Written by: Ray Wright
During the past few months I’ve focused significant attention on the habits and best practices of higher growth MSPs, based on the results of our recent MSP Pricing Survey. Of course, how you price, what services you offer, and what value your services represent, are vitally important to your success, but at the end of the day, if you are unable to attract new prospects and close deals none of that matters.
There are no magic bullets or tricks that you can use to develop new business. Like customer satisfaction, fiscal responsibility and efficient service delivery, lead generation is a discipline that requires daily action and a consistent approach. It’s also expensive. According to research*, it now costs software-as-a-service (SaaS) businesses $1.07 (on average) to acquire every $1 of annual contract value. It’s a good bet that the cost of acquiring $1 of annual recurring managed services business is of the same order.
Assuming that you run an averagely efficient sales and marketing operation, the high cost of customer acquisition in today’s marketplace has several key implications:
- Your existing customers are a key source of growth – it’s far less expensive to upsell/cross sell existing customers than it is to acquire new ones
- Maintaining your existing customer base is as important as finding new customers – with acquisition costs close to revenues, profits, mainly come after year one of the contract
- Investing time in sales and marketing effectiveness and efficiency is important and worthwhile.
Whatever your level of sales and marketing investment, it pays to think about efficiency as carefully as you think about the efficiency of your managed services operations. For example, what can you automate? Where can you standardize? How can you be proactive to avoid waste and unplanned work? There are way too many aspects of sales and marketing to cover even in a whole blog post series but here are 3 very important considerations:
- Target narrowly. The mantra of every marketing expert but often the most ignored advice too. With limited funds to invest it’s vital to focus your messaging and your efforts on a well understood sub-segment where you know you can be successful and where your sales team knows it can win. This might mean selecting an industry sub-segment, a close geographic area, a functional group that needs your expertise or even a particular client attitude – “we’re focused on our business and are delighted to outsource our IT needs”.
- Create online visibility. Most people use the internet to find what they want or, at least, to explore recommendations further. If you are not visible to your target accounts then they are unlikely to ever reach out to you. However, gaining visibility efficiently, without spending $$$s on product/service advertising, requires posting relevant, interesting and compelling information regularly where your target audience can view it. There are lots of ways to get the information out – through paid and natural search, through social media and blogs, via your website, email, newsletters etc. The key is to provide information of value that will attract your audience and to include some that they will even be willing to “pay” for by responding with contact information (hint: this does not include company news, product updates or how you celebrated Valentine’s Day!).
- Follow up immediately. Generating demand is different from generating leads but neither turns into business if there’s no timely follow up. It’s been estimated that lead conversion declines exponentially over time so that both making contact with and trying to convert (to sales or appointments, etc.) hours after the contact information is generated results in massive drop off. The same is true if only one or two follow up attempts are made (versus 7 or 8). Results vary by industry, product/solution, price, etc. but poor follow-up results in wasted sales time and marketing investments.
As with remote monitoring and management, automation can help improve effectiveness and efficiency. Automate your email campaigns, your sales responses and your social media posts. Automate calling so that the sales person is only engaged when a real person answers. Standardize on a specific target audience, just as you standardize on specific IT equipment and configurations to avoid the unknown and unplanned. Be as proactive as you are with software updates and patches by understanding the many factors that affect your customers’ businesses and operations and being the first to inform them about changes or issues. Don’t waste the opportunity to obtain visibility for your business by letting them read about the latest cyber threat or Windows challenge in the general press, tell them first and tell them what the implications are for them.
Although marketing and sales may not be your primary area of expertise, you do have all the experience and skills you need to constantly improve and successfully drive new customer acquisition. Use the same rigor you use to improve your service delivery; set time aside to work on improvement every day.
Reference:
* 2014 Pacific Crest SaaS Survey
About the Author
Ray Wright has been a high tech industry and marketing exec for over 25 years’. His background includes senior marketing roles at Motorola, Cabletron and CA. His product responsibilities have included IT management solutions, security, tethered, wireless and mobile solutions, and software, hardware and services. Ray‘s current focus is on how to make Kaseya’s MSP and mid-sized enterprise customers more successful.