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
