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Key takeaways

1. Pricing and billing are critically important to consistently win profitable service contracts
2. Back-office processes will be tested by the demands from scaling your MSP business
3. An increased focus on cash-flow is required, particularly for channel players early in their transition
4. There is a need to balance customer choice with the need to keep operations simple and efficient
5. Good business systems are required to drive operational processes at scale

Trends driving the importance of your pricing strategy

1. Purchasing and finance departments are increasing their influence over IT investment decisions
2. The commoditisation of IT infrastructure makes it harder to differentiate with technical features alone
3. Disruption to business models and economic uncertainty creates an aversion to capital expenditure. Technology-as-a-service becomes more attractive
4. Economic moats are getting smaller, putting pressure on cash flow and long-term capital investment. Flexibility is king.

You must have a competitive solution in place or your competitors will. We all know once someone else is running the infrastructure of your client, you have lost control.

When I first started out in the channel we operated a standard VAR model and as a result the pricing strategy was straightforward.  Building loyalty with clients enabled us to maximise gross margins by ensuring revenues exceeded the costs of goods. Maximising net profits was done in the most efficient manner by paying close attention to overheads.

Our accounts team had a simple job to collect monies as quickly as possible and pay suppliers. Consequently revenues could be recognised almost immediately. On the balance sheet we had little if any, deferred income liability. Therefore, a small back office team with off-the-shelf finance tools could handle the workload.

Building competitive solutions in data protection

The pricing strategy we needed to compete as a service provider had a much greater impact on our business. As a result, it consumed a growing amount of management time as our business model evolved.

As a pure-play data protection and backup service provider here are some of the things we considered when building our pricing model:

Pricing Metric

for backup and recovery-as-a-service we considered the following:

• Capacity stored
• Server or client count
• Data transferred
• Volume of backup schedules
• Restore requests

Invoicing frequency

• Monthly billing in arrears
• Annual in advance, with or without periodic true-ups
• Fixed or variable

Portfolio choice

We found that a service catalogue made our offering more attractive in the market by introducing several service level tiers. Operationally this meant different levels of customer response time depending on workload type or different hours of cover. Later, we brought in the use of higher performing storage classes for critical systems. This all had to be linked to the pricing model thereby increasing the complexity of our portfolio pricing.

Contract terms and pricing

We found pricing was significantly impacted by contract terms. For example, the length of the contracted period or the cancellation terms could trigger a complete re-think of our model.

If you plan to sell one or two contracts you can survive without investment in management systems. The challenge comes if you want to scale across tens, or hundreds, of clients.

Executing a well-designed pricing strategy should have a positive impact in the following areas:

1. Ensuring timely and accurate customer invoicing
2. Minimising time spent self-auditing for technology partners or suppliers
3. Calculating margins and paying commissions to sales staff or reseller partners
4. Easier filing of accounts, cash flow management and revenue recognition
5. Managing contract renewals

Whether you plan to offer a full-opex service or a basic managed model, allocating sufficient time to your pricing strategy will help you stay competitive and profitable.

Charlie joins Predatar having spent 2 years developing her knowledge of the IT Channel, working for a telemarketing company in Oxford, U.K.

Charlie’s first brush with technology was when she was chosen to be the model dancer for a video game called “Get Up and Dance”, developed for the Playstation 3 and Wii consoles in 2011. Our advice is don’t ever challenge Charlie to a dance-off!

Her new work passion is customer service and this makes her a great fit for Predatar. Like us, she believes great experiences come from the personal connections made, not just from technology speeds and feeds. Charlie will work closely with our partners to develop their customer service capability by getting the most out of the Predatar platform of automation, service management and artificial intelligence.

We thought we would ask Charlie a few questions by way of an introduction.

Q. Do you have a favourite sport?

A. Yes, because of my background as a dancer I’ve always enjoyed watching gymnastics.

Q. Do you have a favourite gymnast?

A. I’ve always admired Beth Tweddle as the first British female gymnast to win European, World and Olympic medals. I also like watching Simone Biles of the USA.

Q. What do you like doing in your spare time?

A. Taking my German Shepherd dog for long walks. Very long walks!

Q. Do you like to travel?

A. I haven’t done much travelling but I’m hoping to get out and meet some of our global partners which will be great

Commenting on Charlie’s appointment, Alistair Mackenzie, CEO at Predatar, highlighted the focus on customer service:

We preach the importance of customer service in the channel’s evolution from VAR to Service Provider, so it is important we put our money where our mouth is. Charlie will be a great resource for partners to get the most from their investment in the Predatar platform.

Please welcome Charlie to the team.

Channel Forces

The established relationships IT channel organisations hold with vendors and customers are being disrupted. For their survival VARs have had to evolve their businesses. A common reaction has been to increase the portfolio of technology and vendor offerings to try to capture every possible customer opportunity. Sounds like a reasonable strategy but it hasn’t solved the systemic problems of weak new business development and falling margins.

There has never been so much vendor choice for on-premise IT infrastructure. This at a time when established suppliers are scrambling to maintain their relevance as more workload migrates to public cloud.

What is Predatar?

Our proposition to the channel is not about selling more technology. It is a business model transformation to help it stay relevant, regardless of the adoption mix of hosted datacentre, private or public cloud.

We don’t expect that every channel organisation will embrace this evolution but we want to work with those that do. The Predatar team engages with channel executives who are excited, if slightly daunted by the opportunities and challenges the new channel ecosystem will present. We know from much experience the evolution is not easy but that’s the point, good margins don’t come easy.

The Predatar proposition helps make the transition as quick and painless as possible. This graphic I hope explains our position in the market.

If you are heading to Las Vegas for IBM Think 2018 and you would like to meet with one of our representatives, please book early to reserve a time.

Andy joins Predatar having spent the previous six years at a storage software company, developing its channel across Europe and Asia.

We thought we would ask Andy a few questions to find out what makes him tick

Q. Andy, why did you decide to join the team at Predatar?
A. The opportunity to build a global network of interconnected IT channel players is unique. It’s not something I’ve seen before despite my extensive experience in the channel

Q. What interests you most about the opportunity?
A. The IT channel is at a critical tipping point, margins are being squeezed and new business models are required to delight customers and maintain relevance. Predatar provides both the platform and the processes to quickly build a global channel ecosystem

That’s great Andy but can you tell the readers a bit about yourself?

Q. Who’s your favourite sports team?
A. Gloucester Rugby Club

Q. You’ve just been handed a sausage sandwich. Do you add red sauce or brown sauce?
A. Mustard!

Q. English, French or American?
A. Stupid question. English, of course

Q. What’s the coolest thing you have ever done?
A. As a co-driver, saloon car racing with Damon Hill in 1992, the year before he got his Formula One drive. Damon went on to win the F1 title in 1995

Q. What’s your favourite joke (keep it clean please)?
A. “I needed a password eight characters long, so I picked Snow White and the Seven Dwarves.”

Commenting on Andy’s appointment Alistair Mackenzie, CEO at Predatar, highlighted the focus on channel transformation:

“With Andy’s industry knowledge and channel engagement experience, Predatar is better positioned to really help its partners evolve and build profitable, recurring business models. We are delighted to welcome him to the team”.

Would you like to say “hello”?

Andy will be with the team when it visits Las Vegas later this month for the IBM Think 2018 conference. Please come say hello at booth #793 and if you’re nice to him he might give you a free Predatar t-shirt!

Enterprise Challenge

Today’s complex IT infrastructures are demanding new ways to manage and protect data.

The burden of owning and operating complex data protection systems is driving many  companies to investigate alternative ownership models.

Service Provider Opportunity

In recent years, consumption-based delivery models for IT services have exploded in popularity.

As increasing numbers of businesses look for ways to spend less time, effort and resources on IT, your long-term success depends on capturing a share of the emerging managed services market.

Data protection is a hot but crowded market. How will you differentiate your BaaS portfolio?

The Problem

It’s one thing to start a Managed Services practice, it’s another thing entirely to scale it and make money. 

The challenge is keeping service levels high and operating costs low. The barriers to attaining MSP status, including cost, headcount, and infrastructure requirements, have prevented many businesses from achieving this transformation. 

Customer churn and a high cost of service delivery can kill the profitability of a Managed Services business. 

Enter Predatar

If you’ve dreamt of building and growing a profitable, sustainable data protection services business, then Predatar can help make it a reality.

We offer value-added resellers the opportunity to establish new revenue streams with their own-branded data protection offerings; converting transactional buyers into loyal, engaged customers.

How do we do this?

Technology

The Predatar platform is a complete systems management solution used by service providers to manage enterprise data protection offerings built with the IBM Storage Protect Suite

Business Process

Becoming an MSP means rethinking everything; not just technology but processes too.

The Predatar Evolution Framework encompasses everything you need for a smooth and profitable transition.

Commercial models

Predatar enables service providers to offer customers more innovative and flexible pricing aligned with their actual consumption

Meet with the Predatar team while at IBM Think and we’ll give you a free Predatar t-shirt.

Drop a note to info@predatar.com to book your slot

More than a century ago, the Russian mathematician, Andrey Andreyevich Markov laid the foundations for much of the machine learning used in today’s driver-less cars and chatbot technology. He studied 20,000 letters in Evgeny Onegin, a poem by the grandfather of Russian classical literature, Aleksandr Pushkin, to predict the probability of vowels and consonants occurring in the text.

It’s a pity he had not been around a 100 years earlier to advise Pushkin on the probability of serious harm if you challenge your love rival to a duel!

To understand if Markov’s Models are relevant to the success of your MSP practice, try answering the following question?

How many times has your customer service desk received a support ticket for a problem solved in the past?

The chances are, if you have been successful for any length of time, the answer is many, many times.

The Problem

As the service provider grows it can face the following problems:

• Repetitive tasks can lead to boredom and lack of employee engagement
• Simple tasks repeated over and over again can be costly to service
• It can be time consuming and expensive to capture and recycle knowledge

The Promise of Artificial Intelligence (AI)

The market opportunity for service providers is expected to grow but increasingly there will be greater competition for profitable customers.

AI can help stave off commoditisation and margin erosion with the following benefits:

• Done right, AI can improve the customer service experience
• Reduce the time spent fixing problems
• Allow expensive resources to be re-allocated to higher level processes
• Improve profit margins
• Give you a competitive advantage

What do you need to get started?

First of all you need a lot of data to train your machine learning engine. The second thing you need is an easy-to-use interface to your new features and services. This requirement has driven an explosion in the development of chatbot technology and programming languages such as Python.

There are two types of chatbot. Bots that risk trying to parse anything you type at them, and bots that limit your input to a few safe buttons or keywords.  In the former, Natural Language Processing (NLP) is not looking for keywords in your text, like a search engine. Instead, it uses machine-learned pattern recognition to match what you say to an “intent” which has been “classified”, which means the bot has been trained to look for certain things.

Acquiring the training data and the time to program your chatbot may not be possible for every MSP but not to worry, the Predatar team has been busy working on a solution, for the benefit of our partners.

The Predatar Service Chatbot

It’s long been known that men don’t like asking for directions when lost. This is probably also true for IT experts when faced with a support issue. That’s why we have built up an extensive knowledge base so that he (or she) can ask the chatbot for help without fear of loss of face.

For every knowledge base article we have had to think “what question is this article helping to answer?”. We wrote multiple questions for each of the 2000+ articles. All the questions, answers and topics created the data set which was fed into our NLP engine to build a chatbot that can understand questions, rather than just keywords, and reply with the relevant knowledge base article(s).

NLP means that if the user does not input the exact question, the bot will still return the right answer.

Once launched, we will retrain the chatbot by studying the questions users are asking on a daily basis and storing this information in the database.

Finally

If you have been researching AI to grow your business, we would love to hear from you. Drop us a note at info@predatar.com or why not make an appointment to meet the team at IBM Think 2018 in Las Vegas from 19th – 22nd March.

Most people know the story about NASA’s “Anti-Gravity” Pen from the 1960’s. The story is part myth but supposedly NASA spent $1 million attempting to build a pen that would work in outer space whereas the Russians simply handed their cosmonauts pencils.

True or not, I think about this story when marvelling at the success of Amazon Web Services, the public cloud pioneer. When most of the tech titans were navel-gazing, myopically focused on technology, Amazon focused on what the customer actually wanted – better business outcomes.

I am worried for many IT channel businesses. Despite Amazon showing them the way, most are still obsessed by technology. Why do some of us do this and why is it a problem?

Part of the reason is because an obsession with technology is what worked in the past. In the halcyon days of the channel, technology was not sold to line of business, it was owned and operated by the IT department. Today however, the digital transformation imperative is blowing up not just traditional architectures but also relationships and processes. Business leaders are looking to IT to be an agile provider of service outcomes rather than simply the owner of the infrastructure. To add value in this new model, channel players must get out of their technology bubbles and comfort zones and start obsessing about service design.

Sooner or later, if left unanswered, these trends will impact the balance sheets of today’s VARs (see CRN’s VAR 2017 profit analysis). When business leaders think of cloud they imagine lower IT costs, more funds for innovation, better customer insights and fewer data centres, not more irrelevant technology. Gartner predicts that 41% of workloads will be in the public cloud by 2020, driven by the desire of companies to focus on outcomes not technology.

Despite this, the trend in recent years for the IT channel has been to expand the number of technology partners in their portfolio. Globalisation combined with an abundance of private equity and venture capital has caused commoditised markets to become even more fractured, reducing the marginal gains available for the channel. The channel’s constant search for the next breakthrough start-up can be a big distraction since it is often motivated by the pursuit of short-term profits, rather than the needs and wants of customers.

Instead of searching for monopolistic positions or obsessing over technology, VARs who want to evolve their business models, should focus instead on delivering the right outcomes for their customers, with great service, for a fair price. In this hyper competitive and commoditised market, the only way for a VAR or MSP to differentiate is through service.

So ask yourself this question – “how much of our time, money and resources goes into improving our service in comparison to obsessing over the technology of our suppliers?”

Most channel CEOs know this, which is why most of their web sites are full of such statements around the great people they employ, or the great customer service they deliver, being their unique selling proposition. What customers really want to know is can you prove your words with clear outcomes and metrics?

Take Backup-as-a-service (BaaS) as an example. Nearly every IT hosting company or service provider has BaaS in their portfolio of offerings and so they should. Customers loss aversion bias towards their data, now more tightly linked to revenues than ever, has fostered a global business worth more than $65 billion per year. The emergence of ransomware, added to ever more punitive regulation (e.g. GDPR) will keep Optimism Bias (the tendency to think it won’t happen to you) in check and expenditure in this sector high for years to come.

What’s surprising is the poor service offered by so many “service” providers. One cause of this poor service is the tendency to measure and track the wrong metrics. If we want to focus on good outcomes the only good outcome for a backup service is a timely and completely successful restore of a piece of data, or application. Yet 99% of service providers track only the “backup success rate” metric which has only a partial correlation to the desired outcome and I think I know why. They default to the easy to measure, quantitative elements, not what’s most closely linked to ensuring good outcomes. If regular testing is required to ensure RPO and RTO metrics are the standard, even though it’s harder to do, then find a way to automate it.

Technology cycles are speeding up and using technology alone as a point of differentiation is not sustainable in the long-term. If you want to accelerate your evolution from VAR to MSP, my advice is to take a leaf out of the Russians 1960’s space manual and focus on service outcomes, not technology.

As a next step, to compliment the technology metrics your CTO needs, the commercial metrics your CFO needs, take the time to craft the metrics that align to the desired outcomes of your most important stakeholders, your customers.

Sales is the 2nd oldest profession but lately it feels more like the 1st. The professional salesperson is still the primary link between most IT channel companies and their customers – and one of the most expensive. Being so essential to the primary purpose of the business; to acquire and retain customers, the seller has always been under intense pressure to perform.

I would never want to make excuses for lazy, unskilled or under-performing sales people but it seems to me they are taking all the flak, when often the blame lies elsewhere.

Everyone from social media evangelists to Harvard professors seem ready to write off sales people, citing new forms of communication to artificial intelligence, as reasons for making the traditional sales process obsolete. Within the VAR (Value Added Reseller) business itself, executive managers, frustrated by the slow pace of evolution to an MSP (Managed Service Provider), have been quick to state that successful infrastructure sellers are unable to make the switch to selling managed services.

I don’t share this view. Good sales people are good salespeople, no matter what they are selling. Most sales transactions are a transference of feeling as much as an exchange of cold cash for product and humans are still better at this than robots. Same as with the world’s oldest profession (so I’ve been told)!

I am biased. At heart I am a salesperson and I love selling, but why are salespeople today under so much pressure and what can be done to alleviate their plight?

In their defence

Back in 1995 when I started in sales, according to the OECD, the IT market was worth $527.9 billion, far less than today’s estimated value of $3.7 trillion. Smaller yes, but it was growing at 9.5%, twice the GDP rate, and the supply to demand ratio was skewed in favour of the seller. In July of this year Gartner cut IT spending growth projections to 2.4% from 3% and data centre systems, the mainstay of the traditional VAR, essentially flat at 0.3%.

If the total IT market in 2018 is still below the $3.8 trillion level it reached in 2014, it stands to reason that today’s IT sales professional is trading in a more competitive market than twenty years ago.

Fighting for a share of that market are a lot of other experienced sales professionals. In the USA alone in 2016 there were an estimated 133,114 IT channel companies as well as 200,000+ self-employed contractors who could be related to the channel.

All but the biggest VARs are owner managed so they need to make cash and profit to continue to trade. In a world awash with credit, fuelled by the easy monetary policies of the world’s central banks, your typical VAR is competing with venture capital backed start-ups where huge losses are tolerated as long as their revenues increase.

It’s like bringing a knife to a gun fight.

While the VAR seller vainly leaves their pitch on voicemail systems, the “hot” start-ups invest millions in coordinated marketing and PR campaigns. The disparity will continue until policy makers tighten liquidity and low yield bond holders stop looking to put their money in riskier assets.

So what’s to be done?

In a nod to Jerome McCarthy’s 4Ps of the marketing mix, here are my 4Ps for CEOs of your typical IT value added reseller.

Purpose

Decide what you want to be. I know some very successful resellers who throw off a lot of cash and have no appetite to evolve their business from a VAR to an MSP. You might decide that you are a few short years from retirement and therefore lack the desire for a transformation journey lasting several years. Conversely, I know other owners who are very much drawn to the high valuations which come with growing sustainable recurring revenues. If you decide on the latter, you need a good plan in order to protect your cash balance while you make the transition. It can be hard to run one model well, running two is doubly difficult.

Portfolio

If your client offerings are “me too” then prospects are unlikely to walk through your door for any other reason than price. Your sales people will find it difficult to book meetings and no amount of spam content or email promotion is going to change that. As the CEO, it’s your job to set the vision and strategy and to build products people want to buy. I see a lot of VARs broaden their portfolio with more technology vendors or they latch onto the previously mentioned “hot” start-ups which promise the next big thing. This is a perfectly good tactic but without exclusive distribution agreements any competitive advantage will be fleeting.

If you want to evolve, you need to focus more on your organisation’s value, not that of your technology partners.

Positioning

Salespeople are always hungry for a good story to tell. Lame slogans like “we put our customers first” or “we care about your business” are not going to cut it in today’s highly competitive sales landscape. How much time are you spending on positioning rather than simply vomiting “creative” content on your client and prospect base? Teach your sales people to have a perspective, or a point of view, which is relevant and will engage your carefully targeted audience.

Pay

It is around the subject of pay where I see the biggest discrepancy between what CEOs say they want and their actions. All too often the big transaction deal gets the rewards whilst the multi-year service contract gets a measly commission pay-out. Often the reason your sellers are not winning managed services deals is not because they can’t, but because they don’t want to.

Here are a few likely causes:

It’s not as profitable for them in the short term.

Often commission plans only pay out on invoice value, so for a seller they are far more motivated to sell upfront transactions. To compensate why not think about extending “credit” to your seller, just like a bank or investor might? If you can pay out, up front, on the annual contract value or even the total contract value, you will motivate the salesperson to change their habits. But wait, I hear you cry. What if the contract fails or the salesperson leaves the company? My response to the former is, make sure your delivery engine gives such great service that your customers have no reason to leave. For the latter, if you have a sales leaver, no problem, the business still owns the “asset” (contract) and that asset has shareholder value. You have also reduced the risk of business walking out the door with the “absconder”.

One could argue that if a customer cancels a contract, it is a bit like a debt default. In which case either the creditor (the business) takes a haircut or forces the debtor (account manager/seller) to repay all or some of the outstanding debt.

They don’t trust your delivery capability.

The mindset of most salespeople is often, quite rightly, about protecting their personal brand and integrity, not yours. On the whole, as a tribe, they can be very reticent to sell solutions that will fail or disappoint their customer. Contrary to popular myth, they have a long-term approach to build customer relationships and customer value. I’ve seen salespeople refuse to sell a new managed service offering, not overtly but quietly, simply by not promoting it or coming up with a convenient excuse because they don’t believe the business can execute.

Fear of loss of account control.

Never said out loud but always lurking under the surface. There exists a fear in the mind of the seller that their services will be superfluous if he or she sells a multi-year managed contract. In my experience, a salesperson still has plenty of value to add after the ink is dry. Furthermore, the customer relationship is more strategically managed, creating opportunities that under the previous model would not have transpired. Ultimately though this is about the trust between the seller and their organisation’s management team.

In short changing your business operating model is always going to be hard. However, not having your sales team aligned with the change just makes things even harder. I’ve seen that taking the time to understand their challenges and motivations can often make the difference between success and failure.

Your journey from VAR to MSP needs to be carefully controlled. For many, the traditional product business still pays the bills whilst the MSP division could be just getting started. In having to balance these two models, business owners face a challenge in the mental shift required to be successful at both.

I see too many IT channel players act like MPPs (managed product providers) not MSPs (managed service providers). The emphasis needs to switch from thinking about the technology product which powers your service offering, to the actual service provided.

Your customer or prospect can most likely get the “product” from dozens of other suppliers but they can only get your service from you. As a result you should focus on engineering the best service possible.

I’m not saying you don’t need to know the technology, you absolutely do. In fact, its assumed that you know the technology better than your customers, otherwise what’s the point. All I’m saying is it’s not sufficient to win consistently over the long term. A few early wins are easy, the problems come with success and as you start to scale your MSP business.

Service Design

There is a scene in “The Founder”, a film about Ray Kroc and the McDonald brothers, when the two brothers shut down their first restaurant even though its making money and literally go back to the drawing board. They go to a tennis court and chalk out a design for a kitchen, then choreograph the process required to deliver food and drink in less than 30 seconds. They knew their system was a lot harder for their competitors to copy then their recipes, or their ingredients. Mainly though, they understood what the customer really wanted.

The other lesson I learnt was the importance of simplicity and standards. The McDonald brothers knew they could not deliver both a broad menu and an excellent customer service. As a VAR it is tempting to take the broad portfolio of products you currently carry and build services for each one. This is possible but it’s a lot of work and how can you guarantee customer service excellence for all of them? Is it not better to design your service around one or two vendors and spend the time fine tuning your process?

Automation In the cloud era, automation is seen as critical. I believe automation is important, it can help drive your process but ultimately good service is about people, not products or processes.

Companies are rapidly moving to a utility model of IT explaining why many more VARs are building managed services divisions. Running a managed services practice within a VAR is a challenge which requires the full commitment of the management team. My previously published article went into more detail on the disruption driving IT channel transformation.

It is difficult for an MSP to provide a differentiated level of service which stays profitable whilst growing the practice – but it’s not impossible. As intermediaries, VARs have always had to focus on customer service in order to win contracts for technology manufactured by a third party. As there is increasingly less to differentiate between the vendors’ technology, VARs will need to draw deep on these skills if they want to compete in a crowded MSP market.

This article discusses two common customer service challenges and then lists ten ways to raise your game.

Being a “Prisoner of the Past”

Do you remember when you bought the home you are living in now or the car you are driving? Do you recall how quickly the excitement wore off and boredom set in? It’s the same for your customers. Typically, the value of your service is driven down as they start to take you for granted.

It’s in the early stages of the service when you make the most improvements. For example, in data protection it’s not hard to improve the percentage backup success rate from say 90% to 98%. Achieving perfection however is not only resource intensive and costly for you but could also be boring for your client causing them to disengage.

The early stage of any service encounter benefits from the “Halo Effect” which is why it’s important to focus especially hard on the first 90 to 180 days of the service.

Murphy’s Law #7 – “It is impossible to make anything foolproof because fools are so ingenious”

Anyone who has worked in IT for any length of time knows that “stuff” happens. My experience in data protection services (backup and recovery) is that 99% of the graft you put in goes unnoticed. Then a big restore is required and suddenly your whole customer service score is measured by that one moment of truth. How should an MSP resource for this whilst still remaining profitable?

Ten tips for customer satisfaction nirvana

1. Make your best resources available

I see too many VARs penny pinch their fledgling MSP business by not making their star technical people available to the managed service team. Those that are serious about the MSP practice will have a process in place to escalate level 3 incidents to their top technical people. Level 3 incidents, like the system recovery “moment of truth”, should not be an everyday occurrence and hence manageable.

2. Use old fashioned communication techniques

If you want to be profitable you should train your customers to raise “calls” via a portal or if you don’t have a portal, via email. It saves time and it creates an audit trail. That said, studies have proven that people rate customer satisfaction higher with people they like. It’s hard to build a relationship via email so try picking up the phone when you close an incident to check their experience. As your business grows consider hiring someone who can visit the customer’s premises on a scheduled basis.

3. Be proactive

If you have good monitoring systems in place you should know bad news before your client does. Make sure you’re the first to tell them.

4. Set expectations

Customers can have fuzzy or sometimes unrealistic expectations and often assume you know what they want. As a good MSP you need to actively shape or at least agree your customer’s expectations.

5. Tell the customer something they don’t know

When you deal with a large client base it can be time consuming to know each business intimately. That said, you will be more competitive if you can tailor your offering to the needs of the client or a specific industry. In dealing with many customers you will have experience of more best practices, so make sure you pass them on. Have a process in place which distributes, either via your portal or a simple newsletter, interesting bits of information or articles.

6. Do something unexpected

As the “Halo Effect” wears off and the routine of providing a managed service sets in, offer something of value which is not in your statement of work or service agreement. A VAR / MSP which decides to show the customer how they can avoid a hardware expenditure, especially if this delays a transaction for the VAR, is one example of an unexpected act and will certainly build trust.

7. Remind the customer of your value

I see a lot of MSPs share key performance indicator (KPI) reports with customers but with little historical context. If you provide good services, then the performance of the system should have improved. If this is the case, make sure to remind your customer and reset performance goals together with them so that you cannot be found guilty of simply maintaining the status quo.

8. Consider using a cool customer facing portal

A big fear of potential clients is the fear of losing control. A portal which provides transparency, insight and a connection to your service desk helps to build customer confidence and trust in you.

9. Run a service improvement programme

This needs no explanation. The MSP market is competitive and getting ever more so. I don’t care if you use Six Sigma, ISO or an excel spreadsheet, but do something and make sure it has board level visibility.

10. Build your brand

For a VAR the focus on marketing is typically one of sales lead generation whereas an MSP requires much more in the way of brand development.

People pay more for a recognisable brand – even in IT services.

It might pay you to seek out the skills necessary to build your managed services brand.