If you’ve been attending recent industry events, you might have picked up on the not-so-subtle fact that many print dealers are losing money on their managed IT offering. But if managed IT is the new golden goose, why is it behaving like such an ugly duckling?
Talking about managed IT is difficult because every provider’s offer is different. But I have a fairly good idea of what some dealers are doing that isn’t working in their favor. And if you want to lose money quickly, here are the ingredients many of them use in their tried-and-true recipe.
Be a Sloppy Seller
Managed print and managed IT have similar benefits. Unfortunately, IT and print experts use different tools and, in many ways, speak very different languages. Your typical sales rep won’t be equally comfortable selling both services, and unfortunately, managed IT can be overwhelming, confusing and expensive. Combine these problems into one sales call and it’s very easy for a client to say no—it’s just too big of a hurdle.
This is where you look to lower the hurdle. At Marco, talking to our print clients about managed IT is a natural progression. Because print security is included in our managed print services offering, our clients are far more aware of the risks every endpoint—even a simple copier—might be hiding. They have a better understanding of the value that additional cybersecurity could bring, and they’ve seen a sneak preview of how our team will take care of them.
We also provide existing and prospective clients with multiple ways to try us before making a big commitment. Our technology assessments make it easy and relatively inexpensive for an organization to compare our work to another provider’s and get a feel for the type of mentorship our IT experts bring to the table. These assessments present a great value, but their greater value for us is getting signatures on long-term contracts.
On the other hand, most IT providers do the opposite. They’ll offer a free assessment that includes a bunch of overwhelming data with no mentorship, and then they’ll wonder why that doesn’t inspire a sale.
Pick the Wrong Clients
We don’t work with every prospect that comes our way. That’s not because we’re inherently picky people; a client that refuses to take cybersecurity seriously is a liability. And a client that won’t update their tools on a reasonable timeline can force us into an endless (and time-intensive) break/fix cycle.
For us, a profitable managed IT client is one that allows us to focus on prevention, which is far less expensive than recovery. And in the long run, it also makes clients happier with our performance.
Unfortunately, many providers fall into the trap of working with clients that will cost them a lot of money and, as an extra parting gift, ruin their reputation. It’s not fair that a client will blame their provider for their own choices, but clients that tend to make bad choices also tend to shift the blame.
Don’t Listen to Existing or Potential Clients
One of the things I love most about Marco is that while the company has grown significantly over the last 10 years, its collective ego hasn’t. When we have conversations with clients about managed IT, we do more listening than talking. We don’t start talking about how great we are; rather, we ask questions about what problems that organization is experiencing.
If you’re asking the right questions, clients will tell you everything you need to know about why they might need managed IT and what they’re looking to find in a provider. It’s extremely valuable information, but from where I sit, most dealers are leaving it on the table.
Don’t Focus on Monthly Recurring Revenue
It’s natural for many dealers that are new to the IT space to think and behave like a value-added reseller (VAR). It’s OK to start there, but not OK to remain stuck there. Fat flat fees are nice, but if that’s the bulk of your IT business, you’ll run yourself ragged keeping them coming.
You can slowly build up recurring monthly revenue and transition from a VAR to a full-fledged managed service provider (MSP) by adding more software-as-a-service (SaaS) solutions. That requires additional research and training, but the more monthly recurring revenue you have, the more strategic you can be.
All other things being equal, those who neglect to grow their monthly recurring revenue will gradually find themselves muscled out of an increasingly competitive space. But if you’re hoping to get acquired for less than your fair market value, that’s your play.
Why Am I Telling You This?
The more that managed IT providers fail to protect their clients, the more profitable it will be for cybercriminals to keep attacking them. The more profitable it is, the more they’ll invest in strategies that will be harder to defend against.
While many of us are competitors, on a much deeper level we’re also in this together. Any managed IT provider has my respect if it advocates for its clients, tells them what they need to hear and is willing to sometimes lose business over it. And for what it’s worth, I’m also happy to provide my counsel.
