One of my favorite business and marketing gurus is Dan Kennedy.  He suggests that every business – including MSPs – is at risk of having a “Sales Prevention Department” working within the company, doing everything it can to prevent you from actually doing business with more customers.

Does your managed services business have a Sales Prevention Department?  I think we all do in one degree or another, and it would be smart for every MSP to take a look at their sales and service processes to find where you are slipping up.

I have a few examples from other industries recently that might illustrate some opportunities to improve at your business:

1. Call centers that don’t pick up the phone! Everon is in the process of selecting a new call center to help us with a new service we are rolling out, and I have contacted about 15 to get quotes.  At least half don’t even pick up their own phone!  Of the half that do, at least half again didn’t call me back when I asked them to.  Are you kidding me?!  The Sales Prevention Department strikes again!
2. Salespeople that call you “Big guy” in the first 30 seconds of speaking with them. I’m not kidding.  I called a company recently with every intention of buying from them, but was absolutely rejected by the completely clueless salesperson I had to deal with.  He called me “Big guy” in the first 30 seconds of our conversation.  I was so turned off by this and other things that I bought from someone else.
3. Gatekeepers that take too much pride in their work. Again, I was contacting a fellow small business with 100% intention on buying from them, and called the owner to introduce myself.  He is a grad of the Babson MBA program, as am I, and I wanted to make a personal connection.  The gatekeeper took so much pride in her work that she refused to connect me to him.  I guarantee you the owner would fire her if he knew she was pursuing her role with such fervor.
4. Employees that rob from the company till. I’m not referring to outright theft here, but the kind of robbery that I think has a much larger impact on our economy – salespeople that don’t sell because of their own personal fears or biases.  I happen to be a water snob and entered a gift shop at the airport to buy some bottled water.  The clerk saw me looking at the choices and pointed me to the cheapest bottled water because “buying the expensive water is such a ripoff”.  I then grabbed the most expensive bottle and proceeded to buy hit while he looked at me like a fool.  This same scenario is happening in every company in America; salespeople unwilling to sell the most expensive option because of their own personal biases – robbing from the profits of the business.

All of these are examples of the Sales Prevention Department at work.  I’ve recently been made aware of a few examples at Everon and Kutenda, and I’m doing my best to exterminate them!  Take a hard look at your business and you are sure to find some as well.

Let me know if you find some good ones that are worth sharing!

MRC

Between the effort I’m putting into Kutenda and the Everon Web Services Business Coaching Program, it’s no surprise that I’m a big advocate of managed service providers adding web/internet marketing services to their bag of tricks.

I’ve been telling the industry that these services are more strategic and easier and faster to sell than managed services.  I think that the recent IPO filing by ReachLocal is proof.

ReachLocal has filed to raise $100m to further fund its expansion.  What will they use the money for?  More salespeople.  They have a local sales model that is working, having grown from $25m in 2006 to nearly $150m so far in 2009, and they want to add fuel to the fire.  Take a look at their financials and the number of salespeople they are adding each year:

Why is this so important to note for MSPs?  The biggest challenge of our business is sales.  This is the reason why there aren’t any MPSs filing for IPOs yet; they don’t have a good organic growth story to show investors.

Sure, companies like Mindshift and AllCovered have grown to be big businesses and are near or over the magical $100m mark that investors look for when filing for an IPO, but they’ve spent a ton of money on acquisitions to get there and my bet is that they have struggled to demonstrate strong organic growth.

Why is our industry having a challenge with sales?  I think a number of reasons:

• Our industry isn’t traditionally run by people with strong sales and marketing backgrounds
• It’s difficult and expensive to build a large sales force that actually works
• We are selling a product that people generally don’t want

You and I aren’t going to do much about the first two challenges other than continue to learn and push forward every day.  But we can do something about the last point.  We can start offering products and services that are more attractive and easier to sell.

The has been a big mental shift for Everon.  We no longer think of ourselves as a managed services firm; instead we think of ourselves as a business services firm serving small businesses.

That may seem like a small distinction to you, but it opens us up to consider an important question:

“What are the products and services that we could offer, that our clients are expressing demand for, and that we believe we can sell most profitably?”

That’s a very important question!  We aren’t bound to just offering managed services…we can offer whatever whatever makes the most sense to us and our clients.

For Everon, a critical next service is internet marketing services.  Small businesses want to be seen on the Internet, they want more prospects, and they want more revenue.  We can deliver that with internet marketing services.  So can ReachLocal, which is why they are having such great success.

Congrats to them.  But the game isn’t over.  Web services is a huge marketplace, and managed service providers have an incredible opportunity to deliver these services to their clients.  I’d suggest you spend some time looking into this opportunity or some other that allows you to sell with the same velocity that ReachLocal is.

MRC

Managed services

That’s a pretty frightening stat for managed service providers to read!  According to a very interesting report I just read, only 33% of clients are loyal to their IT service provider and don’t plan on looking for alternatives in 2010.  Ouch!

The report is titled Deal or No Deal: Sales Mistakes that Turn Buyers Away.

It’s a must read for MSPs and anyone selling professional services.

The good news is that means that any MSP with their sales game in high gear has a lot of potential clients out there – you just need to hustle to reach them.

MRC

I read this great explanation from Perry Marshall and thought it was a must for managed service providers to read.  Everon uses AdWords extensively to find new clients – and obviously I am advocating the approach with my investment in the small business online marketing tools I’ve worked to create at Kutenda – but it’s only one of the arrows in our quiver.  You have to use a variety of approaches to keep your managed services sales funnel full; otherwise progress is just too slow.

Here is the full post from Perry Marshall:

“Sometimes Google AdWords is the least effective way to reach your target customer.”

A chance conversation in New York City shows why other advertising media may be better for you – because each form of advertising slices the world in a different, unique way

On a beautiful day in May I was in New York City for Gary Bencivenga’s now-legendary copywriting seminar, and taking the day off on a lovely Sunday afternoon. Just off Broadway and a few blocks from Central Park, I was drinking coffee in a donut shop when two guys struck up a conversation with me.

Turns out one of them was a senior sales executive for the Thomas Register. In case you’re not familiar, the Thomas Register is a very old company that, pre-Internet, used to make a gigantic set of green books that you would see in a company library, purchasing or engineering office. These books, which probably weighed 100+ pounds, were the national ‘Yellow pages’ for every kind of manufacturing you can possibly think of.

And pre-Internet, if you wanted to buy machine tools, adhesives, pump controllers, conveyor belts or literally hundreds of thousands of other items, the Thomas Register was probably the easiest way to find all of those things.

But now you just do a Google search. Right?

And that’s what this guy hears when he’s selling space at ThomasNet.com (they don’t even print those big books anymore) – his prospect says ‘Hey, I don’t need to advertise on your site, I’ll just advertise on Google.’

Well nobody’s in a better position than me to say that sometimes Google AdWords is NOT the best way for his prospect to reach a new customer! Sometimes it’s a lousy way to reach your target customer. Let me give you some examples:

• Last year I had a client who manufactures AC Adapters – you know, those big black plugs that provide power for your CD player or charge your cel phone. We tried mightily to make Google AdWords work, and couldn’t. Why? Because this company sells custom lots of 500 units or more to manufacturers, but all the traffic for “AC Adapters” and related keywords is everyday consumers looking to buy one unit at a time. Our Google campaign was a total failure, despite our best efforts to dis-qualify the customer. The ads would say “minimum lots of 500,” but Joe Consumer would click on the ad anyway, then leave. A manufacturing directory is a much better way to reach other manufacturers than Google in that situation.

• Let’s say you sell some kind of high-end equipment, software or consulting to high level exectutives – and lower-level people are a waste of time for you. (Very common scenario!) Is bidding on keywords a good way to target those executives? No, not really. Maybe only 1% of the people searching are executives, the rest just waste your clicks. Direct mail would be much, much better for that. A FEDEX envelope on the executive’s desk is a rifle shot.

• Keyword based advertising only works when people know they have a problem and can describe it to themselves and believe that somebody on the Internet has a solution. But many people have severe problems they don’t even realize they have. If that’s the case, search engine marketing isn’t a very good way to reach them. You need to interrupt them instead. So again, direct mail, ads in magazines they read, TV, radio – all of those media might be better. Search engine marketing only gets you people who are proactively looking to solve their problem right now.

• Sometimes search traffic gets you, ironically, the lowest quality, least-interested and least qualified prospects. People who regularly visit specific web sites are much more interested and much more qualified. Here’s an example: Let’s say you are doing fundraising for environmental activism. You could bid on the keyword “environment,” but what you’d probably get is high school kids doing homework assignments and writing papers about the environment. Now it may be nice to reach those kids with your message, but you ain’t gonna get any money out of them. And if you think about it, people who are already active and interested in that probably are not typing “environment” into a search engine. They already have sites they like to go to. You get much better traffic, and more donations, advertising on those sites. (That’s why, in some categories, AdSense gets you better traffic than Google searches.)

Every kind of advertising media slices the world in a different way. Bidding on keywords slices the world according to who’s got an itch to scratch, right now. Direct mail slices the world according to what magazines people subscribe to, what mail order products they’ve purchased, what charities they’ve donated money to. Compiled mailing lists slice the world according to where they live, what income level they’re in, what positions they hold in their jobs, what kind of home they live in.

“Rock – Paper – Scissors”

Print advertising slices the world according to topics people are interested in – if you advertise in Bass Fisherman magazine, you get guys who are rabidly interested in bass fishing. If you advertise on the radio at 7:30 in the morning, you get people who are on their way to work. The pros and cons of every form of advertising are sort of like that game “Rock – Paper – Scisssors” where each has its unique advantages and disadvantages.

So I told the Thomas Register exec that he just needs to come out and say that yes, sometimes Google is hands down the easiest, cheapest way to get new customers. (His prospect will be rather surprised to hear him say that! Coming clean will boost his credibility.) But he can point out that also sometimes, as with those AC Adapters, Google may also be one of the worst ways to get a new customer.

For most people, the truth is somewhere in the middle. For most people, Google is a great way to get a certain amount of high quality leads, but there are only so many available. It’s like an oil well that pumps out just so much every day, and no more. Plus you never want to have all your eggs in one basket, that makes you very vulnerable. So you need to explore other avenues.

In conversations I’ve had, people have been using any or all of the following ways to acquire new customers:

• Buying space ads in e-zines
• Endorsed email blasts from affiliates
• Pop-under and popup ads on other sites
• Postcard mailings
• Direct Mail
• Magalogs – catalogs that look like magazines
• Spots in other peoples’ catalogs
• FEDEX envelopes to highly-targeted prospects from carefully selected mailing lists
• Banner ads
• Radio
• TV
• Telemarketing
• Issuing a Press Release
• Writing a Book
• Being an “Expert” on a Talk Show
• Exhibiting at Trade Shows
• Flyers distributed house-to-house or business-to-business
• Doing a custom teleseminar for another person’s email list
• Ads in magazines
• Remnant space in local newspapers, purchased at a deep discount rates
• Speaking at seminars
• Card Decks – i.e. packet of postcards that comes in the mail
• Writing magazine articles and e-zine articles
• “Buyer advocate” sites like Thomas Register and Globalspec
• Flyer inserts in newspapers, magazines or mail-order shipments (that’s called “Insert media”)
• “Lumpy Mail” – sending people interesting objects, like one guy I know who mailed out a six foot canoe paddle

When all you have is a hammer, everything looks like a nail. So save this list for the next time you have one of those days when it seems impossible to find a new customer!

Remember that every other advertiser out there has access to some customers, and many of them know they can make a little more money (and not lose any business) by giving you controlled access to their customers. And many times even though those other media may have a higher customer acquisition cost, the customers may be higher quality.

To your success,

Perry Marshall

I attended a Robin Robins event in Denver recently to get a refresher course on some of her core lessons as well as to watch her give her sales pitch from the podium – I always take the opportunity to learn from the best!

One of the benefits of attending these events is the side conversations you have with other MSPs.  One conversation I had almost made me choke on the lunch I was eating.

Sitting next to me were two well-dressed gentlemen from an MSP from Colorado Springs, a good-sized city in Colorado.  These guys looked more like two MBA graduates than the typical MSP, and I immediately assumed they must be pretty business savvy.

Upon talking to them, we began discussing Everon’s new web services offering and how I believe it’s a good example of what the MSP of the future will have to do to survive – broaden their service offering beyond that of core infrastructure and application support and into other high-value business services.

As we discussed the pros and cons of the model, one of the gentlemen said to me:

“I think that’s a big mistake.  I want my customers to see me as a Windows Server expert, not a business expert.”

Commence choking.

The following questions started running through my mind:

- Did he really just say that?

- Was he serious?

- Has he been completely oblivious to the trends of cloud computing and SaaS?

- Does he not realize that business experts make unlimited incomes in this world, while Microsoft Server experts willmost likely never again crack the six figure mark, and are predicted to be nearly decimated in the job market over the next 5 years?

- How could we possibly see things so differently?

The answers to those questions are the answers to the future of this industry.  I believe that we are on the cusp of dramatic changes in this business – more dramatic than the initial shift to managed services the industry just went through – and that many MSP’s will not survive.

- Consolidation is going to happen.

- Cloud computing is going to happen.

- Hardware as a Service is going to happen.

- The telecoms entering the business are going to happen.

I believe that being seen as a Windows Server expert is just about the worst thing you could hope for going forward in this business!  Why?  Your clients couldn’t care less about Windows Server – or just about any other technology for that matter!  They care about themselves and their business results.  More sales, more profits, more time off.  Sure, you want to have that expertise, but that’s not the position you want to have in the minds your clients.

This point is critical.

The position you have in the minds of your clients will determine if you are able to successfully introduce new products and services when necessary, and survive as a company as this next big shift happens.  If you have the right position, you’ll succeed no matter what today’s technology trend is; if you have the wrong one you’ll struggle to keep up with your client’s changing demands.

So what is the position you want to have in the minds of your clients?

That’s for you to figure out.

I’m not trying to avoid giving a specific answer; I’m suggesting that the position you have as a business should be based on where you think the marketplace is heading, what you are excellent at, and what you believe your customers will buy now and in the future.

- You can be a low cost provider, or a high-end white glove provider.

- You can focus on Windows PC’s or Mac’s – or both.

- You can focus on a specific vertical or be a generalist.

- You can focus on small businesses or larger ones.

- You can focus on one city or provide services around the globe.

All of these factors – and many more – will determine how you position your company in the marketplace.

Take Everon for example.  We decided to offer web services to clients because we realize that the reason most small businesses aren’t taking advantage of web services is because they don’t know how to effectively deploy the technology needed to do so.

It’s a technology problem that is limiting their business results.

That’s exactly where Everon wants to play.  We want to be positioned in the minds of our clients as a company that uses technology effectively to solve business problems – not as Windows experts or Mac experts or (insert your favorite technology here) experts.

That is a very conscious decision on our part.  We have a long term positioning strategy that we believe will resonate best with the clients we are going after, and offering these types of services are a part of it.

In my last post, I discussed the possibility of the large telco’s really getting the managed services marketplace figured out and putting a large dent in our potential marketshare.  If you are going to thrive against them, you had better have a consciously thought out strategy for positioning yourself against these large companies!

And let me give you some clues around this:

- Positioning your services as cheaper isn’t going to cut it.

- Positioning your services as being more convenient isn’t going to cut it.

- Positioning your services as generalists is going to cut it.

The big companies will have you beat at all of these things right out of the gate, that’s why they are big.  By their nature, they have to offer services general enough, convenient enough, and cheap enough to reach a mass market.  You can’t compete here long term and win.

You must differentiate yourself on some other factors.  And you’d better get started now!

Assuming you can get this positioning thing really figured out, you are leaps and bounds ahead of the competition – no matter how big or small they are. But it’s not enough.  To compete in the future of this space, I think you’ll need to execute on some other factors very successfully.

This post is long enough…we’ll save the others points for the next post or two.

MRC

PS – this positioning thing and its impact on business results is always easier to see from an outside perspective.  Read this article about Starbucks and their positioning challenges and how it’s impacted their business.  It’s very enlightening and educational.