by Frank Colletti, VP Sales, N-able by SolarWinds

While all SMB customers experience similar IT challenges, not all are willing or ready to embrace a proactive and managed approach to IT services. The reasons why are illustrated best by the classic IT Maturity Model, which segments the SMB market into five customer types based on how they value and buy IT services. These segments include break-fix, responsive, proactive, managed and utility.

Customers who operate in the break-fix and responsive stages see IT as a cost. Customers that operate in the proactive, managed and utility stages see IT as an investment and are better candidates for cloud-based services. It’s a clean break, but complexity comes into play when you start talking about how to best sell to these customer segments.

Making the Most of the IT Maturity Model

Not surprisingly, the majority of MSPs want to provide managed services to the most desirable segments of the IT market. Unfortunately, these customers represent only 25 percent of the total market, which means competition is tough.

The remaining 75 percent of the market is made up of break-fix and responsive customers – the majority of which do not want or see the value in fixed-fee, managed services. But the situation is not as bleak as it sounds. There’s a way to acquire these types of customers and almost all MSPs have the resources already in place to make it happen.

What you need is a flexible, ‘a la carte’ marketing methodology that aligns a range of services with the specific needs of the break-fix/responsive customer and allows them to test drive managed IT services. Anything from anti-virus (AV) software, to managed data backup, managed mobile, patch management, data storage, Office 365 and so on is fair game.

With managed AV as an example, you install the product, update it regularly, ensure the license does not expire and provide your client with reporting on a monthly basis to show they are protected. This represents an attractive, single product managed service that will be very appealing to a business owner. Now they don’t have to worry about managing their AV as well as the expiry dates, or quarantining items and any other time consuming chores. As the MSP, you have a new customer on your dashboard generating new recurring revenue.

Moving Customers from Break-Fix and Reactive to Proactive

While ‘a la carte’ is relevant to all segments in the IT Maturity Model, it gels best with break-fix and reactive customers. They need to be educated, courted and shown the value of a managed service -- sometimes one service at a time.

Moving these customers – which again represent the majority of the SMB market – to a proactive type of relationship is also a critical step in any successful cloud-based strategy. In general, these customers are heavily vested in a hardware-based capital expenditure (CAPEX) model. They are looking for an immediate solution to an IT problem, and are therefore less likely to transition to a cloud model overnight, but can and will transition to the cloud once they’ve given it a test drive.  

Proactive customers on the other hand represent a critical crossover point for selling a cloud-based service. These customers have engaged the MSP for regular proactive preventive maintenance and can more easily see the value of infrastructure as a service and make the leap to a managed cloud offering.

A window of opportunity occurs for an MSP when their customer’s hardware comes to end-of-life. This is where the MSP, a trusted advisor, leverages the customer relationship and provides an operating expenditure (OPEX) based proposal aligned with cloud and managed service delivery models. For many SMBs, an OPEX model is more appealing for IT expenditures because it eliminates the need for a higher upfront investment and instead allows the customer to pay out their operational costs over time and at a lower monthly cost.

So if you’re looking for a great way to transform your MSP business from a reactive to a proactive one, embrace the cloud. You can use backup-as-a-service (BaaS), disaster recovery-as-a-service (DRaaS) and other cloud-based offerings to not only change the way you conduct business, but to also differentiate your service portfolio, cross-sell new services to existing customers and expand into new markets. 

There’s no downside - just a greater opportunity for bigger recurring revenues.

About the Author: Frank Colletti is vice president of sales for N-able by SolarWinds, a global leader in remote monitoring and management (RMM) and service automation software. In this role, he is responsible for building the sales infrastructure and culture that supports the company’s managed service provider (MSP) partners worldwide, including new customer acquisition and vertical market efforts. With more than 16 years of experience in sales leadership, Colletti brings an in-depth understanding of sales and MSP expertise to N-able. Since joining the company in 2003, he has made significant contributions to the success and year-over-year growth of N-able and its MSP partner community.