How to Sell Managed Services: 7 Steps to Get Results
Once upon a time, businesses could get by with little technology — a phone, a credit card machine, and maybe an email address.
Today, most aspects of a company rely heavily on information technology. It’s what’s used to connect with customers, store data, comply with regulations, and collaborate within teams. And while it has certainly made life a lot easier, it also comes with the hiccups associated with any type of technology. Crashed systems. Downtime. Inefficient processes.
It’s an entire industry begging for help. Yet, not everyone has the budget to have IT experts on their payroll as full-time employees. What’s a person to do? Why, look into managed services!
- What are Managed Services?
- How We Learned Strategies to Sell Managed Services
- Questions to Ask Prospective Partners
- Common Challenges When Selling Managed Services
- 7 Steps to Sell Managed Services
- Track the Progress of Your Sales Team With BrightGauge's Data Dashboards
What Are Managed Services?
Managed services refers to outsourcing specific tasks. Within the information technology industry, this encompasses a wide array of services, including:
- Cloud infrastructure management
- SaaS management
- Disaster recovery
- Help desk
It’s an efficient way to optimize IT support, since managed service providers (MSPs) hire experienced experts in several niche areas — something that would be cost prohibitive to a lot of businesses to maintain in-house. It also ensures that you have a dedicated team that maintains existing infrastructures and anticipates potential issues so that they can be addressed before they interrupt your operations.
How We Learned Strategies to Sell Managed Services
At BrightGauge, we learned effective strategies to sell managed services during the years we scaled our Miami-based company, Compuquip Cybersecurity. Our approaches proved to be effective, resulting in a monthly recurring revenue (MRR) growth from 800K to $8.8MM. Although we ultimately sold the business, the lessons we learned along the way are still effective, and the topic continues to be one of the most popular that we answer for our community.
During this process, we learned how to truly become our clients’ business partners. We weren’t trying to just make more sales. We offered resources and solutions to run their operations efficiently, on a long-term basis.
Remember the end goal of managed services: you want to be your client’s business partner, not just a vendor. As a business partner, you provide value on an ongoing basis. On the other hand, vendors act as a nameless, faceless entity that simply sells products and services. That’s why it’s important to sell your company as a partner.
In your half of the partnership as MSP, you must provide the talent and processes (and in some cases the equipment too) to offer a complete service to your clients. The client also has to make a commitment in trusting you to effectively manage their systems, on top of the cost of the service itself.
Both parties are taking on some risk in the beginning, and if the partnership doesn’t work out, then it’s expensive and time-consuming (for both sides) to sever the managed services agreement. That’s why it’s critical that you get it right.
We took stock of everything we learned about selling managed services during those five years, and have been helping MSPs apply these steps to improve their sales process. Are you ready to take notes?
Questions To Ask Prospective Partners
Sometimes people don’t even realize that a recurring issue may have a significant impact on their business operations. Therefore, it’s crucial to ask the right questions, to get prospects to consider all relevant factors. Things you always want to ask include:
- What are your main IT concerns?
- How are you ensuring end-to-end security?
- How do you know if your remote workforce is connecting to protected networks?
- How have network downtimes affected your quarterly financial goals?
- How much do you spend on IT support each quarter?
The reason why you want to ask all the right questions is because once you have the answers, you’ll be in a better position to suggest adequate solutions to their specific needs.
Common Challenges When Selling Managed Services
In order to be successful selling services, you have to anticipate prospects’ concerns. This will allow you to provide reassurances as you address them on the spot. Some of the most common ones include:
Customers Aren’t Knowledgeable of the Services
You don’t know what you don’t know, and that can definitely hurt you. This applies to everyone across the board — but particularly, to businesses that aren’t aware of cybersecurity issues they’re facing or of the available solutions. They may also not be aware of how they can get more hours back from their day by streamlining procedures and integrating platforms.
In fact, there are still plenty of individuals who still spend a significant amount of time gathering analytics from different sources and manually entering the information into a single document. Tell them how each of your solutions gives them time back (or the peace of mind necessary for a good night’s sleep) and watch them suddenly become more interested.
Customers Believe the Solutions Are Too Expensive
Every single business will try to maximize profits and reduce costs. However, this can’t be done at the expense of their reputation. If a customer believes a service is too expensive, there are ways to provide options without lowering pricing.
For example, a contract that is more focused on break/fix solutions or one that only provides additional services to a specific number of users/devices. That said, sometimes, nickel and diming services will backfire in the event of a major security breach. So it’s good to be acquainted with similar stories within a prospect’s industry and how your specific solutions could help significantly lower those risks.
Needs for Services Are Evolving
No business is stagnant (at least, not successful ones). And neither is technology. Since one of the skills of effective MSP technicians is to anticipate potential issues, it’s good to convey that messaging in the sales process.
While the scope of work will always be delineated in the service agreement, it’s good for prospects to know that in the event that XYZ likely scenarios may pop up, you would still be able to assess it and provide them with a quote for adequate solutions.
7 Steps to Sell Managed Services
While each customer has different needs, there are common denominators in most sales processes. Becoming acquainted with the following steps will increase your chances of success:
1. Know The Services You Offer Like the Back Of Your Hand
First things first. You can’t sell something you don’t understand. You may miss upsell and cross-sell opportunities — or making a sale in the first place. Fully understanding how each service works and all related processes provides you with credibility, as it allows you to explain everything confidently.
In addition, knowing everything well will allow you to provide the right solutions for the specific prospect you’re speaking with at the moment. There’s no need to complicate the conversation by bringing up services that aren’t relevant to them.
2. Aim to Understand Their Pain Points
Something that is useful in the context of sales is familiarity with the Jobs to Be Done framework. This is an approach that focuses on the customer’s specific end goals. People aren’t buying software just for the sake of owning it.
They want to scale and grow their businesses so they can leave a legacy. They want to work more efficiently so they can enjoy their personal lives more. They want to help small businesses meet their goals. So what can you do to get them there?
3. Offer Customized Solutions
There seldom is a one-size-fits-all approach that’s effective. You want to offer solutions that reduce the time a prospect spends working — from APIs, ensuring end-to-end security, or developing an application, to name a few. This is the reason why it’s essential to ask the right questions in the first place.
Instead of presenting prospects with generic menu options, you are offering something that would specifically help them.
4. Provide a History of Your Success
When pitching a new prospect, one of the best ways to build trust is to show evidence of a long track record in the services that you are offering. Do that by showing them hard data that details how you’ve helped clients become more profitable.
As a new company, you might not have a lot of data on hand to back that you are the best choice to handle their IT systems. If this sounds like your scenario, then consider these options to help prospects vet your company:
- Share personal achievements and experience. If you have experience working within the industry, that experience is relevant to your prospects. Share your experience with them to ease concerns and show capability in the services being discussed.
- Provide testimonials and referrals from previous clients. Being able to point to previous clients who have had positive outcomes from your services is a great way to show experience and ease concerns. You can even go a step further, and set up a conversation between a new prospect and an old client to discuss the results from your services.
- Bring them on a tour of your office. Bringing potential clients in to see your office shows them that you have your team, your procedures, and your business under control. With dashboards on heads-up displays throughout the office, they can see that your SLAs are always top of mind, and they can observe how your team works together to resolve tickets for your existing customer base.
Reliable IT services are a crucial part of any modern business, so it makes sense that any company considering your business will want to confirm your expertise before agreeing to a long-term deal. If you’re a new MSP, that could mean you have to put in a bit of extra effort to help ease concerns before working to secure any new, high-value clients.
5. Define Your Scope of Work
One critical aspect of negotiating a managed services agreement is ensuring that both sides have a firm understanding of the service scope. A well-defined scope helps avoid future disputes where the client feels as if the agreed upon service hasn’t been delivered. Your contract should outline each individual service separately and clearly set expectations.
Here’s a look at part of the scope that we would list in each one of our managed services agreements (there were also sections to cover the scope of network security, endpoint management, and strategic planning):
You should also take the time to conduct a full evaluation of the network and IT services of the prospect before providing a proposal. It’s impossible to know what to propose without first understanding the systems that they already have in place. The less amending that must be done later, the better.
6. Know Your Value and Price Accordingly
A common mistake made by young MSPs is a willingness to negotiate pricing. If you’re tempted to lower your price to bring in initial clients, you also have to remember that a price drop can negatively impact their perceived value of the services you offer.
Put another way, value-based pricing puts you in a position to charge what your services are worth to the client, so it’s imperative that you nail the value component of the partnership right off the bat.
So rather than throwing out a “deal” or a price cut, instead focus on educating the prospect about the advantages that your service will bring to the table — and try to connect those advantages to real-world business cases when possible, because that’s the point where value becomes obvious to them. Allowing them to see that real-world data ensures clients never feel like they are being overcharged.
Plus, understanding your value and charging what you're worth can help to facilitate positive long-term partnerships with clients. At the end of the day, you’re not competing solely on price. You’re good at what you do. Charge accordingly.
7. Keep Contracts Simple
No one likes reading convoluted language. It’s one of the many reasons lawyer jokes exist. Ensure that every service is spelled out as a line-item, detailing the exact scope of the service, as well as the monthly charge. Additionally, be sure to include upsells, upgrades, and additional consulting fees directly in the contract to avoid future disputes.
Track the Progress of Your Sales Team With BrightGauge’s Data Dashboards
With a variety of pre-built dashboard templates and a fully customizable system with filters for your departments, BrightGauge’s dashboard solutions can help you stay on track, adjust when needed, and meet your goals, short and long term. You can use existing dashboards or build your own, depending on your needs, and our team is ready to assist you.