Creating a Specialized MSP Practice Can Be a Long, Yet Profitable Journey
In any sport, the best players are the true masters of the game. They dedicate their hearts, minds and bodies, building up the right muscles and skills through specific exercises and endless practice sessions. Success typically comes to those who put in the work and sweat the details.
It takes a similar mindset to build a new IT services specialization. MSPs must devote a significant amount of time and energy learning workflows, regulations, common IT requirements and the key priorities of various players before joining the conversation with business owners in any prospective target markets. Your team must appear credible in these discussions. MSPs have to earn the right to implement and manage technologies for clients in different verticals, acquiring the knowledge, business expertise and terminology to go toe-to-toe with peers already supporting these communities. Most of all, you must deliver the performance and results those companies need to accomplish their own short-and long-term objectives.
Like any new business endeavor, building a new specialized MSP practice requires a good plan and even better execution. Identifying and exploring the best market opportunities are just the initial steps.
Select the Best Vertical for Your Managed Services Business
In the past, many industry sales consultants told MSPs to focus on the “low-hanging fruit,” meaning the easiest or fastest ways to close prospects. However, simple and quick doesn’t always drive profits. When looking at new markets, a better course of action is to create a standard (or ideal) client profile. That gives the management team a baseline for assessing the different attributes for each prospective vertical, including the number and types of devices to manage, profit potential, systems complexity, and support requirements. This forethought could save an MSP from taking on clients that could lower their average margins and increase their management costs and headaches.
Most managed services firms focus their expansion efforts on complementary verticals and industries with more local players. That approach reduces the investment requirements for sales, marketing and training programs and typically lessens the time to ramp up a new practice. Selecting a specialization that complements or closely aligns with an MSP’s current business model, when that option is available, carries less risk than venturing into a completely different vertical.
For example, IT services firms with strong medical support practices may wish to explore business opportunities in the dental, chiropractic, and optical fields. With similar workflows, compliance requirements, and “vocabulary,” the learning curve should be shorter, and investments will likely be minimal.
Retail-focused consultants could investigate opportunities with companies with similar business operations, including restaurants, hotels, and a variety of hospitality-related businesses. Their Point of Sale (POS) and payment technologies expertise, along with experience developing and supporting customer relationship strengthening solutions, could readily transfer to those other complementary verticals. The more common the technologies, business processes, and consumers, the less heavy lifting it will require for an MSP to enter that market.
What are the best verticals for selling managed services? Most MSPs start with broader categories, such as SMBs, and build a niche, and then, after establishing a beachhead and enjoying success, they expand into the next closest specializations. Here are a few of the many industries where IT services firms have the greatest success:
- Health care
- Local/state government
- Real estate
After determining which sector offers the most opportunities, the real work begins—building and executing the business plan for a new vertical practice. The key elements of that strategy may seem daunting to an outsider, but experienced MSPs conduct some of these activities every day.
Speak the Language
How do you communicate your value to an unfamiliar audience? Selling and marketing to new verticals require a solid comprehension of their terminology, jargon, and pain points. MSPs must understand what motivates prospective clients and, most importantly, the decision-makers and know how to “connect all the dots” with clear and concise messaging. While the technology may speak for itself in many cases, IT sales teams can “lose the room” quickly by misusing the industry’s everyday acronyms and terminology.
While some may cringe when they hear, “you can’t walk the walk if you can’t talk the talk,” that phrase carries a lot of weight in the business community. MSPs earn respect and close more deals when they can effectively communicate with potential clients. The sales pitch must connect the types of service with the business requirements of each prospect.
To sell managed services to new verticals, you need to bring your entire team up to speed on the industry terms, acronyms and common phrases. Some MSPs acquire those language skills through research, industry-specific courses (i.e., a basic online course on opening a construction business), or by hiring an experienced sales professional or consultant in that particular field. Cutting corners on this step can quickly undermine your efforts at building trust in the chosen new vertical community. There is a real opportunity for MSPs with a dedicated sales pitch, solid technical background and knowledge of the industry.
Learn Workplace Nuances
Like the language subtlety concerns, MSPs must have a solid grasp of workflow and a good feel for the customer expectations in each market they serve. Before selling managed services in a new vertical, a common best practice is to spend time inside one or more prospective clients’ businesses or bring in someone with that expertise.
For example, you could hire or contract with a former CIO of a health care organization to manage the practice and educate your team on the nuances of various types of medical facilities. From front desk operations and billing to the flow of patients and the tasks performed by doctors and nurses, understanding the staff’s responsibilities is critical to selling managed services to these organizations.
Understand the Tech Needs
Which systems automate or help prospective clients manage their workflows? While most organizations employ the same base technologies, including email and office-enabling applications from Microsoft or Google, the line-of-business applications differentiate the verticals.
For example, when selling managed services to restaurants, MSPs should be able to skillfully implement and support POS and kitchen/order management solutions. Those clients would naturally expect and rely on your expertise at supporting these systems if signing a contract—though you could partner with others to deliver some if not all of those specialized services. To prevent misunderstandings later, MSPs must be careful not to misrepresent their capabilities or technical details when entering a new vertical. Can you support the specific cloud solution, security services, or infrastructure management programs that their current service provider employs? You may wish to avoid developing business relationships in industries with a complex list of needs and technical requirements.
Be true to new and current customers. The worst thing an MSP can do when selling managed services to a different clientele is to leave technology or support gaps or not be capable of addressing cybersecurity issues. IT firms with operational maturity that offer a wide array of tools, security solutions, cloud computing capabilities, industry expertise, and a solid services delivery model, will be in the best position to expand their customer base.
In today’s tech-savvy environment, where decision-makers have more IT-related insight than ever before, the worst thing your sales reps can do is fake their way through a conversation. Your team must have a firm grasp of the technologies needed to succeed in new vertical markets.
Unlike the movie “Field of Dreams,” you have to do much more than build a new specialization to ensure its success. Prospects will only come if they know about your MSP’s expertise and ability to address a true need in their operations. Effectively telling the story of how your solution or expertise will help a new audience is essential, but first, you have to get their attention.
Start by leveraging your current customers and networks. Reach out and share the news of new vertical expertise with respected business professionals who can provide recommendations to potential customers. Create a referral program that incentivizes people in your network to make a simple introduction to targeted businesses’ key decision-makers, including previous clients. Whether that means offering a free cybersecurity assessment, a one-month 50% discount, a $250 gift card or another enticement, the goal is to encourage positive engagements between acquaintances.
Effective IT marketing activities (i.e., advertising, social media campaigns, newsletters) should also be part of the demand generation plan. An MSP that builds an effective sales funnel will engage prospective customers with their specific pain points through the stages of the buying journey: awareness, interest, decision, and action. Selling managed services to new verticals can energize your team, boost customer retention, and even increase your security business or other offerings.
Close the Deals!
No new IT services practice can succeed until it generates more revenue than expenses. Creating an effective sales process for each business unit is essential. For that point, the most important step when selling managed services to a new vertical is closing the first, second and all subsequent deals, creating strong cash flow to pay the bills and invest in future projects. It’s all about creating the best business outcome and client satisfaction.
Sales success is all about the links. The opportunity becomes real when you connect the dots between a prospective client’s potential issues and business objectives and your core and specialized services offerings. What your sales team does from that point will determine whether your new practice succeeds or fails.
If your MSP is ready to explore a new vertical, you’ll need cash flow to propel your efforts—to invest in marketing and acquire new tools, training or staff. ConnectBooster is trusted by thousands of MSPs to automate billing and collections to achieve effortless cash flow. Request a demo to see how ConnectBooster can help you convert outstanding accounts receivable into real revenue in the bank—all while saving time and money.