Posted by Larry Cobrin on Mar 6, 2018 9:11:34 AM
How to Grow Sales: Data and Perspective
Our latest webinar, How to Grow Sales: Data and Perspective, looks at how Managed Service Providers (MSPs) can keep their sales funnels full of warm leads. You can access the webinar by clicking here - webcast online. By analyzing data collected from hundreds of MSPs, we have identified some common characteristics of companies that are successfully growing sales. Managed Sales Pros’ Carrie Simpson also provides her insights on how to get started with cold calling – even if you have never dialed a stranger in your life.
Lessons from the Data
We analyzed data collected from hundreds of MSPs using MSPCFO software to answer some critical questions that face MSPs trying to grow their revenue.
Where do successful MSPs generate their growth?
We analyzed our client databases by looking at only monthly recurring revenue (MRR) from January 2017 to September 2017. While new clients accounted for just over half of revenue growth, the surprising discovery was that the rest came from revenue growth from existing clients through upsell opportunities. What we came to realize is that MSPs need to understand the revenue opportunity within their existing client base rather than just focusing efforts on new clients.
When it comes to prospecting, it’s also important to avoid looking for a highly profitable ‘slam dunk’ on day one. New customers may start out with a small contract – such as backups – and more than likely require some investment before they move on to more profitable elements of a managed services contract. Take any meeting with a prospect and then discuss managed services when you meet face-to-face rather than disqualifying them at the onset.
When looking at existing clients, who should you sell to?
MSPCFO recently created a variety of widgets to help answer this question. The chart below looks each of your clients revenue per node as well as the number of end points for each client. When you look at these together, what becomes apparent is where the the upsell opportunities are among your clients.
Should you focus on a specific market or is a diverse customer base the key to success?
We broke down over 100 clients into three different categories, including vertically-focused, very unconcentrated, and 20% to 40% concentration. Not surprisingly, concentrated clients saw the best growth rates with 13% the average rate of growth. The unexpected outcome was the very un-concentrated clients were the second-best performer. Our theory is that referrals are effective at driving growth and they are the strongest within specific industries.
In the end, the best sales strategy is a great customer service strategy. Happy clients buy more services and refer more colleagues. Successful MSPs keep referenceable clients at a high priority and have a process in place to ensure that they’re utilized to the max.
How to Get Started
Managed Sales Pro Founder and CEO Carrie Simpson provided insights into how to get started with prospecting and answered some common concerns.
There are many different ways to reach prospects, but calling them is among the most effective method. While many people are hesitant to pick up the phone, Simpson notes that the process is exactly the same as being at a networking event. Start by introducing yourself, touch on the niche market you serve, and ask who to speak to about IT support. It’s important to avoid terms like managed services since most people don’t know what that means.
The most common objection to cold calling is the feeling of interrupting someone or not providing value to them. In reality, Simpson frames it as these companies having the responsibility to listen to opportunities that benefit them. A CEO that can save money or avoid costly downtime owes it to their shareholders and customers to listen to the pitch. You just need a compelling value proposition to offer them.
Business owners just starting out should handle cold calling on their own. After all, they cannot easily hire someone and train them without knowing what works and what doesn’t. Simpson says that her internal training tends to take about two weeks to go from not having picked up a phone to setting appointments on their own. Once you have a process in place, you can replicate it through outsourcing or hiring internal staff.
It may be tempting to use so-called robo-callers to accelerate sales, but these are rarely a good idea for several reasons. While there are new technologies coming out, such as voicemail drop and predictive dialing, these high levels of automation reduce the personal touch that’s often needed to close business-to-business deals. As a result, these technologies may be most appropriate for large-scale business-to-consumer markets and not MSP sales.
The economics of cold calling dramatically improves when you create active referral networks. Suppose you have a list of 1,000 companies and start calling into the base. Each lead takes about 19 calls, on average, to engage with a decision maker. This means that you’ll need to invest a lot of time to actual cultivate leads and make a sale. Referrals will accelerate that process by connecting you directly to a decision maker.
You can create active referral networks by asking your existing clients for referrals as part of an ongoing process. For example, when you touch base with a client to see how they’re doing, you may ask them for any referrals if they are satisfied. You might even check out their LinkedIn profile and suggest some people that might be good referrals to reduce the cognitive load and responsibilities for them even further.
The Bottom Line
The How to Grow Sales: Data and Perspective webinar provided some great insights for MSPs looking to accelerate their growth. We looked at where successful MSPs generate their growth, what existing clients to focus on for upselling, and whether to focus on diverse or niche markets. We also discussed some insights from Carrie Simpson of Managed Sales Pros, including how to build an active referral network to drive sales over the long-term.
Our business intelligence solutions help MSPs act on this advice. Following the webinar, we launched several beta widgets to help MSPs discover what customers are prime for upselling and what customer segments perform the best.
If you’re interested in trying out these new widgets and improving your performance contact us today for a free demo.