Where's Your Next MSP Client Coming From?
By Ben Spector, Zomentum
Where is your next client coming from? If you're not sure, you're not alone. Sales often take a back seat to service delivery for managed services providers (MSPs). I know from experience; I ran my MSP for almost a decade and am quite familiar with the pain of selling IT services to small businesses.
Of course, you and I both know that filling the sales funnel with leads is step one, but where are all those leads coming from?
If you're like many MSPs (mine included), you've built your business on word-of-mouth. There's nothing wrong with that; it's how many businesses get off the ground. More importantly, it means your customers value the managed IT services you provide enough to recommend your MSP to other businesses. That's invaluable! However, if you're honest, organic word-of-mouth alone doesn't create a consistent stream of leads. To grow and scale, you need a more reliable sales pipeline. For tech-led organizations, the trouble often is knowing where to start.
Where Should MSPs Start To Build A Sales Pipeline?
The stages of the sales funnel go by different names depending on the source, but for this discussion, we will envision Awareness at the top, or widest, part of the funnel, followed by Consideration, Decision and Action/Purchase as the funnel narrows from leads to prospects to customers.
Let's define the stages:
- Awareness: The buyer's journey begins with making potential customers aware of your MSP's services or products.
- Consideration: Prospects begin to develop an interest in your product or service.
- Decision: Prospects evaluate your product against competitors or their own goals.
- Action/Purchase: Once satisfied, the customer purchases your product or service.
More recent representations of the customer journey resemble a life cycle with Action now followed by Advocacy, wherein satisfied customers help you generate new leads through referrals, testimonials, etc. (Here's where you can add processes to capitalize more consistently on positive word-of-mouth that you're already generating. More on that later.) Advocacy, in turn, drives Awareness, and the cycle starts anew.
How Can MSPs Generate More Customer Leads?
Whether you prefer a funnel or a flywheel, I think we can all agree that the more people you reach, the more people will be interested in learning about your product or service and eventually purchasing it. As a result, you can begin to identify where your next client is coming from by looking at your reach. In other words, how are you reaching out to build awareness about your services and solutions?
Rather than leave awareness-building to chance (e.g., word of mouth), take control of outreach the same way you have with service delivery.
Without a defined, repeatable process, your service delivery organization would be so inefficient that it would eat up margins and drive away paying customers, tarnishing your reputation and ability to gain more customers. It's unthinkable that you would leave service delivery to chance.
If you take only one thing from this blog, it's this: Think of selling in the same way you do service delivery – a process critical to the health of your business.
Let's start with building awareness to generate leads. Begin by asking the following five key questions about your approach:
- Is it targeted?
- Is it intentional?
- Is it convertible?
- Is it measurable?
- Is it repeatable?
- Is It Targeted?
Before you begin any outreach or campaigns, you need to know who you are targeting. The hard truth is at least half of your prospects are not a good fit for what you sell.
Instead of a “spray-and-pray approach,” focus your outreach on tactics that put you in touch with prospects that fit your Ideal Customer Profile (ICP). A quick way to identify your ICP, look at your most profitable customers (not necessarily the largest) and contrast them with the least profitable or the ones you've lost.
Of course, your ICP should look at the business characteristics (size, industry, location, etc.) But it also should include the decision makers (and influencers) inside the organization. People buy from people, after all. For example, your ideal buyer or buyer persona might be:
- The IT manager or business owner
- The IT budget-holder
- Open to new technology
- Views IT strategically
- Is It Intentional?
Outreach to build awareness of your company and its offerings should be deliberate. Plan and set goals. Decide how you're going to create awareness. A range of tactics can be used alone but are more powerful when layered, such as PR, advertising, email, trade shows, and, yes, even word of mouth.
Here's a tip you can implement right away to capitalize on those positive word-of-mouth referrals by being intentional.
Bake it into your sales process – ask customers for referrals when they sign or during quarterly business reviews. But you can go a step further and create a formal referral program that incentivizes your customer contact (a personal gift works well) and the business they refer (an exclusive discount). Everyone gets something, and you get a new paying customer.
- Is It Convertible?
As you move through the sales cycle time and again, pay attention to which outreach tactics produce the most conversions. Then look at the time and resource investments that produced those conversions to determine what outreach tactics provide the best return on investment (ROI).
For example, is three days of cold calling by one salesperson resulting in one new customer worth doing when three people at a three-day conference enabled you to close 10 deals? I'm not saying you shouldn't do both – calling is ongoing and events are point in time. I'm saying that you should analyze the ROI and prioritize.
- Is It Measurable?
Speaking of ROI, you'll need a way to measure the success of your outreach tactics. How many leads did you generate? How many were qualified as potential customers? How many became sales opportunities? How many requested proposals? How many converted to customers? And what is the projected retention rate? What is the customer lifetime value?
As you grow, tracking these Key Performance Indicators (KPIs) becomes vital to your strategic planning. After all, true pipeline management means you're able to forecast how much revenue and cash flow is coming into the business to invest in growth, e.g., people, systems, and more marketing!
Remember: Just as you optimize your service delivery operations, you need to optimize your selling process to drive performance. Measurement is key.
- Is It Repeatable?
Building a sales pipeline is a lot of work, but it can be simplified with repeatable processes. This exercise is no different from what you've done with your service delivery organization to make sure it hums along with only a few hiccups. Start by,
- Documenting a sales process to help your team build new habits,
- Define sales roles - for example, who's hunting and who's farming,
- Leverage sales automation tools to guide and reinforce the processes.
- Pay close attention to what works and what doesn't.
And most importantly, share learnings among your sales team to improve conversions.
So, Where Is Your Next Client Coming From?
Building awareness in a targeted, intentional, convertible, measurable, and repeatable way is a sure-fire way to jumpstart your sales engine. And you'll finally be able to confidently answer the question, "Where's my next client coming from?"
About The Author
Ben Spector is an ex-MSP owner turned Product Manager for Zomentum, creators of the first Sales Acceleration Platform for the IT channel. He leverages his previous experience running a managed service provider (MSP) organization to shape Zomentum's development roadmap. Spector spent nine years as Founder and Technical Director for U.K.-based SpecTronics, a successful IT managed service provider, which he grew to support more than 100 clients and sold in October 2020. Following the sale, Spector was introduced to Zomentum while consulting with a London-based MSP on service delivery and business processes. After the first demo, he was so impressed that he joined Zomentum to become an advocate for the MSP community in perfecting a platform to solve sales problems for MSPs.