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Survey: Skip the Cold Calls in Selling Managed Services

A recent survey, billed as one of the first polls of end users of managed services, found the customers were much more responsive to managed service providers they encountered at trade shows and to referrals than to cold sales calls.

The survey was conducted and released this month by the MSP Alliance, a six-year-old organization of about 250 managed service providers based in Chico, Calif. There were about 50 responses, and the MSP Alliance found its respondents by forwarding the survey through its member organizations, which range from small companies to industry giants such as Avaya, EDS, Siemens and Wipro.

According to Charles Weaver, president of the MSP Alliance, what distinguishes MSPs from traditional break-fix service providers, are proactivity; remote monitoring and management of services; and regular and predictable billing for end users. Weaver provided this litmus test: "In the break-fix world, when the client feels pain, the service provider profits. In the MSP realm, if the client feels pain, the MSP also feels pain."

Managed services can range from providing one-off services such as a VPN, firewall or Voice over IP to more comprehensive offerings, such as maintaining all desktops, servers and e-mail in a network offering. Larger companies tend to outsource one-off services and smaller companies are more likely to hand over management of an entire network to an MSP.

Much of the challenge in the emerging sector is raising client awareness that MSPs have a legitimate business model, and there is real debate within the MSP community about the most effective way to develop leads, Weaver said.

According to the customers surveyed, 33 percent said they found their MSP through a trade show and 33 percent reported finding an MSP by a referral. Web searches and advertisements were also cited, but nobody reported responding to cold sales calls.

"The absence of sales calls in this study (while not entirely conclusive) does seem to bolster a growing theme in the industry," the study noted. "This theme surrounds the efficacy of 'selling' managed services, as opposed to creating market/brand awareness and education in the end-user mind."

Weaver said the niche-orientation of many successful MSPs makes referrals all the more important, as shown in the study. "The ability for an MSP to have a good happy client that will then take that message and talk to other people [is key]," Weaver said. "A hospital IT administrator will talk to his or her colleagues in the healthcare industry."

Similarly, the trade shows that tend to be successful for MSPs are the ones for the vertical industry the MSP serves, he said.

"I think that it's certainly giving some credibility to the non-traditional, non-outbound cold-calling approach. It's very much in line with our feeling that the managed service industry is really moving toward a profession and away from a purely technical gathering of individuals," Weaver said. That said, Weaver added that he suspected sales calls played a role, either as follow up or in some other capacity that survey respondents didn't acknowledge.

Other findings of the survey:

  • End users said the types of managed services they plan to buy in 2006 included VoIP (33 percent), database applications (33 percent), server (16 percent) and desktop/laptop/workstation (16 percent).
  • When citing factors that led to the purchase of managed services, 100 percent of customers named security, 67 percent added improving employee performance and 33 percent wanted to reduce costs. After using an MSP, 67 percent of customers reported improved employee productivity, and 50 percent saw a reduction in cost. Other benefits included improved IT performance and improved security.
  • About half of respondents had been using managed services for less than a year. A third had been using managed services for one to three years and nearly 17 percent said they had been buying managed services for more than three years.

  • About the Author

    Scott Bekker is editor in chief of Redmond Channel Partner magazine.