This may seem obvious, though I’ve seen many companies fail to succeed at building out a managed services practice due to lack of executive buy-in. To succeed in this market, you need to fully-embrace managed services, meaning your entire organization (from the top down) should be bought-in to this model. To do so, some areas to focus on include:
Creating sales compensation packages and quota requirements will help incentivize sales teams to sell managed services. Your sales reps are likely used to getting large commission checks based on large product or project sales. Therefore, paying the sales team a percentage of managed services revenue on an ongoing basis will likely not incentivize them to sell managed services, as this is a completely new way of making money for them. Instead, you will want to create a compensation plan similar to what they are used to. For example, you may pay out a full month of managed services revenue up front as part of their commission, rather than a small amount monthly.
Prioritize Managed Services Over Competing Service Offerings
As an example, many companies sell blocks of time in advance that their customers can then use for support requirements as needed. But when they start selling managed services, the sales team will want to fall back to selling these blocks as soon as they get pushback on the managed services solution. It is up to the executive team to set rules in place that prevent this from happening. While no longer offering blocks of hours may not be an option—as you may have too many customers leveraging this service to remove it entirely—restricting them to be only available for project work will help keep the support options focused on managed services.
At the end of the quarter, managed services still needs to be a sales priority even if other products or service lines have not hit their goals. I see this all the time with office equipment dealers and VARs. Selling hardware is what pays the bills, so if hardware sales are down the executive team re-directs all sales resources to focus on hardware and forget about managed services. This sends a clear message to the sales team that the executive team is not actually bought-in to managed services, and will kill any excitement they might have had around selling it.
Why do you need to productize your MSP offering? The answer is simple: confusion on all fronts.
Your sales reps are used to selling something that is clearly defined and that they are comfortable selling. Even if your team has been selling project services, it is likely that these services were sold as part of some product purchase. Whether it be a new firewall or a server upgrade, there was still a clear project/product that they could explain and sell to the client. On the flip side, your prospective customers know what managed services is, but it’s likely that all of the competitors in your market have a slightly different take on managed services. This results in a lot of confusion in the market, and also makes it challenging for you to differentiate yourself from the competition.
Productizing your services allows you to effectively identify what you will be delivering—a catalog of deliverables, so to speak. In turn, this creates a foundation for your support processes. By identifying everything in your deliverables, it can help maximize profitability as you have basically created a defined scope of work for each service. With this scope of work in place, your team will be able to easily identify out of scope activities, which allows you to either bill separately for them or include them in the overall product and increase your pricing as needed.
Ultimately having a tangible product that your sales force can “see and touch,” so to speak, eases the sales process by helping them understand the deliverables, the value proposition and what differentiates you from the competition.