As a business owner, your days are filled with tasks that further your mission of providing World Class IT and vCIO services to your clients. You got into business because you love doing these tasks.
The other tasks on your to-do list are the things you need to do to run – and build – your business. It’s tempting to put them on the back burner in favor of the tasks you enjoy. For many, sales is the number one task you’d rather ignore.
You can’t ignore sales, though. Not if you want to stay in business.
Instead, you need to set up a solid MSP sales process that focuses on monthly recurring revenue. This will enable you to increase your MSP sales efficiently and effectively, without letting it take over your workday.
Start with these three simple steps.
1. Do The Math
For a reliable cash flow, focus on monthly recurring revenue (MRR), not projects and upgrades. Determine how much new business you need each month, whether your goal is to cover attrition among current clients or to increase your overall revenue.
You’ll need three other figures for your calculations:
- First-time appointments (FTAs): the number of sales calls you make (or want to make) each month
- Close ratio: the proportion of your FTAs that turn into sales
- Average MRR amount: your total monthly revenue from service agreements divided by the number of your clients
Multiply these three figures together to see what MRR would result. If the result isn’t what you want, experiment with adjusting one or more of the variables to see what happens.
For instance, if your close ratio doubles from 10% to 20%, the number of FTAs you need to make to hit your target will be cut in half. And if you double your MRR amount, the number of clients you need at that price is cut in half.
Once you’ve figured out a doable balance among these three factors, it’s time for the next step.
2. Set Goals
The close ratio and average MRR numbers you used in the first step are based on how well you’re currently doing. Now use them to calculate the number of FTAs you need to make a year to meet your revenue goal, then divide that by 12 to determine the number of FTAs you need to make a month.
Setting a monthly goal keeps you focused and allows you to course correct throughout the year. If you’re hitting your numbers, great. If not, look at increasing your MRR numbers and improving your close ratio, and not just making more FTAs.
3. Fill Your Sales Funnel
You may have several hot prospects (perhaps referrals from current clients). And you probably have hundreds (maybe thousands) of names in your database, but only a tiny percentage of them have any chance of converting to clients.
But do you know who might become clients in the future? More importantly, do you know who is currently in the market for the services you can provide? You need to fill in the middle of your sales funnel to develop the prospects you’ll be making your FTAs with.
Leads come in three types: cold leads, warm leads and hot leads (the latter are often prospects you’ve talked to previously). After you’ve sorted out the names in your database, focus your energies on the prospects most likely to do business with you. They’re the fewest in number but the ones most worth your attention and energy.
There’s more to developing an effective MSP sales process, but these three simple steps will set you well on your way.
Learn more about improving your MSP’s sales process in this free whitepaper.