Thursday, January 29, 2009

Money for nothing

In these times of economic ‘non-spending’ many resellers are glad they have implemented managed services. This basically means they charge clients a monthly fee that covers some form of service. The idea is that over the longer period the amount charged is less than the cost so a tidy profit is made. However, in uncertain economic times like these managed services provides much needed regular cashflow for IT resellers because clients are no longer making large infrastructure purchases or calling up to have things repaired. In most cases they are going longer before making a call that costs them money.

 

Now managed service resellers might be sitting back thinking they are pretty in pink but I wouldn’t get too cocky yet. I foresee two issues that will even affect you. Firstly, as business tightens up clients are going to be looking at every outgoing and asking whether it is justified. If they are ‘paying’ for IT support and they don’t feel or see they are getting the value for that they’ll look at cancelling it or at the least bumping it down a level to save money. Secondly, it is all well and good to extract cashflow from existing managed services clients but I think most will struggle when attempting to sell that offer to prospects. So, as I see it, you will get cashflow from your existing managed services clients but that is going to be under pressure as the client’s cashflow comes under pressure.

 

Now there is a caveat here. If you are ‘sitting back’ and simply expecting your managed services cashflow to keep rolling in then don’t complain when it starts to wane. Now’s the time that you need to be telling all your customers and prospects exactly what the benefits they receive as part of their managed service ‘investment’. You need to illustrate how much benefit they do receive (real and imaginary) for their dollar. You need to worker harder to demonstrate that by going with managed services from you they are actually SAVING MONEY!

 

That’s the trick to maintaining, and maybe even improving your managed services income. You need to elucidate exactly what the benefits are FOR THE CUSTOMER. Even though you may not believe they are a benefit they still maybe to the customer so make sure you tell them.

 

A managed services approach in IT certainly provides resellers with a big advantage in times like these but don’t simply sit on you butt thinking that the cash is going to keep rolling it. If the customer doesn’t think (note – it’s from the customers perspective not yours) they receive value from what they pay, then they are certainly going to start questioning whether continuing to pay is such a good idea. Get off your butt and remove the doubt from their mind because all revenue these days requires work.