This series of articles is about building a successful managed services business; and this particular article shares my observations and discoveries when engaging dealers who want to include managed service deliverables in their go-to-market strategy. Just saying that you’re a managed service provider solely because you’re in the industry isn’t enough. Trying to define what you should or shouldn’t sell is difficult and must be thought through carefully. Assuming that your research and fundamentals are done, your go-to-market strategy is the process of successfully taking offerings to your market to achieve certain objectives, usually surrounding revenue, profit, or market-share.
An organized and well thought out go-to-market strategy that is REALLY in play, is pretty hard to find. A good go-to-market strategy connects your key business objectives to a road map of execution and is bigger than any one product. Defining your key business objectives is all about what YOU want from your business, and your go-to-market strategy should define what products or services that your MARKETPLACE needs or wants from you!
MFP dealers often share and feel that they are qualified to sell managed print services just because they sell printing hardware. The comments I hear are, “We already lease and service long term MFP contracts so we’re definitely qualified to sell MPS.” This could not be farther from the truth and could be dangerous to your core hardware business revenue if not well thought out. Unsuccessful and non-profitable MPS contracts are everywhere and are referred to as “the one that taught us a lesson!” If you haven’t reviewed the full life cycle of MPS, including sales training and existing talent, installation and implementation, account management costs and requirements, I suggest you take a serious look, because without the proper go-to-market details, you may cause greater harm to your company or bottom-line than the income it may produce.
So let’s zero in on these topics and I’ll share some of the challenges I’ve seen that seem to prevent, and sometimes collapse, go-to-market efforts:
Designing the Right Sales Team
I won’t say that it’s impossible to take your existing hardware sales reps and train them for managed service sales. I will say that the number of sales reps who successfully make this transition from hardware to managed service sales (without proper training) is few and far between. Over the last few years, I’ve participated in 350-400 C-level presentations where I was invited by a dealer to participate in the call. I can tell you that over 40% of those appointments were blown in the sales rep’s opening sentence. The hardware sales rep that focuses 100% on selling hardware will ultimately only care about selling hardware. It will come out of their mouth very quickly as the best way to help a client solve their business issues, and may cause a business leader to completely disconnect from any 1st appointment presentation. Ask me how I know!
When you inject training into your go-to-market strategy for selling MPS, that training should not come from a biased source, meaning someone who wants to inject their business model into your sales process. Sales training should be pure and directly benefiting you and your target. MPS training from a hardware provider, most likely, will train the sales rep that the solution to every client problem is in the replacement of “old worn out devices” with the new “latest, greatest device.” MPS training from a supplies vendor may possibly train that “old devices,” or the devices in play, are ok because they can sell you any supply you may need. Be careful when you absorb what’s there. You may undermine dealer profit potential and client savings opportunities.
A great go-to-market strategy, and the differentiation that most dealers scream for, will include training that focuses on what the client/prospect views as their greatest need. Any training should align and deliver a well informed, business capable sales rep that can speak to and understand a C-Level target. Effective sales team training will align with your go-to-market strategy and create sales reps that can deliver solid value without a preprogrammed destination.
Your go-to-market planning must include WHO will sell your services, and if that person doesn’t exist within your company, you’ll have to find them. I’ve written many profiles for dealers to define this person, and it isn’t typically someone who has hardware experience, or a network or technical background. It is a professional sales person; someone with extreme business sense who understands the strategic and tactical practices of business leaders and why they would choose managed services as a viable path forward. This person is going to cost you more than the typical MFP sales rep, so plan for it and build it into your go-to-market strategy!
I want to include a few comments on observations I’ve made in today’s sales team model; however, I’ll be brief because I will cover this topic in detail later in the year. Considering and balancing most companies’ requirements for both client retention and net new growth, few hardware-centric sales teams are producing consistent and successful hardware sales results today. Incorrectly adding managed service quotas on top of a stressed hardware-centric sales team reduces focus on the sales of core hardware solutions and may risk the overall health of the organization. Thus, some organizations keep their managed services sales reps separate from their hardware sales reps. Although I’ve seen a few succeed with this model, mostly I’ve seen a revolving door and failure on the side of the managed service specialist. It seems that no matter how the managed services specialist is laid over the account base, the MFP rep typically sets the law on how and when someone will approach his or her account. Designing a proper sales team model is very important and contributes greatly to the go-to-market success of any company transforming into services. The sales team of the future is different than today and it must be changed!
The Sweet Spot
A go-to-market strategy will definitely define the proper title, company size, and sales process required to reach the market. These are three very important seldom-defined contributors to going to market. Let’s break it down; no one will argue that every company could benefit in some way from an MPS type of engagement, but every company doesn’t need, want or welcome a conversation around outsourcing or managed service deliverables. So, you have to define what size company would most likely welcome the value and benefits gained from an MPS contract.
Let’s face it; if the company is too small, although the benefits of MPS are real, they may not feel the benefits outweigh the risk. If the company is too large, you may have to continually jump through hoops and timelines that completely destroy your ability to forecast. Therefore, the go-to-market strategy definitely defines a company profile, in your market, that you feel most welcomes the benefits of an MPS engagement, your sweet spot! Defining the sweet spot almost always improves forecast accuracy and sales process timelines. When your sales organization understands who you want to approach, there are typically less “one offs” fed through your funnel, thus creating a more manageable win ratio.
The Right Target
Finally, let’s talk about the proper target. Our industry has been reduced to a commoditized mentality, and as such, price is the only value that can be typically identified. When you look at the typical targets inside of our industry, you can find that the majority of hardware deals are executed with a middle manager, I.T., or purchasing. Over the several years I’ve tracked dealers’ forecast accuracy, as the chart below indicates, the greatest accuracy comes when business strategies are discussed with strategic positions, namely the CFO or CEO. That rarely happens in today’s sales approach and thus price is all that’s left to discuss.
It’s not hard to understand that strategic maneuvers are planned and decided on by strategic titles. A 2009 survey published online from CFO.com presented statistics sharing that 83% of the time companies required their CFO to be involved in the signing of a contract. I can only imagine that today’s economy has increased the financial pressure to keep the CFO neck deep in financial contract approvals. It’s important to understand that most companies in the typical sweet spot will have a CFO. However, if you don’t have a CFO, share your values with the most senior, financially concerned officer of the company. NOTE: Do not fool yourself. A Controller title is typically NOT your target, as they are more likely the manager of accounting and probably answer to an owner.
Why then do we still push our sales reps into begging for a business session with I.T. and Purchasing? Is there business to be had there? Sure, but look at the forecast accuracy above and tell me where is the best return for time invested? The go-to-market strategy must consider this type of information as you build your market’s plan. Managed service offerings weren’t created by our industry and are almost always secured by approaching the strategic leaders of any company.
Installation and Implementation
One of the reasons that your go-to-market plan must define your sweet spot target is that the organization behind the sale must be able to deliver and support what sales brought in. I get 2 to 3 calls per month telling me that a dealer is about to lose their largest account. When I ask why, I’m told many times, “They’re not happy with our support!” In over half the times, those dealers have secured business that their company cannot support properly which exposes no real go-to-market plan at all! Knowing when to walk away is one of the best business builders there is!
This is not limited to smaller dealers; it has the most to do with planning the approach and growth of your company.
Account Management Costs and Requirements
Not establishing the proper account management processes and structure can have the same result and overwhelm your company, thus deteriorating a client relationship or your reputation simply by failing to manage an account well. This can be that the client feels let down due to lack of account management OR it can be that your organization is now worked to death to support only one client, all proving that the need to define the go-to-market strategy is real. Should the go-to-market plan define a certain percentage of growth, then the support team and account management group’s personnel and technology needs to grow with it and those costs must be accounted for, which can make a deal less profitable and should affect your commission structure.
One thing I believe we fail to do with our current accounts, especially with MPS clients, is to remind them constantly of their old ways and failures vs. the new ways and successes we deliver. This is especially important when there is a change in the CFO position. Remember, if you’ve done a great job of taking care of a client and they get a new CFO, the first thing they’ll want to do is validate their existence, and cutting monthly expenses is where they’ll go! If you don’t engage the new CFO with the same value proposition and facts quickly, their first question is going to be, “Why are we paying this company so much money every month?” They’ll dig in and try to reduce monthly costs, especially targeting larger monthly bills. And that’s you!
Account managers should be on the lookout for anyone who is becoming distant and, of course, turnover in a strategic position! Remember to remind your clients every month that they are spending less, and that they have more control and visibility over the way it used to be! If possible, on every monthly statement, show them that the $6,500.00 a month you’re charging them today is $2000.00 a month less than the $8,500.00 a month they were spending before they engaged you. If you add new devices into the current contract, always add the same increase to the old totals to give the proper perspective. If today you bill them $6,500.00 per month, and you inbound two new devices that will raise their monthly expenses to $6,800.00 per month. Remember to show them that (under their old way of doing business) the $8,500.00 would now be $8,800.00. Always keep them informed!
A final note for those who may feel that managed print services has reached a commoditized state. As long as there are significant economic challenges, and I believe they’ll be around for quite a while, business leaders will seek great ideas for driving cost management and best practices. Remember most CEOs receive year-end bonuses based on their performance, company growth, and profitability. Hire and train your team with that mentality. Your go-to-market strategy is a secret weapon, and since most businesses don’t implement one, you have an advantage. If MPS is an over-used, worn out phrase, build your go-to-market values around a different identifier. Include a reach and value that goes beyond most MPS providers. Combine and bundle technologies so you are different. One thing is for sure, in every meeting I’m in, every executive I meet is looking for better ways to compete in their marketplace, and that’s what you deliver!
The go-to-market strategy defines and streamlines your business’ execution to your marketplace, and although it may sometimes waver, it does create focus and guides current and future execution with intelligent intent.
