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Erick Simpson
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In my last 2 posts hereand here I discussed the worsening economy and its impact on the spending behavior of business owners, who tend to tighten their belts during periods of economic uncertainty, and look to cost-cutting measures in order to "hunker down" until the storm blows over.

 

In extreme conditions, these same business owners also look to staff reductions and outsourcing labor-intensive business functions such as HR, Payroll and IT Services, which is an excellent opportunity for the well-prepared Managed Services Provider to capitalize upon.

 

 

With the proper messaging and an effective marketing and sales process, MSPs will be more successful at winning business and more profitable in 2008 than System Builders, reactive break-fix and professional services providers. Let's explore how we can tailor our marketing message, value proposition and sales approach to take advantage of the current economic climate and increase our revenues.

 

 

4 types of service providers

 

 

Remember our 4 types of service providers, and their challenges and strengths?

 

 

  • System Builders

  • Reactive Break-Fix Service Providers

  • Professional Service Providers

  • Managed Services Providers

 

Although each group of these service providers are very different from the others, there are some strategies which can be employed by all groups to maintain and increase profits.

 

Strategies for all Service Groups

 

 

The key to maintaining and growing profits is to target the right clients initially. Generally, the more dependent upon technology a client is, the easier it is to sell them solutions that increase their efficiencies and productivity and mitigate business pain and risk. So we are looking for heavily technology-dependent clients and verticals and technology-strategic clients. Technology-strategic clients are those that see their IT investments as strategic investments to help them achieve their goals. These are the best clients to have, and economic downturns will have less of an effect on their IT purchasing decisions than it will on other clients. In fact, in many cases the effect may be the opposite, as these clients see these periods as an opportunity to gain a competitive advantage by investing in their technology and infrastructure.

 

 

These clients will more readily understand and welcome our requirements for vPro and Centrino Pro enabled desktops and laptops, as they will see these technologies as investments in maintaining their uptime, efficiencies and profitability - especially when TCO is a factor.

 

 

Messaging and Marketing

 

 

True for all service provider groups, effective messaging and marketing is the key to increasing client opportunities, but what messaging is the most effective during uncertain economic periods? Messaging that conveys the following concepts seem to work well when illustrating the benefits of vPro and Centrino Pro technology:

 

 

  • Cost savings

  • Improved efficiency/productivity

  • Pain reduction

  • Risk mitigation

 

A consistent marketing process is crucial to maintaining a consistent sales funnel of opportunities, and increasing marketing activities over historical levels for all service provider groups is recommended in 2008 and beyond. Look to vendor co-sponsoring opportunities and leverage marketing development funds wherever possible in order to defray costs. Include multi-vendor participation for local events where your message can be delivered to large groups, instead of individuals.

 

Final Thoughts

 

 

In order to maximize service revenues during uncertain economic times:

 

 

  • Reduce internal costs wherever possible

  • Look to tools and technology such as vPro and Centrino Pro, process and procedure to increase your internal efficiencies and utilization

  • Partner with other providers and vendors to deliver services as needed

  • Target technology-strategic and technology-dependent clients and verticals

  • Build deep client relationships as your clients' Trusted Advisor and outsourced CIO to ward off competitive threats

  • Leverage Vendor and Distributors' services and support offerings, as well as other benefits such as spiffs and special offers and Marketing Development Funds

  • If your client base averages less than 26 users, move up to the 26-100 user space

  • Add financing as an option to each and every Proposal

 

These are just a few of the things we, as service providers, can due to maintain and grow our profits in 2008 and beyond.

 

Erick Simpson

 

 

0 Comments Permalink Tags: managed_services, vpro
Erick Simpson
0

There has been a lot of chatter lately on the boards and newsgroups I monitor about the economy in 2008, and whether we can classify its current status as an economic downturn, mini-recession, recession, etc. It's been generally accepted by noted economists that we are certainly experiencing an economic downturn, if measured by a significant decline in activity spread across the economy, and lasting longer than a few months. On the other hand, the technical indicator of a recession is defined as two consecutive quarters of negative economic growth as measured by our GDP.

 

We'll need to wait for this quarter's numbers to see if the US economy will indeed be categorized as in recession, based upon last quarter's decline in growth, even though most economists agree we are heading that way, led by indicators such as the fall of the housing market to its lowest level since 1993, and consumer spending posting its smallest gain since 1991. The most telling news heralding the severity of our current economic climate is Sunday's announcement of the buyout of Bear Stearns, one of the world's largest and most venerable investment banks by JPMorgan, for the fire-sale price of only $2 a share.

 

So what does this economic downturn mean to us as service providers? Businesses traditionally are much more careful in their spending during times of economic uncertainty, and I.T. projects are normally among the first batch of initiatives to be placed on hold, as clients and prospects tighten their belts to weather the storm. It's important for us to identify this reality and shape our internal processes, deliverables and their supporting technologies, message and value proposition accordingly so that we can take advantage of these opportunities.

 

 

Did that last sentence confuse you? If it did, let me explain my position. If we, as service providers, shape our message, deliverables and pricing in such a way that we are seen as a cost-saving solution to clients and prospects that can mitigate their business risks and increase their efficiencies and productivity; and therefore net profits, we have a really good shot at not only weathering economic downturns ourselves, but actually growing our businesses during these periods. Sound crazy? Let's dive a bit deeper...

 

 

As a reactive service provider, we are most profitable when our clients are experiencing the most pain. If there is an outage or disaster event, we react to and remediate the problem, then bill our client. Our clients are never prepared to pay for these reactive emergencies, so the negative impact to their cash flow and operations is very high. This is the reason many clients and prospects have a less than positive opinion of I.T. maintenance costs in general.

 

 

As a proactive service provider (read: MSP); however, our relationship with clients is the complete opposite, as we are most profitable when our clients are experiencing the least pain. The better we proactively manage and maintain their environments, the higher their efficiencies, productivity and profits. The more we integrate enabling tools and technology such as vPro that reduce our service delivery costs, and utilize processes and procedures to remotely monitor and manage our client environments, the higher our staff's utilization becomes, and the lower our cost of service delivery, increasing our net profits. So in this example, our business goals are in perfect alignment with our clients' - we are the most profitable when they are the most profitable.

 

 

So how can we reduce the cost our deliverables, and improve our efficiencies with technologies such as vPro, and shape our marketing message and value proposition to take advantage of the current economic downturn?

 

 

Watch my next blog post to find out...

 

 

0 Comments Permalink Tags: managed_services

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