Dec 19, 2018
From VAR to MSP: The MSP Mindset
The value-added reseller (VAR) business isn’t what it used to be. Competition on pricing is intense, and profit margins have become thin. As a result, some VARs are looking for ways to diversify their offerings and generate new revenue. For many, that means delivering managed IT services.
According to CompTIA’s Trends in Managed Services Report, increasing sales revenues, protecting customer base, and minimizing financial risk are driving many IT professionals from VAR to managed services. Additionally, MSPs maintain long-term client relationships and frequently acquire new customers through referrals.
“We switched from VAR-type work to managed services about eight years ago,” said Patrick Murphy of Results Technology, an MSP and Datto partner. “Basically, we got tired of the ups and downs. With the VAR model you’ll have three months basking in the sun eating steak, then two months eating franks and beans.”
Delivering managed services is all about being proactive about monitoring the IT environments of a variety of customers. If you’re a VAR, once you’ve installed technology, you are on to the next sale and implementation. “The VAR business model is all about selling,” said John Marshall of Quest-Logix, a Houston-based MSP and Datto partner. “MSPs have to be about customer service. If you want to be successful as an MSP, shower your customers with service.”
“We like to help people. It’s not just about making money.” Murphy said. “So, helping customers became the focus of our business.” That mindset is essential to make it in the MSP game. Successful MSPs know that it’s not just about technology, you really need to build trust with your customers. Offering customers impartial advice about technology is a great way to do so. Obviously, you need to generate revenue and make profits, but it’s more important to recommend technology that helps them succeed. “With managed services, you can build long lasting business relationships,” said Marshall. Jordi Tejero of CRS Technology Consultants, a Florida-based Datto partner, agreed. “Your engineers need to develop relationships with customers,” he said. “Having the right attitude is everything.”
For many VARs, this customer-service focus is a challenge that requires considerable employee training. It may even require hiring new service-minded employees. Delivering ongoing, consistent customer service may not come naturally to the typical engineers that work in the VAR world. Many fall into the trap of providing excellent service to new customers, while neglecting older ones. “That’s probably the biggest downfall I see with a lot of VARs moving into managed services. They start out delivering great customer service, but then they fall off and pay more attention to new customers,” said Marshall. “It’s all about consistency and meeting expectations. You need to live up to however you sold the service.”
To overcome these issues, many VARs make a slow, gradual transition into the managed service space. According to Murphy, Results Technology’s transition to an MSP shop didn’t happen overnight. “It definitely took a while,” said Murphy. This “easy does it” approach allows your staff to adjust to the realities of delivering managed services. It allows value added resellers to start acquiring new managed services customers while continuing their legacy business as well. Or, they might convert some existing break-fix type customers to managed services while keeping some VAR customers.