The Evolving MSP

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The 'Influencer MSP' Approach to New Products

Smart MSPs no longer focus on promoting the sale of any specific product. In fact, some have abandoned product sales altogether, preferring to partner with someone to procure and provide products when needed. What they really need to do, however, is change the way they look at new product introductions. 

When we only think about a given product as a good that might earn a marginal profit if we sold it, we're quickly reminded just how slim that margin really is. It's just not worth the effort anymore. Even if we do eke out a small profit, that profit is eaten up by credit we extend to our customer and the operations it takes to order, receive and process each product.

But Some Products Bring Opportunities
Equip yourself with a quick filter for new product announcements. Start by reading the first paragraph or so of the announcement and ask yourself which of your services you could wrap around this product. Can you: 

  • Consult on it?
  • Design systems around it?
  • Configure it?
  • Prepare it?
  • Test it?
  • Install it?
  • Deploy it?
  • Network it?
  • Train users and administrators on it?
  • Provide ongoing support for it?

The more "yes" answers you come up with, the more opportunities this product offers you.

The simple fact is that most services MSPs offer to their customers involve or are attached to some product or products. The most fundamental service MSPs offer is monitoring. What do we monitor? Products -- servers, storage, routers, switches, modems and more. Similarly, we manage all those devices and more. Add software applications to that list, and that adds a substantial lift to our revenue, too. The bottom line is that MSPs do have an interest in products -- a deep interest.

Depending on whose numbers you're looking at, there are tens of thousands or perhaps even hundreds of thousands of Microsoft partners who know they're making less and less money selling Microsoft's products, including cloud services. But they remain partners. Why? Because they make so much money consulting, deploying and supporting those products and services.

The Correct Response to New Product Announcements
Once you've identified a new product that requires your services, the next step is to reach out to the vendor of that product. It may be a hardware manufacturer, a software developer or a services provider. Find your regional representative from that vendor. If all else fails, call the company's main number and find someone who can provide you with the name and contact details for that person.

Reach out to that representative to talk. Going into the conversation, keep in mind that channel representatives' lives have become much more difficult since the great rush from reseller to MSP. They have fewer active partners than before. Fewer of the remaining resellers are moving away from that model. As that happens, it becomes harder for channel managers to achieve their sales quotas. For them, a channel partner calling them is a gift, manna from heaven. They will greet you with open arms.

Whatever they may want to talk with you about, start by telling them about the services you feel you could wrap around their products. Ask them if you're missing anything. Are there other services you could be profiting from when you move their products for them? What do they think of your ideas? Can they punch any holes in them and help you improve upon them?

Press them to inform you about the value their channel program can provide to you. Market development funds sound great, but there are a few caveats you will want to insist upon: 

  • They cannot be based on sales volume. You're not planning to move any product in volume; you're planning to propose services and projects that include the product.
  • They'll need to be willing to work with you on collateral and marketing activities. If they're not willing to promote your services along with their products, that's a deal killer. Ideally, the marketing should be about the value of your services and why you include their product in the solution.
  • You'll want better access to their technical resources when necessary. That makes you more valuable to your customers. You used to get that access as a result of your sales volume; now you need it because you are an active proponent of using their products.

It's likely that any channel manager will approach you the same way they always have. For them, you can generate sales. They'll want you to know how much margin you can earn. You know better.

This Is Not a New Concept
For the vendor, this is the classic "influencer" model (but not the kind where someone on social media talks about how cool something is).

Probably the first vendor to recognize and reward partners for influencing sales was Citrix more than 30 years ago. Even if the customer bought the licenses elsewhere, Citrix would pay a healthy percentage of the cost to the partner who could prove they created the sales by influencing the customer to engage in a project. Influencer partners ended up having very low volume of sales. But, beyond payment, Citrix recognized these partners as full partners. They had access to all of the resources Citrix had.

This is the partnership you want to seek, and it starts with that first conversation. No, you're not going to sell volume, but you're going to include their product in your proposals and thereby pull through healthy sales. You'll be pleasantly surprised how many channel managers have already recognized how the world has changed.

Posted by Howard M. Cohen on April 17, 2023