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Stefanie Hammond, head nerd at N-able discusses building a dedicated team.
The typical small managed services provider (MSP) has a handful of employees who play whatever role necessary to run and grow the business. Whether an IT specialist does a little bit of sales, or a security expert plays the role of CMO, everyone needs to be flexible. When the phone rings, the available person deals with the matter on the other end, regardless of their job role.
But this isn’t a model for sustainable growth, especially for sales. So, when is it appropriate to build a dedicated sales team? It’s common for an MSP to reach around $2m in annual revenue before making the leap to hire more dedicated salespeople and invest in marketing. After this, these dedicated teams are pivotal to whether an MSP continues to scale or hits the ceiling of growth.
Our recent research, the 2024 MSP Horizons Report, shows that customer acquisition is one of the biggest challenges facing MSPs today, making a focus on sales vital. So, how do MSPs properly invest in sales at the right time?
Crossing the chasm
To scale, businesses need to make structural adjustments including formalising and defining job roles. Rather than people taking on multiple roles (as one might expect from growth), the focus should be on becoming more specialised and creating new departments to replace the hybrid roles that existed before. The good news is MSPs recognise this too. Our research reveals MSPs are looking to invest in sales roles in 2024 despite the wider uncertainty in customer budgets in the short term.
In preparation for growth, it’s worth sitting down and considering the sales pipeline. How does the function currently work? If sales are mainly through direct recommendations or word of mouth, this will likely limit growth if not properly formalised with marketing and brand strategies.
It’s important to note that managed services and managed security services are not technical sales. These conversations should be held at a business level, explaining how you will help the business owner use technology to generate, help protect, and increase their revenue streams. Technical staff should be brought into these conversations only when their expertise is required, for example if the potential customer has a technical background or knowledge, such as a CTO. Preparing for these different conversations will be aided by a formalised marketing and sales strategy and truly understanding these different targets. It’s important to prepare correctly or risk letting the sale turn cold.
Impact on staff
Going from a small to a medium-sized MSP is a more difficult transition than simply renting a bigger office space and employing a few more people. It’s shifting away from the growth/start-up structure of people taking on multiple roles to get the job done. A smaller MSP might have worked quite successfully with a tight-knit team of specialists who know the business inside and out. But in attempting the transition from small to middle-sized MSP, it will be these members of staff who might feel undervalued if their specialisms aren’t recognised.
It’s well-reported that many IT workers are stressed, with global studies finding two in five IT professionals are at high risk of burnout—with this figure rising to over half in security. Burnout can lead to health conditions and recurring sickness, affecting productivity, decreasing the standard of work, and this can lead to a bad reputation for the company that affects hiring. As the business grows, asking staff to take on additional roles becomes increasingly unsustainable, even harmful.
The need to plan ahead
When a business grows, there will be customer churn. This can be simply because customers move on or perhaps sometimes because the new, bigger MSP is no longer the right match for a customer. This is something that needs to be planned for and doesn’t have to be an issue if the sales pipeline is built out in the correct way. But it will become an issue when technical staff are too busy with their main role to moonlight in sales.
According to our research, customer acquisition is the most significant challenge for MSPs today with 22% of respondents highlighting this as a key concern. Smaller MSPs tend to rely on referrals for their new business. When moving away from this more reactive method, MSPs can proactively improve the sales function with simple housekeeping such as lead categorisation, ensuring follow ups are conducted, and building a customer lifecycle framework to support onboarding and offboarding correctly.
It’s worth considering the following questions when building an MSP’s sales team and strategy:
- Who are your target customers?
- Are they in a vertical niche?
- Who is the decision-maker?
- Do they have the budget for your services?
- How many touches will it take to get interest?
- Does your sales team need technical sales support?
- Do you have a CRM system so you can begin to build a database of prospects?
- And, last but not least, are all your contracts, collateral, and sales materials concise and on message?
Setting an MSP apart from the pack
The MSP model is increasingly blending to form a mix of resell, consulting, managed services, and systems integration, making it more important than ever to differentiate in the market. Growing means coming up against new competitors, and often without the same word of mouth used to attract new customers.
Building a brand story, messaging, and having a dedicated team to follow through will help current and potential customers be aware of the value an MSP can provide and leave specialists to upskill and focus on the areas they know best. Without a dedicated sales team, a growing MSP risks being overstretched, lacking a sales pipeline and unable to let prospects know the great job they can do for them.
