By David Wilkeson, MSP Gadgets
Have you ever considered what you are truly selling when you are offering a managed services product? From the perspective of most of our clients, it’s not what you think.
At the most basic level, they aren’t buying the cool technology you are offering or all the wonderful support tools you are bringing to the table. Most of them aren’t even trying to save themselves money. They are buying predictable IT services; computers and internet connections that stay up and when they don’t, smart people that can resolve their problems within a time frame that works for their business needs.
The challenge for MSPs is delivering consistent predictability. Most technology issues can be solved with well-designed solutions. That still doesn’t address the biggest wildcard in service delivery — our employees. When you look at the root cause of service delivery problems in MSPs, my experience is most of those problems are caused by employees whose efforts are not aligned with the expectations their managers have for them.
There are many reasons for this misalignment challenge. They may be in wrong seat on the bus, meaning they are doing the wrong job in the company. It’s also possible they are on the wrong bus altogether and should be shown off the bus as quickly as possible. Assuming they are in the right seat, it’s likely they simply don’t understand what the expectations are on a day-by-day and hour-by-hour basis. They stay busy throughout the day and go home at night after putting in a hard day’s work. They want to live up to our expectations. It’s really our failure as managers to create consistent feedback about what our expectations are and provide rewards to keep them focused on meeting those expectations.
Fortunately, I’ve found a straightforward solution to solve this problem. The first step is to boil each employee’s job down to three or four metrics that measure their effectiveness in the job they are doing and set attainable goals for those metrics. You likely already do this for salespeople. Their metric is new sales and their goal might be to sell $10,000 of new project work and $1,500 of new monthly managed services.
With a little thought, we can do this for every employee in the company, from technicians to admin people. For example, for a managed services help desk technician, our goal for them should be to work with the rest of the help desk technicians to keep the managed services mean time to ticket resolution (MTTR) below five hours, keep the positive customer satisfaction (CSAT) responses above 99 percent, and keep the ticket response time within our service level agreement (SLA) that we have with our customer.
For an admin person responsible for collections and billing, our goal might be to keep accounts receivable day sales outstanding (DSOs) below 45 days, to do invoicing weekly, and to respond to client billing issues within one hour. All the metrics I have mentioned can be calculated or tracked using your PSA and accounting software.
The second step is to ensure employees are aware of their numbers on a consistent basis. For many metrics, there are tools either built in to your PSA or available as an add-on that can display the current numbers in real-time. Others, like DSOs, may need to be manually calculated. It’s important if the metrics aren’t automatically generated that they be provided regularly to the employee, which means at least weekly. Waiting until it’s too late for the employee to improve the number defeats the purpose. Employees need to know where they stand relative to the goals you have set for them.
The third step is to pay a meaningful monthly bonus to employees if their metrics meet or exceed their goals. By meaningful, I mean it must be enough money that it has a significant impact on their paycheck. I like to target 20 to 30 percent of their compensation as bonus dollars, with some or most of those dollars shifted from their base compensation at the outset of the program.
It also must be tied to the revenue they are responsible for and not just an arbitrary dollar figure. That means that they can earn more as revenue increases, and thus their workload increases. For example, the bonus for our managed services help desk technician should be based on the total monthly managed services revenue and should be pooled across the entire team of help desk technicians. This encourages them to work harder and find ways to be more efficient as the workload grows. From their perspective, they are creating their own pay raise as the piece of the company they are responsible for grows. In other words, their interests become aligned with yours as their efforts become aligned with your expectations.
Once you roll out a bonus program, the challenge becomes doing the calculations needed each month. You could do that with complicated spreadsheets, but users of the ConnectWise Manage PSA also can utilize a tool I co-developed called MySlice that helps you design your plan and then automatically does the math for you.
No matter how you run the numbers, a meaningful bonus program will solve many of service delivery problems you face daily.
About The Author
David Wilkeson is CEO, MSP Advisor, and Cofounder of MSP Gadgets. He is a serial entrepreneur with more than 28 years of experience building technology companies, the latest being a 100-employee Managed Services and Cloud Services provider. Since 2013, David has been helping MSPs throughout the U.S. and Canada to scale and refine their businesses through one-on-one coaching and consulting.