The Evolving MSP

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As Microsoft Partners Head into 2023, It's Time To Take Stock

Back in the day, when I was still writing "The Changing Channel," I was asked every year to take a look into the coming year and write about the kinds of changes and planning that partners should be considering.

Then the channel changed, pretty much completely. It's been a few years since I've suggested any "marching orders" for the coming year, but recent conversations have made me realize it would be good to discuss a few suggestions for 2023.

And where better to begin than with your customers? There are many things you no longer need to do for your customers.

Many MSPs no longer sell products to their customers. They've found that the cost of credit quickly consumes the basis points of margin available, and the cost of operations to order, receive, prepare and ship products eats more than what's left. They see themselves losing money on product sales. Some have turned to resellers to provide products for their customers. Some have joined sales agent programs where they do nothing more than place the order.

The upside of this change is that MSPs no longer have to spend extra when a product arrives DOA. In fact, they can, in some cases, charge their customers to take care of the return and exchange.

Some MSPs are turning the act of procuring products into a service. They help their customers select the right products, configure them appropriately, then process the purchase order to competitive sources, including former reseller competitors.

This puts those MSPs comfortably into the path of products moving through to the customer, where they can add asset management and maintenance services, as well as support and training.

One of the MSPs' most frequent and loudest complaints is that they have a really hard time finding quality salespeople. It may be, however, that the profile of an ideal selling resource in an MSP business has changed.

Since the MSP is no longer selling products, the 90-mile-per-hour salesperson no longer has spec sheets to point at to the proclaim the superiority of the unit they're trying to sell. Speeds and feeds are simply no longer part of the conversation. All of that exists in the cloud provider's datacenter.

The IT Sales Professional of Tomorrow
Stop for a moment and think about your engineers, technicians and your consultants as true, credentialed professionals, like lawyers, accountants or doctors. Who does their selling? There may be a variety of answers, but the most popular is that they do the selling themselves and build their own referral networks. Their clients prefer dealing with the actual practitioners because they know what they're talking about. They offer valuable advice and guidance -- not something most salespeople can do.

Personally, I've had the pleasure of working with thousands of engineers over the past 40 years. The best of them -- the ones for whom clients asked time after time, and who generated the highest billings -- were those who were as familiar with software licensing and hardware costs as they were protocols and configurations. They rightly see costs as something that must be properly managed for the customer to be truly satisfied. They don't serve the infrastructure. They serve the customer from a business perspective, as well as technical.

The question you should be asking as you head into 2023 is: How do you best train your technology professionals in the art of effectively managing customers?

A World with No Product Sales
Another change arising from your not selling products is that you no longer receive market development funds (MDF) to help with your marketing. You pretty much have to fund that yourself, and many MSPs either don't get, or don't value, marketing.

To build your business and make it grow, you need to market your services effectively. There are more and more coaches making themselves available to help you. Your next priority to carefully consider in 2023 is how you vet these agencies to determine which you're going to trust. There are many who will encourage you to do what can, at best, be characterized as retail marketing -- flashy postcards and the like. That isn't how professional services are marketed.

Professional services require relationship marketing. You need to obtain more than approval from your client. You need to earn their trust and their confidence. You're not going to do that with postcards.

New Marketing Strategies
Co-operative marketing, such as what you used to enjoy from manufacturers when you sold their products, requires at least two entities that will mutually benefit if they work together to market the outcome of the integration of their products and services.

Look carefully at every hardware and software product, and every cloud service that you include in the solutions you provide to clients. Invite them in for a conversation to celebrate the new year and talk about how you go-to-market together. You'll find that many of them have realized how the lack of an MDF-based relationship is hurting them, too.

Come up with ways you can market together. Discuss how to fund that, and what kind of return they could expect. Remember that your services are actualizing the value of their products. Without your installation and management, clients can't use their products. You have mutual interests. Leverage them.

You and Microsoft
2023 is a year in which you really need to closely re-examine and re-evaluate your Microsoft relationship.

Given that their new chief partner officer, Nicole Dezen, came out of their devices division, what do you think is the role they think channel partners should play? Selling Surface Pro and related peripheral accessories? Is that what you do?

When I was still an executive in the channel, we came to refer to our Microsoft partner account managers (PAMs) as "the Pipeline Police." All they did was come in and ask us, "What do you have for me?" What was in our pipeline? What was close to closing? And woe be it if we weren't prepared for that conversation with a completely updated pipeline on their system.

This is a great time to determine exactly what value you are receiving from your Microsoft partnership. In the past, I have recommended that some of you engage in benign neglect of them. You don't need that partnership to be able to include their products in your solutions, especially if you're not selling products at all.

Here's the thing: Some Microsoft partners are flourishing and growing in part thanks to their Microsoft partnership. They may know something you don't. The best way to find out what that is may be to participate in some of the many forums on social media that service the Microsoft partner community. If you attend conferences, spend more time conversing with other MSPs to see what you can learn from them.

There is definitely an art to managing any vendor relationship effectively. Commit to finding out what that art is, and remember that it is constantly changing. Happy holidays, and happy new year.

Posted by Howard M. Cohen on December 19, 2022