By Michael Barnes
In our last blog, we focused on some stumbling blocks you might encounter when switching to a managed IT services business model — and how to overcome them. Now let’s discuss the right and wrong ways to add new products and services to your line card.
Sounds basic, but you’d be surprised how many times an MSP gets sold on hot tech and fails to assess current clients’ needs, or what’s trending in its key vertical, to ensure it’s an addition that makes sense. Look at revenue-producing systems and data retention or regulatory requirements as well. While each client is unique, there are usually some common needs and future business trends. Think about those when deciding what products make sense for your portfolio.
One important client consideration is hardware — review your clients’ existing equipment with a focus on systems that can be upgraded or consolidated. Outdated and unreliable hardware, networking, security and telecom systems often can’t support sufficient mechanisms that you would want to add; for instance, an upgraded disaster-recovery component.
If this is the case, these items should be replaced and/or upgraded before approaching a client with a new product idea. Of course, this requires extra money and time, but there are ways to pitch this to your client as something that is worth the expense because it adds a value proposition and positions them above their local competitors. They will now have updated systems and features that others in their area might not.
As an MSP, take into account each client’s respective needs and ensure that you have a solution that’s both flexible enough to provide a variety of these requirements and keeps your margins aligned and in check.
Speaking of value proposition, as the MSP, if you are trying to convince your client to upgrade, replace any current hardware and also expand with additional services that you want to offer, the value proposition is really defined by what you do, not just the tools you use. You can have all the latest products with all the bells and whistles, but if they are not being executed properly, then it’s a recipe for failure.
The value proposition for adopting new services is your technical expertise, experience in supporting customers and a deep understanding of the many unique requirements of the SMB market. Now that you’ve nailed down positioning, you also must decide whether the new product offering will become part of your existing packages or be its own line item. This will help with successful services adoption and allow you to effectively sell the product to your existing client base.
Further, if you do decide to offer the product as a standalone solution, brand it with a proper name so that clients identify with your brand as well as value proposition.
To improve your chance of success when adding a new product and/or service, follow a structured go-to-market strategy that fits with what you are currently offering. Focusing on the integration of products that mesh well or are managed under the same umbrella is also something to think about. The last thing you want when introducing a new solution is to have techs and other support staff confused and disjointed, possibly leading to internal confusion, impacting client satisfaction and your bottom line. Set clear sales objectives by defining metrics such as number of sales leads and meetings as well as the rate of leads converted into real clients.
Any new product should also be tested with clients on a trial basis, under real-world conditions, so that the client is fully aware of the product’s strengths and weaknesses and can offer valuable feedback before you fully deploy. A testing period helps you to see how your clients respond to the product, and if it’s the right fit for both your respective business models.
While adding a new product and/or service to your line card is a big decision that impacts sales, it should not be thought of as an easy way to make more money. As with any new business offering, managed services require a well-established plan complete with thorough assessments, an SMB-focused portfolio and a strong value proposition that resonates well with your target market.
Michael Barnes is Continuum’s director, New Partner Acquisition, where he manages the account executive team responsible for new partner recruitment. Prior to joining Continuum, Michael was senior channel marketing manager, Experian Data Quality, where he led the development and execution of the go-to-market strategies with key technology partners.
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