4 Managed Services Business Changes You Should Make Right Away
By The Business Solutions Network
This MSP made four decisive changes to its business, resulting in 10 percent recurring revenue growth last year and up to 20 percent projected growth this year.
CTG (Corp Technology Group) Tech
Founded:
1982
2015 Sales Growth Rate:
10%
2016 Projected Sales Growth Rate:
15 to 20%
Employees:
15
Phone:
(817) 557-4091
Website:
www.ctgmanagedit.com
Verticals:
construction, healthcare, manufacturing, SMB
Vendors:
Bitdefender, Cisco, ConnectWise, Cytracom, IBM, LabTech, Lenovo, Microsoft, Open-Mesh, StorageCraft, VMware, WatchGuard
Distributors:
Ingram Micro, Tech Data
Hosted VoIP Is A Big Win For The Channel
When Kevin Welch was first introduced to hosted VoIP provider Cytracom at an ASCII event last year, his first thought was that Cytracom’s offer sounded too good to be true. Welch, who is a partner at managed services provider (MSP) CTG Tech, is familiar with VoIP, including the thousands of dollars of training and equipment purchases required just to get started. “The person speaking at the event, whom everyone called ‘Texas Tim,’ said all the hardware was free, the solution was sold only through the channel, and only two people at our company had to go through a certification process before we could sell it,” he says. “Any initial reservations we had about trying it were further alleviated after Tim explained there were no long-term contracts required for customers or partners — it was sold as a monthly subscription.”
Within a week of the meeting, Welch and another CTG Tech colleague completed certification training, received a free demo phone, and made their first sale to a 15-employee customer. Shortly after that, the MSP landed a 20-handset deal with a small salon chain. “What made this project so memorable was that the salon owner had spent $30,000 on an on-premise phone system just two years prior,” says Welch. “The system had been unreliable and complicated to use since day one, and the owner was at his wits’ end. I left a demo phone with him and asked him to call me in a week with any feedback. He called me back two days later on the demo phone to tell me his legacy phone system was down again. Today, he’s paying us $150 per user, which includes our bundled VoIP and managed services offering, and he’s been able to eliminate the analog phone lines he was paying for previously.”
One thing Welch says makes it easy to sell Cytracom is the simplicity of its sales model. “Clients have two packages to choose from — limited or unlimited — based solely on how many simultaneous calls they anticipate,” he says. “If a client projects more than 50 percent of its available lines being in use at any given time, we recommend the unlimited plan. Plus, if their call volume grows, we can order additional lines on the fly.” What’s nice, too, he says, is that the Cytracom hosted VoIP solution is a fit for customers of all sizes. “We have customers with only five lines using it, and we are currently talking with a prospect that will need 600 lines, and they are a good fit for this business phone system, too,” he says.
Welch says Cytracom’s channel focus is another differentiator. “Unlike lots of other VoIP vendors that try to sell through the channel and direct at the same time, Cytracom is 100 percent channel-focused,” he says. “Plus, they were started by an MSP who understands the struggles and challenges of other MSPs, and that’s why they have gone to such great lengths to overcome the obstacles that used to accompany VoIP sales.”
According to Kevin Welch, partner, CTG Tech, referrals become customers nearly 90 percent of the time compared with cold leads, which have less than a 5 percent conversion rate.
Photo By Tim Schermerhorn
One of the hallmarks of a successful managed services provider (MSP) is its ability to adapt to change. When Microsoft announced it was ending development of Windows Small Business Server (SBS) in 2012, for example, MSPs’ flexibility was put to the test. Some IT solutions providers dug their heels into the ground and avoided talking about or selling any cloud-related solutions and services. Others responded to Microsoft’s announcement by learning about what the cloud offered their customers and figured out how they could profit from the cloud, too. Many of the solutions providers who refused to adapt to the change saw their revenue and employee counts dwindle.
Fortunately, CTG (Corp Technology Group) Tech does not fall into the resist-change-at-all-costs category. In fact, even among other agile companies, CTG Tech stands out as exceptionally proactive. Within the past two years, the MSP has made four deliberate changes to its business, each contributing to its year-over-year double-digit growth.
Change #1: Get Rid Of Ineffective Sales Processes
It’s not surprising that one of the first areas CTG Tech would focus on was its sales processes, asking questions like, “What is our average sales cycle?” and “Where do our best leads come from?” What is surprising is what the MSP concluded at the end of this exercise — get rid of the sales team. “Despite setting up multiple sales appointments each week and taking up hours of our salespeople’s and managers’ time, we still had less than a 5 percent close rate,” says Kevin Welch, partner at CTG Tech. “Our conclusion was that it was much harder to convert someone who did not know our company than someone visiting our website and actively looking to replace their current IT person. Prospects in this latter category became customers 90 percent of the time. So, that’s where we chose to focus our efforts.
Change #2: Get Serious About SEO (Search Engine Optimization)
Building online relevancy used to be a matter of having lots of relevant keyword tags on your website. Search engines like Google, which owns 89 percent of the search market, would give higher scores to sites with more keywords. In 2011, however, Google changed the rules by releasing a new search algorithm, called Panda, which looked beyond keywords to more complex factors such as content quality and links contained within a website.
A year after introducing Panda, Google released another significant algorithm — Penguin, which was designed specifically to demote sites that Google believed were using unnatural backlinks to garner high rankings. This meant that SEOs who formerly solicited links to their sites regardless of the source had to start paying attention to those details.
Today, there is a large number of companies that try to follow proper SEO protocol, but still wind up being penalized by Google’s algorithms. Although CTG Tech was having fairly good search engine rankings on its own, it recognized that to optimize its online sales leads, it needed to hire an SEO expert. “In addition to removing content and links from our site that could potentially cause us to be demoted by Google, our SEO person helps us develop original content and establish effective outbound links,” says Welch. “We’ve also been focused on creating city-specific search pages to increase our search relevancy in specific geographies. For example, if someone is looking for ‘IT support in Amarillo, TX,’ our search page [www.ctgmanagedit.com/amarillo-itcompany] shows up on the first page in the top spot. We’re using the same strategy to promote our business phone systems [e.g. www.ctgmanagedit.com/business-phonesystem-amarillo].”
The MSP’s SEO efforts didn’t end there. Last year, it purchased a new domain (www.cgtmanagedit. com) and changed its name from Corporate Technology Group to CTG Tech. Presently, its former company name and domain (www.ctgyourit.com) are still active, but the plan is to phase out the old one in time. “Our old site still performs well despite having mostly syndicated content, which is why we opted to build a new site with fresh content,” says Welch.
“It was much harder to convert someone who did not know our company than someone visiting our website and actively looking to replace their current IT person.”
Kevin Welch, partner, CTG Tech
Change #3: Actively Drive Traffic To Your Website
In addition to improving its search engine ranking, CTG Tech promoted its blogs and other thought leadership content on social media sites. It also incentivized its active customers to provide leads. “As soon as we close a support ticket, we’ll send the customer a follow-up message that includes details about our latest customer referral promotion. The prize might be the latest iPad or Surface Pro tablet or a similar high-value item. To earn the prize, the customer must refer us new business. As soon as the prospect becomes a client, the referring customer receives the prize, plus we waive the costs to manage the device. This has been a huge hit with our customers, and it’s netted us several new clients. Our close rate on these referrals is nearly 90 percent, which is more than 18 times higher than the cold leads we used to receive from our sales team.”
Change #4: Make Customer Relationships Stickier With Hosted VoIP
CTG Tech has been a long-time believer in selling VoIP, despite the high costs and low margins it experienced early on. “Not that long ago, an MSP had to invest at least $30,000 in VoIP equipment, training, and a demo kit even before it started selling it,” says Welch. “Plus, only a small percentage of our target audience saw enough value in the technology to make the switch.”
Less than a year ago, however, CTG Tech was introduced to hosted VoIP provider Cytracom while attending an ASCII event (see sidebar on page 18, to learn more about Cytracom). “After experiencing the value of hosted VoIP ourselves, we started presenting it to our customers and right away 20 percent of our clients were ready to make the switch, and the rest were at least somewhat interested,” says Welch. “Unlike on-premises systems, there is no $5,000 PBX (private branch exchange) appliance clients need to purchase, and setting up a pilot test is simple. We just plug an IP phone into the customer’s router, use the Windows interface to configure the system, provide a brief tutorial on how to access some of the advanced features, and stop back in a week to get their feedback. More than 75 percent of the time, customers buy it after trying it.”
Not only has hosted VoIP become a new and viable revenue stream for CTG Tech, Welch says it’s enabled his company to keep competitors from trying to steal its customers. “Phone providers are trying to move into the IT networking and infrastructure space,” he says. “MSPs that refuse to address this reality now may find themselves losing clients to companies that can provide comprehensive IT solutions and services — like our company offers.”