Let’s face it, the VAR life has been a good one. Adding services to hardware and software sales has been a huge money-maker for a long time. So, it’s no surprise that many VARs cringe when people talk about shifting to a managed services model. But business is changing, and the transition from VAR to MSP is a critical one. It's time to get in the game.
The benefits of cloud-based managed services are many, and the ability to profit is rapidly increasing. But it’s the transition that breeds most of the anxiety. Here are five things you can do to kick the stress, and transition to an MSP model.
1. Change your mindset
Being a VAR can be a tireless pursuit of profit. It’s a revenue model ripe with inconsistency through one-and-done projects. And, for many VARs, it’s time to start thinking recurring revenue rather than break/fix for the sake of survival. This is a mental shift, as well as a financial one. Thinking like an MSP is thinking about the long-term relationship. It’s about selling reasons to stay in contact—services you can manage for them so that you maintain contact to sell more services. Yes, moving to a recurring revenue model can be an adjustment—you might have to tweak your administration or revaluate sales incentives—but, over time, it will simplify and create greater consistency.
2. Change your customer’s mindset
VAR customers have been conditioned to only think of you when there’s a problem. It’s not a bad thing being top of mind when something comes up. It’s just unpredictable from a revenue perspective. And, really, do you want to only be associated with bad things? So how do you change the customer’s perception of what you do? By showing them you’re someone they can look to for insights, not just a quick fix. That you’re a force for good, not just a repair person. Focus on building the relationship: share new trends, review their processes—find reasons to talk to them every week. In short, position yourself as a Trusted Advisor. That way, you can upsell/cross-sell new managed services that help them improve their business while adding recurring revenue.
3. Improve your service level
Break/fix environments are inherently unstable. And it’s most often a drop-everything, mad-dash that sets you back as much as it does your customer. Don’t get me wrong, we all love the adrenaline and sense of accomplishment that comes with being a hero, but it’s just not great for business growth. Take time in the beginning of a relationship to stabilize these break/fix environments, and gain a thorough understanding of the customer’s environment, policies and processes. This way, you can identify and upsell more services. A broad portfolio of recurring services means consistent revenue with growth potential. Stay in tune with the latest and greatest third-party services to broaden your portfolio and key partnerships.
4. Communicate Often
As a VAR, the tendency is to check in occasionally after the initial sell. But an MSP model, specifically a ModernMSP model, provides for much more upsell and cross-sell opportunity. The key? Communicate often with your customers. Nurture through email: send a whitepaper on improving their environment, or a short survey to assess their need. Find reasons to call: tell them about a new insight they might think valuable, a new offering that will save them time, a new app that will automate a process. Most of all, offer managed services that encourage regular communication—because if you don’t, someone else will.
5. Automate everything
The bottom line: you shouldn’t spend time on anything that involves repetitive tasks. Neither should your customers. This applies to everything you do, from patches to billing. You want your operations as low-maintenance as possible so you can focus on your customers. And, equally, you want to automate your customer’s operations for two key reasons: 1) you can manage these services for them, and 2) data compiled from these services is a goldmine of new potential services. The more you automate, the more time you have to upsell/cross-sell—and the more time your customers have to implement more projects. Managed services simply offer higher value and higher margins than the traditional break-fix model.
The IT services market is one of the fastest-growing sectors in existence. Spending surpassed 900 billion dollars in 2015, and is expected to reach well beyond 1 trillion by 2019. Yes, the VAR life was a good one; but it’s a new day, one of those moments in business where you can either jump ahead of your competitors or play catch-up later. As you become a valuable asset to your customers, any recommendation you make will be met with consideration. And any service you provide will increase your long-term viability.