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I hope to see you there!

I take the stage at 250pm ET, and I’ll be around for a while before and after.  I hope to connect with some of our readers in person.

MRC

I first met Paul Dippell at a Connectwise Partner Summit a few years back. I can remember thinking after his presentation:

“Damn, that guy is smart.”

Paul runs a firm called Service Leadership, based in Dallas, TX. His background in our industry is one of running companies of various size as well as serving as the head of mergers and acquisitions for All Covered during their growth boom. In other words, he’s got a background that you can learn from. His business today is advising managed service providers on how to grow successful, profitable businesses.

The team at Everon was fortunate enough to be able to pick his brains this week. We had Paul come and spend all day Monday working with us to “sharpen our sword” as they say. It was a great experience for our team and for me personally.

Paul isn’t cheap, but you get what you pay for. If you have the opportunity to do so, I highly recommend hiring him to assist your company - particularly in the areas of P&L optimization and growth strategy.

MRC

It sounds so easy on the surface, in fact those that have done it successfully will tell you that there is no secret formula and everything they would advise you to do you already know – they are merely reminding you to take action.

I had the opportunity to speak with and hear from some of the greatest service minds in the country over the last week and they all say the same thing – with their own variations of course or you would not buy their book – your people and your culture are your most valuable asset.

As I think about our culture I realize that for years we have talked about creating a culture that we care about and that we want to come to work in every day – this to us is all about our people – but I have only recently been able to clearly express what that means to someone on the outside looking in.

In a way Mike and I have been lucky in that we intuitively have been able to build a fun and exciting place to work. We have benefited from low employee turnover in an industry that is knows for employee churn. As a result of this we have also seen incredibly low customer churn numbers during our time in business.

So you may ask, how have we managed to pull this off? Well, we have done nothing more than start with a hyper focus on the people we bring into the organization. I would rather have to work 80 -90 hours a week than to hire someone just to fill a spot. Is this an easy thing to do?? No way. In fact there was a point early in our business when we lost our patience and hired just for the sake of filling a hole, you could say we hired skills rather than cultural fit and we paid for it over the three months it took for this person to move themselves out of the organization. In hindsight (I am always incredibly smart in hindsight) it was one of the best things that happened to us because it both consciously and unconsciously created the commitment we have to only hire the best fit for our organization no matter how long it takes.

Over time we have developed a standard interview process to help us gain an understanding of a person’s heart – what they are all about and what they will bring to the culture – while simultaneously allowing the interviewee to gain an understanding of the type of culture we are. Remember the questions from back in the day when Google and Microsoft used to ask interviewees mid sentence to tell them how many hubcaps there are in NCY? We use similar puzzles and questions to get at the essence of how a person performs under pressure, how deep their critical thinking skills go, and ultimately what kind of people person they are. We have interviewees tell us frequently that our interview is the most fun and challenging they have ever been on, we also have had some that we thought were going to walk out mid interview but hey, at least we knew they were not a fit.

So as we go through this process we look for these four items listed in order of importance:

Cultural fit – can they laugh at themselves, do they take themselves too seriously, do they like to have fun, would you choose get together with this person outside of work

People skills – you have heard me say it over and over again, we are first and foremost a people business we just happen to be really good with this technology stuff

Critical thinking skills – no one can survive in the tech world without having great critical thinking skill

Technical skills – we believe these are least important and the easiest to teach out of the bunch

So next time you are about to hire someone because they know the technology that will round off your team, or they have the exact skill set match that you are looking for, stop for a minute and think about what that person is going to bring in terms of service excellence and cultural fit to your team. And if you need to, step back and exercise patience in order to preserve your culture.

JC

I’ll be presenting at this conference.  If you read our blog and can make it, I’d love to meet you in person.

Here is the registration page.

My presentation will be covering the key service processes and metrics every MSP should have in place and how to make them work.

Hope to see you there!

MRC

Josh and I and two other members of the Everon team are at the Great Game of Business National Gathering of Games conference in St. Louis right now.

What a great conference!  If you aren’t learning what they are teaching here, you’re falling behind!  This conference is an exciting opportunity to meet and learn from business in a variety of industries that are practicing open-book management and using its philosophies and practices to get ahead each day.

Managed Service Providers aren’t typically the most sophisticated bunch when it comes to business knowledge and practices; this event is the perfect way to get the equivalent of an incredibly practical MBA in two days.

If it isn’t this conference, it better be another one.  Or a book.  Or a seminar.  Something!  If you aren’t learning every day, somebody else is getting ahead of you.

MRC

A high utilization rate is one of the keys to success in this or any professional services business, and yet a recent study from the Technology Professional Services Association (TPSA) revealed that the average utilization rate is 65% or less!

Raintoday.com, one of my favorite resources for learning sales and marketing strategies, is work with GoToAssist to provide a complimentary webinar to provide tips on how to bring your utilization numbers up while delivering outstanding service.

We’ve used GoToAssist at Everon for years…we love it.

Check it out.  Increase your utilization.  Make more money.

Nice!

MRC

The Net Promoter Score for Everon is over 95% this week. I don’t mean to brag…I’m just proud of that number!

We typically run in the high 80’s, which is incredible for a service firm such as ours, particularly considering the challenging nature of our industry. Those numbers compare to that of Harley Davidson, whose customers go and get tattoos on their asses (is there any better sign of brand loyalty!?). I don’t think any of our clients have done that yet, but I’m eagerly awaiting the first to do so!

If you aren’t familiar with the Net Promoter Score concept, learn it and start using it at your business right away. It’s one of the most valuable feedback tools there is.

I’d love to see everyone in the managed services industry start using it on a regular basis so we can start having competitions for bragging rights!

Why have our scores gone so high? Simple to understand but not necessarily to execute: we are at appropriate staffing levels right now with great people on the team. This is the toughest part of our business, but it’s the part that makes the biggest difference as well.

MRC

It is intuitive to understand that you will need sales engineers to support your sales team as they bring new prospects through the door – who else is going to answer the technical questions the client asks or give the demo of your cool NOC monitoring software. What is less intuitive is the fact that your support team will play an active role in the sales of services and products to your existing client base over time but they should not be compensated or motivated based on this role.

But wait a minute we are all in this managed service thing to make money! – Well yes, and I would be the first to argue that you should create profitable services and products or you should get into another business. The problem is that I see a lot of organizations that set their client management structures up in such a way that the group directly responsible for making sure the client is getting the most out of their service is also directly compensated and incentivized for selling specific products or solutions. Your reaction to this run on sentence is probably – Well yeah, that is how the industry has been doing it for years! Well, you are right but I would argue that to truly act in the best interest of your clients your team must be compensated on client satisfaction and retention over the long haul rather than the quick hit 30k project or product.

We have empowered our team to gain first position with clients by creating a system that lets them say things like “listen Mr. client, I have no vested interest in which solution, vendor, product, service, etc, you move forward with I am only recommending what I truly feel is best for your business based on the goals and initiatives we have been talking about”.

Now that is powerful thing to be able to say to a client and a sure fire way to earn a seat at their executive table.

JC

I’m going to admit something that’s very difficult for me and other managed service providers to admit…

At Everon, we lose customers every now and then.

There, I said it. Whew! That’s a big weight off of my chest.

Now that we got that over with, I’d like to consider what an acceptable level of customer churn (turnover, loss, etc.) is in the small business IT support industry. Josh and I have been plotting and planning our growth for the year, and we realized that we can get bit in the butt if we don’t do this correctly.

Assume too low of a level of churn and you hire too quick and end up blowing money on salaried employees you don’t really need.

Assume too high of a number and you may end up providing poor service because you are understaffed.

So what is the right number to use in your planning? I’ve heard that an industry average is close to 20% customer churn - that’s a big number. No wonder it’s hard for businesses to grow past $4 or 5 million in revenue - you need to $1 million per year just to stay even! That’s tough on a small budget.

Here are the numbers I’ve come up with:

• 10-12% churn - for those that are established businesses with great service processes and long client relationships
• 12-17% churn - for those that are running their businesses pretty well, but have occasional lapses in service due to lack of process, fast growth, etc.
• 17-25% churn - for those that are struggling with their growth and/or are very resource constrained; service is average at best

Now, there are exceptions to every rule, so please keep in mind these are just guidelines. And please don’t write me telling me how you’ve never lost a customer…I’ve heard enough of those stories to last a lifetime. Customers come and go - it’s a fact of business. Better to recognize it and prepare for it than put your head in the sand.

I’d be interested in what kinds of numbers other customers see - please let me know.

MRC

We are traveling this week and I appologize that we have been slacking on our posts. We will be back in full force soon but please don’t hesitate to email either of us if you have questions that just can’t wait!!

Until we are back you can check out this post on the importance of gathering input from your employees in todays knowledge economy:

http://www.metricz.com/2008/04/management-innovation-yes-your-employees-have-brains/