Common Sales Challenges MSP’s Must Overcome to Increase Managed Service Sales and MRR

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Feb 18, 2019

Video Above: Hannah Erb (Collabrance) and Michael Cummings (Taylor Business Group) share in a webinar how MSPs can avoid losing sales.

How MSP’s Can Break Through the “Sales Ceiling”

On average, managed service providers (MSPs) only bring on two new contracts per year. This low growth rate is likely due to the fact that those MSPs are not creating enough new monthly recurring revenue (MRR) prospects and are not finding enough prospects to pursue.

“The business model that was sufficient to get you to where you’re at today, simply doesn’t scale,” said Michael Cummings, Sales & Recruitment Director at Taylor Business Group. “You need to make fundamental changes to what you do and what your business model looks like, in order to build a business that is going to double and triple in size in the next four to five years.”

Develop a Scalable MSP Sales Engine

Image Above: "The Sales Chasm" in the MSP industry, and building a scalable sales engine to determine future growth (Taylor Business Group).

The key to doubling or tripling the size of your MSP business within the next three to five years is by focusing on creating new MRR clients. An effective sales driven business model that generates new MRR clients monthly, does so through developing two discovery meetings per week.

Discovery meetings are face-to-face meetings with a decision maker at the prospective company. During a discovery meeting, the salesperson and decision maker should develop a relationship and dive into the background of the prospect's business. The salesperson can determine if the decision maker is engaged and begin to qualify them as a potential MSP customer.

On average, MSPs close 25 to 35 percent of qualified discovery meetings. This almost guarantees an MSP will bring on two new clients per month if they are diligently developing two discovery meetings per week.

Generate Discovery Meetings

In order to break through the ‘sales ceiling’ and generate two discovery meetings per week, your MSP must develop a plan to attract more leads.

There are a number of methods to go about this; however, we have found marketing success through:

Use internal resources

Leverage what you already have. Use referrals and qualified lists, cold call, and develop sales contests in order to motivate your internal team. Don’t be afraid to go back to square one and generate opportunities to get your name out there.

Leverage public relations

Word-of-mouth is a powerful tool. Proactively search for opportunities to get the word out about your MSP. Use networking opportunities, such as attending industry events to get face time with potential prospects.

Have an online presence

“You have to have an online presence that really solidifies your credibility, provides the information your buyers need to make a decision, and builds your status as a trusted technology advisor.”

Buyers research companies online prior to making a purchase decision, so it is critical to build your presence through your website, social media pages, videos, blogs, etc. By providing prospects a positive online experience, you further qualify your MSP business and set yourself apart from competitors.

Provide corporate literature

Prospects are expecting you to be their trusted business advisor. Direct prospects to targeted internal resources like webinars, videos, and whitepapers to provide them with beneficial information and position your MSP as a knowledgable and trusted source.

Host an event

Hosting an industry event provides your MSP with great networking opportunities and allows prospects to have conversations with you without the pressure of a one-on-one phone call.

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The Six Pillars of Business Development

To generate two discovery meetings per week, it is essential to keep up with business development activities, which Taylor Business Group refer to as "pillars". The accumulation and consistency of nurturing each pillar enables your account managers to develop two discovery meetings per week.

Image Above: "The Six Pillars" (Taylor Business Group).

By committing to not one or two pillars, but all six, you establish an effective sales plan that ensures the generation of two discovery meetings weekly.

Focus on Your MSP Prospect Needs

During the discovery phase, the prospect acquires a sense of what a business relationship with your MSP would look like. During the initial call, pushing to promote your solution instead of focusing on the buyers needs will likely end up in a "thanks, but no thanks."

Businesses buy from MSPs who truly understand their business and what they are trying to accomplish. Building a valuable relationship with the client should be the initial goal in the sales process. Act as your customer's consultant buy asking the right questions and understanding the buyer's values, from their perspective. From there, you can specifically align your services to their needs.

"You want to treat that first meeting like they are already your client and you are really just consulting with them. And the reason for that is, ultimately that is what they buy. They buy the connection they have with the people in front of them and whether they think they will be good consultants to them."

Prepare for the Initial MSP Discovery Meeting

Set yourself up for a successful discovery meeting, by laying out a game plan. Think of the initial call as an interview.

The goal is to determine:
  • “Who is the client?”
  • “Why will they buy from you?”
  • “How will they decide?”
  • “What is their pain?”

Throughout the discovery call, if you are able to determine pain points and a compelling reason for them to buy from you, you can take the next step and further qualify them by determining their budget.

Cost Justification and Overcoming MSP Sales Objections

Instead of throwing proposals out on the table early in the game, take the time to dig into the company’s revenue, number of employees and salary in order utilize those numbers in quantifying their pain points and waste. By doing this, you can find areas in which the business is misusing resources and taking away from core business activities. Leverage this by positioning your MSP as the solution that provides value and ROI to their business.

“It should never be a price war, it should really be focused on value.”

When objections occur, take this time as an opportunity to further qualify your MSP. It is crucial to come prepared to answer any questions or concerns, and to fully listen to and comprehend their concerns. Continue asking questions and keep the conversation going to uncover any underlying issues. The more you work to find solutions to their concerns, the more likely you are to continue moving forward with the deal.

Category: Sales

About The Author

Hannah O'Donnell

Hannah O'Donnell, Director of Sales, is responsible for building the strategic vision for sales and marketing while providing business planning, education, training, and sales assistance to partners. She is also responsible for originating new partnerships for Collabrance. She was recognized as one of 2019's Women of the Channel by CRN, a brand of The Channel Company. Hannah started at Collabrance in 2013 as a Strategic Business Advisor. In 2014, Hannah was nominated by her peers and won Rookie of the Year, and in 2015 became a member of the 100% Sales Achievement Club at GreatAmerica. Hannah earned her business degree in Marketing and Management Information Systems from the University of Iowa.