When MSPs start out, it’s usually the founder who is doing the work of finding new customers. After all, no one understands the SMB’s IT pains better and there probably isn’t a whole lot of extra cash on hand for marketing.
Over time, an incredible thing happens. The MSP goes from surviving to thriving! The entrepreneur evolves into a true President; from someone working solo to having a team on the payroll; from having a few clients to serving more than what two hands can count.
This is usually the point when the President’s mindset shifts and they start to think differently about their role in the company. It’s here where the next chapter of their MSP begins.
The purpose of this MSP Sales Journey Series is to help MSP Presidents effectively navigate the journey of this mindset change. Before embarking, there are some considerations to make that can help MSPs launch into proactive sales with confidence.
The MSP sales journey starts with a simple but often overlooked first step: setting sales goals.
To understand the advantage of starting with a sales goal, I’ll look at an example from a different context that is very similar to a proactive sales journey.
Interestingly enough, planning sales for an MSP isn't all that different from marathon planning for a serious runner.
A well-executed marathon depends on how the runner defines “well-executed.” Similarly, a well-executed sales plan depends on how the MSP defines “well-executed.”
For example, let’s consider my wife – the marathoner of our family.
Her main goal is to run a marathon in all 50 U.S. states. Her secondary goal is to run each in 3:40 or less. For her, this pace is comfortable and respectable.
Since her goals are clear, she knows that she must run 45-60 miles every week year-round. Some of those miles are run faster than others, sometimes she cross-trains on a spinning bike, too. In her experience, that level of weekly training enables her to be successful.
For me? My goal was totally different than hers.
I wanted to run just one half-marathon and a “good race” meant running faster than my wife’s marathon pace! Therefore, in order to hit my goals, I had to train differently than she did. For one, I could run fewer miles than her each week and, since I didn’t desire or have the time to run every day, my only option was to increase the intensity of my training runs.
Sharing our goals ahead of time forced us to be accountable, resulting in more discipline and good results.
The bottom line is that having clear goals is not just a tool for empowerment. It's also a tool for accountability and discipline. Having a clear overall goal allows us to break our goal down into smaller goals that are easy to aim for and track.
You don’t want to make the mistake of jumping into marriage with an outsourcing lead generation firm or a new hire without a clear understanding your goals.
Asking yourself these four simple questions can make a huge difference in reaching your goals:
Let’s look more closely at each of these questions.
The amount you want to grow in three years can help determine how much you need to grow yearly and monthly. Creating a goal that’s three years in the future sets you up to be able to make smaller, more manageable goals to get there.
For example, maybe you see yourself increasing your revenue by $1 million or $2 million.
Your goals are your goals! You can play with these figures, but imagine how this growth could affect everything in your business and personal life.
Once you know your overall goal, you’ll have to find a way to reach that goal. You’re probably not likely to grow as much as you want without new clients, so it’s necessary to determine how much growth will come from current vs. new clients.
For example, if your growth goal is $1 million in 3 years, and you expect $250K from your current clients, 75% will have to come from new clients. Thus, you have to find enough new clients to make up the last $750K for you.
After you understand how revenue you need from new clients, you will need to determine how many clients you need to meet your revenue growth goals over three years.
For example, let's assume that each new client brings in $30,000, and you expect to make $750,000 from new clients. You will need to divide the total you want to make by the revenue amount each new client will bring.
$750,000 ÷ $30,000 = 25 new clients necessary to reach your 3-year goal.
Now that you know how many new clients you need, you’ve got to think back to how much work it took to get your first clients. To determine how many opportunities are necessary to reach your goals, it’s important to look at how many opportunities convert into new customers.
An Opportunity is any sales-qualified leads who agree to speak to you, be it over the phone at first or maybe through a video meeting. Sales-qualified means they are a good potential client in terms of their industry, size, and location.
To determine how many opportunities you need, you will need to create a sales funnel for your 3-year sales goal. Making a sales funnel requires thinking about the journey you went through to turn potential clients into current clients.
First, you will need to estimate the average closed-won ratio, which refers to the percentage of the Opportunities that convert into a new customer.
Most MSPs have never tracked their closed-won ratio, so the tendency is to assume that closing warm referrals is the same as closing all Opportunities, no matter how you got the lead.
It’s not the same! If you got the client through a referral, it’s a HOT Opportunity. Closing them is easier because HOT Opportunities have acute IT pain and someone they trust is referring you to them.
Don’t make the mistake of thinking that close rates from referrals will be the same as close rates for leads you source from marketing!
Instead, humbly assume that the close rate for marketing sourced leads will be lower than what you are accustomed to.
For example, if you assume your closed-won ratio for warm referrals is 25%, then you can estimate a closed-won of 15% for leads you didn't get from acquaintances.
Here’s how you can use that 15% conversion to arrive at the number of Opportunities you need.
25 new clients ÷ 15% close rate = the number of sales-qualified leads you would need!
This works out to an estimated 167 sales-qualified leads that you would need over the next 3 years.
In conclusion, when sales goals are considered, discussed and shared, they can be reverse engineered into smaller milestones that different stakeholders can own and track.
In the next article, I'll get into a topic that most MSPs new to proactive sales don't anticipate being an issue. And because they don't think twice about it, even their well-executed lead generation initiative fails to add up.
Just make sure you subscribe so that you can avoid this easy-to-miss mistake all together.
Derek Marin is President of Simple Selling, the agency that generates predictable pipeline for MSPs. Their best partnerships are with MSPs that are ready to switch from referral-based growth to outbound-multi-channel growth strategies. He's the father of 3 little boys, competed in two sports in college and currently resides with his family in Boston, MA.