Studies show that managed services providers as a whole are struggling to convert their customers over to a recurring revenue model. While attending an N-able by SolarWinds conference, former MSP Gary Pica, CEO and founder of TruMethods, an MSP mentoring company, addressed this pain point to an engaged audience of managed services providers. Pica shared a story from his managed services days when he presented a plan to convert a customer over to a recurring revenue model and was met with the classic objection many MSPs face: “Our IT is fine. Why should I spend more money with you?”
“The problem is that you have a different idea about what ‘fine’ is compared with your customers,” says Pica. “When they use that term they mean that servers aren’t crashing and their IT vendor calls them back if they have a problem. When an MSP uses the term ‘fine,’ he’s thinking about providing a predictable IT performance in contrast to having to react to every IT problem that comes along.”
The key to getting your customer to change their definition of fine to your definition depends on how you ask questions, according to Pica. He suggests the following 4-step process to reframe your customer’s perspective:
1. Paint a picture. Pica used the Ebbinghaus illusion to illustrate how your customer perceives their IT issues compared to how you perceive their IT problems. (e.g. they see themselves surrounded by small problems, illustrated by the small circles and you see them surrounded by potentially big problems, illustrated by the large circles). By taking the time to help them see the costs associated with security breaches, violating an industry regulation (e.g. HIPAA), or downtime, you can open their eyes to the real picture they’ve been missing.
2. Attach a value to your picture. How much does it cost your customer to be down for four hours? How much could they be fined if an unsecured laptop containing company and/or customer information was stolen?
3. Use cost to your advantage. Now that you’ve given your customer the proper perspective on the problem, you can talk about your price without coming across as just another greedy salesman.
4. Don’t overemphasize technology. One of the biggest pitfalls IT solutions providers fall into is skipping steps 1 to 3 and trying to combat a managed services objection with technology talk. “This new server runs this much faster, holds this much more data… Or, I’ll replace your legacy firewall with this new, dynamic firewall and email content filtering software.” Selling on technology puts you in the line-item business, which makes it easier for your customer to pick and choose what they want and what they don’t want instead of paying you to solve their business problems. “If you sell line items, you will get run over,” warns Pica.