How to sell service management
How To Sell Managed Services (Part 1)
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hey guys robin robbins here founder of
technology marketing toolkit.com where
we work with vars msps i.t service
companies to get more and better
quality clients through strategic
marketing systems and um
i had something that came up that was
really interesting on our member portal
we've got
you know thousands of members who log
into our member dashboard and we've got
this thing called the queue
stands for questions updates exchanges
it's a private member group
and a lot of great questions and
discussions happen there but this one i
thought in particular
was interesting and i'll summarize it
was from
ron rothstein and he actually was asking
i that he needs a good elevator speech
if you will for managed services because
he's got
clients that are paying for block hours
and
uh you know he's approaching them to
switch to managed services and he's kind
of struggling with
you know why should they sign up for
managed services versus what they're
doing now
now that's not necessarily even the most
interesting part of this discussion
what i thought was really interesting
was that a member posted
hey you don't need to sell managed
services to be proactive i mean that's
the whole
you know everybody would say well that's
why you need managed services because
we can be proactive and her point was
you can do that with block hours you can
still deliver managed services if you
will
proactive support and do it under a
block hour contract
and she's right you can do that but my
argument is you never
want to sell block hours there's a
reason for that there's actually a
couple reasons
one is that block hours focuses the
client on your hourly rate instead of
the value
that you're bringing and when they're
focused on the hourly rate
instead of the value that you're
bringing they're always going to be
worried about price you know and then it
invites price shopping because there's
always somebody they can find who's
going to do it cheaper
you know okay you want to charge 120
an hour and they're going to say well
hey wait a minute bob down the street
charges
only a hundred dollars an hour you know
you're a lot more expensive so i'm going
with bob down the street
what they don't realize is bob down the
street doesn't know what the hell he's
doing
and so he's mucking everything up even
though he's cheaper
or he might take three hours to fix
something because he's not as
experienced or he's putting a junior
tech on something
and so now you're paying for three hours
instead of what could be done
in one hour so that's one of the reasons
i don't like
selling by block hours the second reason
is now the client feels like they have
to keep count
you know were you really here eight
hours i thought i saw your guy going to
lunch or did you really spend that time
because some of it may be remote
and there's no way for them to really
police that
and know whether they're getting
overcharged for the hours or under
charge for the hours
um you know and and and it just creates
a situation where
the client can be taken advantage
advantage of you know
and and to my point earlier um when you
are selling block hours
you're incentivized to do find more work
and take longer because you're getting
paid by the hour right i mean
why wouldn't you slow walk every fix why
wouldn't you give it to junior guys
you're gonna take
five hours instead of your most senior
guy who could get it done in an hour but
he's expensive right
and so when you explain this to a client
that doing a managed services agreement
where there's a set
number of services that you're going to
provide and there's a
dollar figure they're going to pay for
that see you are incentivized now to
keep
the network quiet you're incentivized
now to be efficient and
effective instead of slow walking it
taking longer than necessary to do the
job so that's another reason why
block hours actually is not good for a
client either because again
you know if you get a dum-dum you get
somebody slow you get a junior guy
etc you know the client could end up
spending a lot more
and then the other reason for that is
you on the other side
if let's say you do a really good job at
running your business you hire really
good quality people
you have systems and processes in place
you um
you know how to resolve tickets quickly
so in other words you're really
efficient
now if you're really efficient that
profitability
should go in your pocket but if you're
doing block hours
you lose that that advantage you you
lose that profitability
because now like everybody else in the
industry let's say it would take them
five hours to do a project
it takes you maybe four hours to do a
project because
you're efficient good at hiring good at
managing good at
organization all those things so that
profitability should go in your pocket
because the value is the same to the
customer right so again
that's what these are reasons why i
really don't like selling via block
hours and if you want one final reason
again when you sell block hours it
almost always invites
a discount conversation it's like okay
so if your hourly rate is
150 an hour but if i buy
you know 20 hours every single month
can i get a discount they almost always
are going to ask for that so again
that's another reason why
i don't like block hours so i know
you're probably thinking hey
i want to know the answer to the managed
services question so you have to tune in
for another video on that but i did want
to make sure that you understood that
selling via block hours is not
always the the best and the right way to
do things
i actually think that in some cases
selling some sort of a hybrid where
there is a managed services agreement
for a set
very defined set of recurring services
and then any additional projects that
need to happen
are quoted on a project basis and that
way
you know you get the recurring
maintenance gets done
the client knows that it's going to get
done there's a set price for that
but then any network ads extras
changes projects and so forth you get
paid for because
just like i don't like block hours the
other thing i don't like is these all
you can eat managed services agreements
where
you say hey it's all included for one
price and it really isn't because like
if their entire network burned to the
ground
like physically literally like the
building burned the ground or they had a
ransomware attack
and you had to restore their entire
network a lot of msps that sell all
inclusive would go hang on a second
we're not doing that for
just your managed services fee that's a
project you got to pay us more
and the clients well within the rights
to say hang on a second you said it was
all-inclusive all i could eat that's
what you said you know you're like the
buffet line is all i can eat right
you're golden corral of i.t so i don't
like
all you can either either so i think the
the answer to this is
manage services with again with a set
defined
number of recurring activities that are
going to be ongoing every month
then with certain things carved out for
projects that are block time
when i say block time like project and
build that way separately
maybe the best approach that so i hope
you appreciate that stay tuned for
another
video i'm going to talk about how do you
actually sell managed services what
would be a
a good way to position that um hit the
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that'd be great appreciate it and stay
tuned for the next video
