Many MSP sales teams make mistakes in their process that hurt profitability. Understanding the challenges your business faces is critical to making improvements and moving forward.
Here are three common mistakes that MSPs make in their sales process – and how you can avoid them and improve your MSP sales.
3 Common Mistakes MSPs Make In Their Sales Process
Quoting The Wrong Price
One of the biggest mistakes that MSPs make is quoting the wrong price. MSP sales boil down to a math problem, and successful MSPs understand how to make the math work in their favor.
Your recurring monthly sales goal is equal to the number of first time appointments (FTAs) you attend, times your close ratio, times your average monthly recurring revenue (MRR). For example, if your average account size is $1,500 per month, you would need twice as many FTAs to reach your goal as someone with an average account size of $3,000 month. That average account size is based on two key factors, the price you charge per seat and the size of the prospects you target.
Many MSPs struggle with packaging and pricing their services in a way that shows value to a prospect, but this is how you increase your MRR. Bundling your services, for instance, provides value to the customer and justifies a higher price per month.
Neglecting Lead Generation
Generating new leads for your business is critical, but most MSPs lack a process for generating the quality and quantity of leads required to achieve their recurring revenue sales goals.
Many MSPs rely on referrals for all of their new business. While referrals are great, most businesses can’t generate enough quality referrals to build their profitability.
Instead, focus each week on warm lead sources that pay large dividends, such as qualified referral partners. While this requires a great deal of discipline – you’ll need to set activity goals and put accountability processes in place – it’ll pay off in the long run as you generate more qualified leads.
Failing To Manage Prospects
Once you make contact with a qualified prospect, it’s critical that you have a process for maintaining the relationship. If not, you risk losing the customer forever.
Too often, MSPs spend their time chasing down new leads instead of nurturing past contacts. It takes discipline and accountability to nurture relationships, but the benefits of doing so far outweigh the time it takes.
Make it a goal to build a list of 250 top prospects to maintain ongoing relationships with. As your list grows, you’ll likely find that close rates and overall sales results increase as well.
How MSPs Can Overcome These Challenges
It takes accountability, discipline and a solid set of processes to overcome these challenges, but it’s not impossible – especially when you’re willing to put in the work.
To improve MSP sales, it’s important that you have a strong understanding of the math that’s involved. Use the formula above to set an annual recurring revenue sales goal and figure out how many FTAs you need per month. Once you have this number, compare it to the actual number of FTAs you’re generating today.
Improving your sales isn’t just about math, though; it’s also about relationships. Make it a priority to generate new leads every month, and to maintain contact with prospects you’ve already identified.
The sales process is a challenge for many MSPs. By understanding where you’re making mistakes, you can take actionable steps to improve your MSP’s sales process. In turn, you’ll benefit from a more successful sales process and greater profitability.
Learn the right packaging and pricing strategies in our free guide.