Friday, August 10, 2007

How to move your existing "break-fix" customers to IT Managed Services

One of the most difficult things you'll do as a company when moving from the break-fix model to managed services, is to convince your existing customers that they should join you or even deciding whether they are suitable to be managed by your new company. Although you may believe fervently that you can provide this service for all of your existing customers, a good majority of them won't want to pay you for something they perceive to have low value or more likely, they won't have the "personality profile" to fit your service offering.I describe this in depth in my posting 7 traps for prospective managed service providers.

The first thing to do is to define your customers in groups.

1. Residential - Get rid of them (I don't need to tell you why). Geek Squad has 10,000 "engineers" so send them there. They have no value to you as an MSP.
2. IT-Dependent: These customers understand the lost productivity in dollars per hour. They allocate budgets to IT, refresh their network, and tend to be loyal but are demanding. These are perfect for your new endevour.
3. IT-Aware: Often good prospects as they have functions to allow for continuing their business function when their systems are down. They usually have no specific budgets, but are willing to drop some cash on IT and can be loyal if you're good at what you do.
4. IT-Tolerant: Most small companies with under 10 employees (especially in hard goods manufacturing or wholesale) fit into this category. They are fair to poor prospects, as they view IT as an expense and try to minimize the expense as much as possible. They choose to be technically naive and tend to constantly shop for the lowest price for everything.

If you're a individual or a small service provider, based upon the breakdown you'll do I have to guess that the majority or your existing business customers will fit into the IT-Tolerant category. They do business with you because they silently think you're a sucker - You've always under priced your service and been highly responsive, while allowing them to get away with murder. By murder, I mean calling you at all hours; spending the time to configure systems for nothing or providing valuable consulting while allowing them to buy all their products at discount outlets and many other egregious mistakes in judgment on your behalf. Well, it's time to change this approach. There is a good reason why most of these companies have been through multiple providers before you arrived, and who most likely shared the common believe that each other were total a'holes.

First and foremost, you must sit down and explain to each and every customer what your plans are in detail. Prepare your SLA's and marketing materials beforehand by paying an expert to design them. To get a logo, a website and a brochure may cost you a few thousand dollars, but it'll be worth it. Anyway you don't have time to do it yourself.

Give your customers a specific time-frame to decide what they want to do, and if they are resistant initially, don't cave. You've been caving for years and it's now time to man up and start a real business. Don't be an a'hole but explain to them they you cannot continue to do what you're doing because you'll go out of business. In short, if you're going to commit to them, they should do the same.

You can demo your MSP software and explain how efficiently you will be able to be and that waiting for a response is a thing of the past. If they still say no, you should then walk away after your time-frame is up. You are not obligated to provide them with a "free" transition plan or a recommendation of any kind- they clearly made the decision to bail on you and now they must live by that decision. Always, and I mean always, release their admin passwords and other proprietary information to them. This way you'll keep your integrity and not act like some "old schooler".

Now it's time to look for new more appropriate customers. And those customers that embrace your new endeavor need to be pampered and treated with respect. They are paying you a consistent fee and it's your obligation to follow through. They are the key to the holy grail of MSP's - recurring revenue.


Anonymous said...

Great Post thx

Johnny Kessel said...

No problem mate! I'm glad you got some benefit