As co-founder and CEO of managed service provider IT4, over the last 20 years Brett Jaffe has grown his business from a hardware reseller and computer repair shop to a fully outsourced provider of IT services. The key to this long-term success is simple: relationships. Granted, this isn't a new concept. Visit any corporate web site and you'll find marketing blurbs touting devotion to customer relationships. But, there's a big gap between the saying and the doing. Day in and day out, it's tough to provide the service and attention that inspires customers to think of your company as more than just another vendor -- creating and fostering relationships have to be deeply rooted in the corporate culture.
Beyond Business Basics
Jaffe believes this is especially important in the MSP space where the basics just aren't enough anymore. "When you make sales calls, no one ever needs managed services; they already have them," Jaffe says. "It was different a few years ago when it was the new thing." Now, the problems that leave a potential customer open to talking to IT4 about its services rarely have anything to do with IT. "When we talk to potential clients, it's not that they're unhappy with their existing provider, exactly. It just seems that a lot of competitors look at this as a 'set-it-and-forget-it' business. Their customers don't feel like their MSP is taking an interest in how the business is doing, how they can do things better, how they can help grow the business and be more efficient."
IT4's approach is different. "We are very involved with our client's business. We sit in on strategy meetings, help with budget planning, and deliver educational seminars." He adds, "We're also getting into areas that are outside the scope of traditional managed services. That's made us really sticky with our client base."
Sometimes building good customer relationships means passing up the short-term dollar. You might know that a client is having a tough time in this economy. They need new server hardware, but the budget is tight right now. In some cases, it might be better to find a way to make it work in the interim and revisit the issue next year. Jaffe sums up: "It isn't always about selling something. It's about working with the customer, taking a vested interest in their company, and making sure the relationship works."
Partner Relationships Just As Valuable
Jaffe finds partner relationships just as important as customer relationships. "Over the past year, I've seen bigger vendors making direct plays for clients." This is one of the reasons Jaffe chose to partner with Zenith Infotech to handle some of its services, such as system monitoring, and backup and recovery. "Zenith doesn't sell to the end-user; it's strictly channel," he says. "There are other companies that are much harder to work with because, in a heartbeat, they'll go around you and try to sell services directly to your customer. Dealing with channel-only companies guarantees our place in the market."
Zenith's approach to customer relationships is similar to Jaffe's. "I've spent time in Zenith's main office, and every conversation was about what they could do better for the partners, and how they could help partners have more sources of revenue and larger profit margins. That seems to be a philosophy that is otherwise disappearing: Other companies will raise their prices or give you a smaller percentage. Zenith is adamant about giving you a high-value item at a reasonable cost so you can make some money." When asked about the similarity of Zenith's approach to his own, Jaffe responds, "I'm not surprised my relationship with my customer base mirrors my relationship with Zenith -- it's the way I like to do business."
Maintaining Customer Loyalty
Jaffe's approach is working. His clients are loyal, despite being wooed by competitors. "Many of our clients get two or three calls a day from competing companies, but we have almost a 0-percent attrition rate. I can count on one hand the number of clients we've lost in the last 10 years." Jaffe will continue to fight to inspire customer loyalty because he doesn't see competition from the big vendors going away. "I look at some of managed services as somewhat commodity-based. If you're just focusing on the plumbing portion of managed services, you're going to get buried because you can't compete on price. But, if your response time is there, you're delivering on the services you've promised, you're going above and beyond in terms of customer service, and you're talking with your clients on a business level and not just a technical level, those relationships will come through for you."
Posted by Christa Ayer on June 22, 20100 comments
Talk to any SMB owner and they'll tell you that along with the thrill of watching a business grow comes the agony of managing that growth. As their business gets more complex, certain areas of the organization start to require more than just entrepreneurial drive and a small yet dedicated group of employees to hold them together. Nowhere will this be more evident than in the IT department.
For the average SMB IT department -- usually consisting of one or two people -- outside skills and manpower in the form of a managed service provider can be a big help handling day-to-day IT operations such as e-mail and e-mail security, server maintenance, and data storage and backup. This frees up internal IT staff to work on projects that drive new growth
Morale-minded business owners will rightly wonder how their existing IT staff will react to handing over some of their duties to an outside company. In these tough economic times, it's understandable that internal IT staff might feel threatened. Bret Jaffe, president of IT4, a Massachusetts-based MSP, explains the situation: "A full-time person is almost always initially a barrier. Usually, they're on the defense and they want to protect their job rather than bring in someone who has more experience, or does things differently. But once you get past that barrier, you can build some great relationships with onsite staff."
The first step is to help your client's management clearly define for the internal IT staff what duties the MSP will, and will not, be taking on. "If we're just taking on the plumbing, that's what we'll focus on with the staff," says Jaffe. "Do they really want to spend their time on patch management, maintenance, and monitoring? Do they really want to be on call 24/7?"
The next step is to encourage management to start the internal staff on customer-facing, strategic technology projects that have been sitting on the back burner. "When the staff gets started on these 'higher tier' projects, we can supplement their knowledge if they're trying to implement a solution that's new territory for them," says Jaffe. "But, to get to that point, you really have to gain their trust. Once you get past that initial barrier, and they understand that you aren't trying to steal their job, they'll trust you as a resource."
Even companies that specialize in high tech can benefit from outside help. Eric Shorr is owner of PC Troubleshooters, a company that itself provides IT support services to small- and medium-sized companies in the New England area. Shorr is a big believer in knowing one's core competencies and sticking to them. He didn't want his engineers stuck in the office handling day-to-day IT maintenance; he wanted them on the road working with customers to help them better run their businesses. Shorr's solution was to bring in Zenith Infotech to share the IT workload.
It's two years later, and PC Troubleshooters engineers have embraced Zenith. "They've seen them in action," says Shorr. "This partnership has allowed us to extend our reach without adding staff. Over the last couple of years, we've held steady at about a dozen employees." During this time, with very little IT turnover, and in tough economic times, PC Troubleshooters has been able to grow. "In 2008, we were up almost 30 percent. We don't have the numbers back for 2009 yet, but we're also up," declares Shorr.
"We didn't let go of any engineers after entering into our partnership with Zenith because that wasn't my goal," Shorr says. "I wanted to give my engineers a better quality of life, and let them focus on customer-facing projects. I don't want them rebooting servers at 1 a.m. This is where Zenith comes in."
Not every IT department will initially react well to working with an MSP but, with a little insight and planning, you can help turn the situation around.
Posted by Christa Ayer on June 16, 20100 comments