Before you plan your lead generation and marketing/sales efforts, you really must understand the concept of Total Lifetime Value (TLV) of your managed services clients, otherwise you won’t know how much money you can spend to acquire a new client.

The TLV calculation does exactly what its name implies; it tells you the total value of the client over its lifetime. In other words, it tells you how much your client is worth to you, which is the number that determines how much you are willing to spend to get a client.

How do you calculate TLV? I would suggest you use the following formula:

Average revenues from client over lifetime of service relationship X Gross Margin %

So let’s say that your typical client is worth $5000 per month and on average they stick around for 3 years. This means that this client brings in a total of $180,000 in revenue over its lifetime.

Let’s further say that you operate at 50% gross margins. This means that the amount of money that is actually returned to you from your work with this client to cover expenses and generate profit is $90,000.

Theoretically you could spend $90,000 to acquire this customer and still break even. Now, that wouldn’t leave you with any money to cover any of your operating expenses, so it’s not a realistic strategy in the long term.

A more realistic strategy can be found by multiplying the $90,000 by whatever percentage of your budget your business model says you can spend on sales and marketing and still have a viable business. Let’s say that the total combined number is 15% of total revenues.

That means you could spend up to $27,000 (15% x $180,000) in total sales and marketing expenses and still be operating within the framework of your business model! If you were to find a way to operate with even higher gross margins, you could spend even more money.

There is an old saying in direct marketing circles that goes something like this:

“The company that can spend the most money to acquire a customer wins.”

Effectively, if I know the TLV of my clients and you don’t know the TLV of yours, you are going to be very hesitant to spend the kind of money you could to win new business, which means that I’m going to beat you all day long out in the marketplace!

You must calculate your TLV so you know how much money you can spend to acquire a customer; otherwise you may not be putting in the appropriate amount of effort to be competitive in the marketplace.

MRC

MSPs are increasingly using a wide variety of marketing tactics to engage prospects and attempt to speed up what can be a long and challenging sales cycle. One tactic that we’ve used successfully is holding managed services marketing seminars. Seminars are a great way to engage your prospects in a format that help you sell while also positioning you as a valuable educational resource.

Marketing seminars are live events at which you meet with prospects to:

• Educate – Share useful information about something related to one or more of your services/products
• Sell – Pitch your services/products

I think the most important lesson we learned about using seminars is that you have to be aggressive about getting “butts in seats”! Most people are way too passive in their approach to this – often times quitting after one postcard mailing or round of calls.

You have to keep after it! When we are holding a seminar, we’ll send three pieces of direct mail, make three rounds of phone calls, and do several email blasts if we have their address. That’s how you put butts in seats!

Holding live marketing seminar events can be daunting for first-timers and there are lots of pitfalls to avoid, so we put together a guide to help MSPs plan for and hold successful marketing seminars. Click here for this free guide from MSP Coach. This guide consolidates our experiences along with research we’ve done on seminar marketing best practices.

Good luck!

MRC

The best teachers are able to boil down sometimes difficult concepts into simple, easily understood “nuggets” of wisdom for the rest of us to understand.

Dan Kennedy, famous entrepreneur and marketing guru, boiled down the fundamentals of advertising and marketing into just five points that I think every managed service provider could benefit from when marketing their MSP business.

Here they are:

1. Construct a relevant, irresistible offer
2. Require immediate action
3. Present it to the right prospect
4. In a way that the prospect must pay attention
5. Then establish safety for the buyer

According to Dan, if you succeed at doing these five things, you’ll succeed in any market.  If you fail at these five things, you’ll most likely fail in any market.

Now, it’s easy to look at this list and think, “Duh”, and then go about your merry way.  But I’d encourage you to stop and take a hard look at your current marketing to see if you are really doing each of these five things.  In most cases, I believe that you’ll find that you are not.

I’m taking a look at our marketing right now and I see TONS of room for improvement.  Might bet is that you’ll find the same.

MRC

Managed Services Marketing

I’m happy to report that Kutenda has been recognized with a Bullseye Support Service of the Year award from Channel Insider!

I’ve learned over the last year that trying to take a vision in your head and turn it into a working software system is not easy!  The team at Kutenda has done a fantastic job of sticking with it, listening to our partner feedback, and continuously improving – they deserve to be recognized!

Here is what the folks at Channel Insider had to say:

Kutenda is a Web-based suite of tools that include a content management system for designing a Website for promoting managed services, an e-mail and search marketing platform for creating and distributing promotional content and special messages to prospects, and a contact management system for nurturing leads through the sales cycle. This may sound relatively rudimentary to some solution providers and MSPs; after all, who doesn’t have a Website nowadays?

But the problem that Kutenda addresses is more than just having an online presence. Its package enables MSPs to quickly create a search-friendly Website, complete with optimized keywords that helps surface the MSP higher in end-user search query results. E-mail newsletters also seem rudimentary, but designing and managing newsletters is a hassle. Kutenda provides the system for creating and distributing newsletters, as well as a library of content to round out newsletters. The system tracks prospect interaction with distributed content, continually requalifying leads until they’re ripe for quick closing.

Services and applications such as Kutenda are fairly common. However, few exist with this level of robustness and specificity for small businesses and managed service providers. Kutenda is truly addressing a gap in the managed services business model and providing small MSPs with a quality tool for growing their customer base and revenue. For that, Kutenda has earned the Channel Insider Challenger Bull’s Eye Award for Channel Support Service of the Year.

They did a nice job of capturing why Kutenda is an important internet marketing tool for MSPs; I couldn’t have said it better myself.

But the best is yet to come!  We have exciting plans under development; 2010 will be an exciting year for Kutenda and our partners.

MRC

This is a graph from a recent Forrester report.  That’s exciting growth!