Lots of break-fix VARs would prefer to exchange their unpredictable sales cycles for the stability of a managed services business, but there are a lot of changes that have to happen before that goal can become a reality. The sales model and marketing strategies are much different in a managed services business. And, employee turnover and customer churn can offset any benefit gains if the transition is not handled properly.
These topics were addressed recently during the closing panel discussion at Business Solutions’ 2016 Channel Transitions conference in Boston. The panel featured four successful MSPs: Tom Clancy Jr., president, Valiant Technology; Todd Molloy, director of sales and marketing, Systems Engineering; Scott Haselkorn, president, Haselkorn, Inc.; and MJ Shoer, CTO, Internet & Telephone, LLC.
When you make the decision to sell managed services, there will be some customers who won’t make that transition with you. According to Molloy, finding new customers is essential for offsetting the inevitable churn, which is typically four to six percent. “And, if you want to grow your portfolio 15 percent or 20 percent each year, you’ll need to communicate well with your existing customers while attracting new ones,” he says. “Our company uses content marketing and thought leadership events to serve this dual purpose of retaining clients and finding new growth opportunities.”
Valiant Technology’s Clancy finds there’s no substitute for face-to-face networking. “We tried using a social marketing/content creation firm for a year, but it was a waste,” he says. “More Facebook likes didn’t make the phone ring and didn’t close deals. Prospects call because customers, friends, and networking partners refer them to us. In New York City, we work with a group that sets up business breakfasts, which also enables us to make connections.”
Internet & Telephone’s Shoer concurs and adds, “Referrals, ironically, are still the largest share of our qualified leads. I think they always will be, but we generate a lot of leads through SEO [search engine optimization], social media, speaking opportunities, and writing articles for regional publications. Anything that helps establish you as a subject matter expert is important. Then you have all those other tools behind you, so that when people research your company, they see all your points of involvement and all the things that you do, and they prequalify themselves, which is nice.”
Shoer says his company creates a lot of ebooks, too, which are updated regularly. And, his company produces a fair amount of educational video content. “I know ASCII has some marketing resources for members, along with some social media services and marketing support services. There are other groups out there that are dedicated to helping MSPs develop thought leadership content, too, including a variety of website companies that focus on our industry.”
Clancy shares that opinion and adds, “Syndicated content providers like Axiom and Mind Matrix provide bulk available content that MSPs can essentially embed in their websites. MSPs don’t have to do all the blog writing themselves.”
Truth be told, he says, your prospects don’t necessarily care if your company’s content is coming from you. “As long as they’re getting the news that they need, it’s pertinent to them, and it shows that you’re connected to their market, that’s what really matters.”
Educational thought leadership events are big for Systems Engineering. “We hold events in multiple cities,” says Molloy. “We made a pretty big investment in content marketing, too. We currently have two-and-a-half FTEs [full time equivalents] who are focused exclusively on website content marketing.”
Haselkorn says he also invests the majority of his marketing budget on events, which are vertically focused. “I leverage clients in specific verticals to introduce me to their colleagues, too,” he says. “Many companies attend events in their industries, and they have colleagues that they compete against, but also are friendly with, and they share information and try to help each other out. This is where a lot of my new business comes from.”
Hosting your own events doesn’t have to be formal or expensive to be effective, says Clancy. “We have a networking group that I put together with a couple of peers that provides service to our primary vertical, which is the creative industry,” he says. “We work with advertising, TV production, and other media companies. I have peers who sell insurance to those companies or provide financial advice to them. We created a group on LinkedIn, called the New York City Creative Masterminds, and we get everyone together once a month for cocktails.”
Clancy says the key is that it’s not a hard-sell environment; he’s merely bringing people together in complementary business roles (e.g., copywriters and videographers) to swap information and build relationships. Plus, the whole thing doesn’t cost any money. “We’ll approach a bar and ask for a corner to be blocked off on a quiet Tuesday evening,” he says. “The manager is always willing to accommodate us, and it’s a win for the bar, too.”
Initially, there is a time commitment required to develop the LinkedIn message and send out invitations, he says. But, once everything has been set up, it’s easy to maintain. “If you count my networking group and my morning networking breakfast, I average $120 a month in marketing costs,” says Clancy. “I used to spend $500 to $600 a month doing content marketing and other activities, but I was pretty unsuccessful at it. The reason the other stuff wasn’t successful was partly because I didn’t give it enough time and energy and partly because the companies that did our content marketing didn’t understand technology.”
At the other end of the spectrum is Molloy’s company, which spends more than half a million dollars a year on marketing activities, which mostly comprise the events the MSP hosts and industry events it attends. “Most of the events we host average 200 companies,” he says. “It’s as much a customer service retention effort as it is a prospecting event.”
Like Molloy’s, Haselkorn’s company has a strong vertical focus. “Unfortunately, the industry conventions we attend are expensive to exhibit at,” says Haselkorn. “It’s not uncommon for us to spend $10,000 to $20,000 at a three-day event. But, it’s necessary for us to have a strong presence to show prospects we are a player in these markets, and not just a fly-by-night company.”
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