March 07, 2016
Converting From Break-Fix To MSP: Find The Right Customers
After you’ve made the jump from break-fix to a managed service provider (MSP), there are a number of issues you must take into account to ease the process. Whether that’s working out a pricing strategy, or developing an MSP culture, it’s imperative to take the proper steps to ensure the transition is smooth and effective.
One of the parts of this transition will be finding the right customers. This, of course, means converting existing break-fix customers or generating new business. Converting break-fix customers to managed services can be challenging. A recent conversation in Datto’s new partner forum illustrated two different, but successful approaches for transitioning to managed services.
“We actually split out MSP from our break-fix (Decatur Computers) by creating a whole new company,” wrote Brendon Traxler, COO of Illinois-based Network Solutions Unlimited. “Except for C-level executives, there are no shared employees between the two companies. We have tried to brand the businesses separately—each reaching a different market share.”
“In my experience, the slow transition from break-fix to MSP worked well, and it gives your staff time to adjust,” wrote Steve Weeks, president of Vancouver-based Netcetera Consulting. “We started to make the transition to managed services by adding MSP components like e-mail filtering, backup and disaster recovery, monitoring, etc. Then, we converted a couple of existing clients over to managed services.”
Sitima Fowler, CEO of NY-based Capstone IT, took a similar approach. When her company started the process of converting break-fix customers to managed services, they started by reaching out to the customers that were using their services the most. “We looked at what they were currently spending and showed them how much they’d save by moving to the managed service model,” she said.
Jordi Tejero, owner of CRS Technology Consultants, suggested offering a 90-day trial period for managed services to current break-fix customers. “Prove to them that it works and they tend to buy-in,” he said.
When it comes to generating new clients, there are many options to consider. Tejero said that CRS is a strictly referral-based business. “All of the prospective clients are coming to us. We don’t advertise; we do not even have sales people,” he said. That works for CRS, but it is a well-established business with a strong client base. When you are just beginning to build your business, you need to show prospective clients that you exist.
Fowler said that marketing is one of her primary responsibilities at Capstone. “It’s all about education,” she said about reaching out to prospective clients. “In smaller cities like Rochester, many small businesses don’t know about or understand the value of managed services, so you have to show them.” Capstone gets the word out using direct mail, email, Google ads and social media. Fowler said that she blogs regularly and website traffic has generated a lot of leads. She stressed the importance of ranking highly in Google search, “We looked at what [our break-fix customers] were currently spending and showed them how much they’d save by moving to the managed service model.”
When you are first getting started with managed services, you probably won’t have the option to be choosy about clients. But, over time, it pays to be more selective. Think of it this way, if you are spending 80 percent of your time on two clients that’s fine—as long as they make up 80 percent of your revenue. However, if they only make up 20 percent of your revenue, you might need to rethink your relationship with them.
Tejero said that it is important to add an “out clause” to your contract or agreement with clients. His states that either party can end the relationship at any time, but must give 30 days notice. “If I have to end an agreement, I meet with the client personally, and recommend another IT service provider that is a better fit,” he said. “There’s nothing worse than having a client that doesn’t want you,” said Cohn. “When ending a client relationship, it’s important to meet and come to a mutual agreement to part ways. Good communication is ”In smaller cities like essential.”
To learn more about making the jump from break-fix to MSP, download our eBook.