Everybody makes mistakes and the dealer community has made its share as they struggle to make a go of it in the Managed Services business.
This month in the print version of ENX magazine the main feature is “Managed Services Made Easy.” The individuals we interviewed for that piece had a lot to share on the topic of Managed Services, but not all of it could fit into the article. As a result we are presenting additional Managed Services coverage in ENX/The Week in Imaging. Last week we explored some of the fears experienced by dealers regarding Managed Services. This week we examine common mistakes made by those who have entered the Managed Services fray.
One common mistake that gets referenced again and again is making the Managed Services sales compensation the same as selling hardware.
“I see it over and over again,” observes says Charles Lamb, president & CEO Mps&it Sales Consulting. “You have to understand that ‘Services’ does not have hardware in it at all. Many dealers say they’re selling services, but the reps don’t get paid a dime until hardware moves. That’s a big mistake. If you want to drive long-term contracts for Managed Services you have to rework your comp so it pays the reps on what you want. Reps are coin operated so if you want to sell services, you’ve got to get there.”
He adds that it’s equally important to deliver service that fits your client’s needs.
“It’s possible they don’t need more hardware, but need better cost management controls and increased organizational performance. Those are the things you’re actually selling.”
A competent team is necessary as well. “It’s a big mistake to leave Johnny in there when he can’t portray the higher value tangible benefits,” says Lamb
-
- David Pohlman
-
- Charles Lamb
-
- Britt Siedentopf
-
- Dean Swenson
-
- Nick Pegley
Another mistake he sees is placing Managed Service sales reps on top of an existing hardware sales team.
“So you immediately create a sales team model that is going to fail,” states Lamb. “Their objectives are different. At the end of the day, one is there to sell the box while the services guy is going to slow down the box, so there’s a conflict.”
The mistake that David Pohlman, Office of the President/COO, GreatAmerica Financial Services Corp. cautions against for dealers coming at it from an office equipment background is approaching every customer as a potential Managed Services customer.
“That’s largely true in the core businesses and the background we come from, but for Managed IT, at the max, maybe 20 percent of your customer base is probably a right fit for the right price, right delivered Managed IT Services,” he says.
What he means by that is that these are the people who are willing to engage with the dealership to create a win-win situation for both parties where it can be scaled and scaled profitably.
“Where people seem to make the big mistakes is when they start taking on a lot of accounts that aren’t interested in engaging in a win-win; they want you to do bits and pieces for them and in the end it’s not a good fit for Managed IT Services because you’re not going to be able to scale it and scale it profitably,” says Pohlman.
Another mistake is falling into the mindset that whatever the customer says they want is what the dealer should deliver.
“That’s the kiss of death,” states Pohlman. “If you’re going to take over the accountability and responsibility for managing the IT infrastructure the quid pro quo to that is you get to have a say in the platform and the structure that you’re committing to support it on. No organization can support a wide array of technologies and do it effectively. The best way to approach this business and scale it profitably is to have consistency in what you’re supporting day in and day out.”
He adds that techs will see the same issues day in and day out and the dealership will become efficient at running IT for someone and then be able to scale a business and scale it in a way that produces a good economic result.
“If you’re trying to support a wide array of things there’s no way to do that effectively and you end up with an unhappy customer and make no money,”
Another common mistake occurs during the assessment process.
“Once they get a customer that’s interested, but haven’t closed the customer yet, the dealer will send the engineer out to do an assessment, but they’re not sales people and that’s a problem,” says Britt Siedentopf, managed services manager, Leapfrog Managed Services by Muratec. “They need someone to do the assessment who understands business and can sell. Ultimately, the customer doesn’t care what’s wrong, you need to present to their business goals and objectives and pain points.”
On top of that that process must be quick because time kills deals, contends Siedentopf. “For most dealers this takes 30 days. That’s plenty of time for the current IT company to fix things. Then all of a sudden the customer is happy again. You need to get the assessment and recommendations down to a week.”
Dave Sobel
“The biggest mistake I see is that people assume they’re going to instantly get their Managed Services right and that they’re going to go out and sell a ton of it and it’s going to be incredibly profitable from Day 1,” says Dave Sobel, Director of Partner Community at Logic Now. “What I oftentimes find is the first one to three deals are very profitable, but deals three to five collectively cause pressure on the organization. It’s good positive pressure and proves that the model works and you’re learning the cost of service delivery, but when you pressure your sales team and they go out and find 10 deals right away it creates pressure because oftentimes they don’t understand the cost of delivering service.”
He says this can be a problem when a dealer makes Managed Services an all you can eat offering when they haven’t learned all the ways they truly want to onboard and how to ensure the environment is a stable one.
“They move too fast and that can cause strain in the organization and service problems,” states Sobel. “That’s why I recommend the style of transition I do (See original article.) because you’ll learn a lot of the business side of things before you add the higher risk of also including labor costs.”
Partnering with the wrong partner was one mistake that Dean Swenson, President of The Swenson Group recalls making in his dealership’s initial foray into Managed Services.
How’d that happen?
“What we learned is we needed to partner with an established organization that has instant credibility. Our first venture we were trying to establish things and people were asking for references and we had none. Working with All Covered we can say we’re in this space with our partner and they’ve been doing it for 20 years.”
The final mistake is not completely committing to a Managed Services initiative.
“Dabbling is one of issue we see,” observes Nick Pegley, VP marketing, All Covered IT Services from Konica Minolta. “Anything less than a full commitment is a challenge to execute.”
