Gary Pica, founder of TruMethods and a well-known managed services veteran, is onstage at the Ingram Micro Seismic Partner Conference in Dallas. Pica is sharing managed services sales tips. Here are some of the highlights, plus a hint about Pica’s next potential career move.
First, some background: Pica purchased an IT reseller business in 1996 just outside of Philadelphia. He ultimately transformed the business into an MSP that managed 7,000 endpoints and generated $500,000 in monthly recurring revenue. mindSHIFT, the top-ranked company on the MSPmentor 100 list, acquired Pica’s business (Dynamic Digital) in 2005. And by 2009, Pica had moved on to launch TruMethods to help MSPs build their businesses.
During the session, I asked Pica if he would ever get back in the managed services game. Pica said he’s still a shareholder in mindSHIFT. And he also hinted that he may consider a career move in the next 18 months or so. In the meantime, he’s busy educating MSPs.
The biggest challenge facing VARs and MSPs, Pica said, is an acronym called: A.T.D.I.Y.P.B.A., short for after tax dollars in your personal bank account. “After a few years, the reality of life and business set in and you adjust your expectations downward,” said Pica. His goal, naturally, is to help MSPs adjust their financial expectations upward.
When Pica launched his managed services practice, he told a customer it cost $2,000 a month. The customer’s reaction: “I spend $18,000 a year with you; why would I spend more?” Pica instantly realized “something had to change” because he had a business model and pricing challenge.
New Approach
To build a successful MSP practice for customers, Pica zeroed in on these five points:
1. Focus on the end result
2. Limit the choices and options you offer to your customers
3. Zero in on people, process, technology and time
4. Define your edges: You have to have a clear line of distinction between what’s included in your service and what isn’t. Be able to say what the service is, what it covers, what it doesn’t and how much it costs, you’re probably on the right track, Pica said. “Don’t have fuzzy edges,” said Pica. “If you have fuzzy edges you’ll sell less and you’ll make less.”
5. Remove barriers to entry: “There’s only one thing that can eliminate risk in your business. Have enough customers at the right price to create scale, and therefore eliminate risk.”
Building a Sales Engine
Generally speaking, for a 20-person network Pica says you can charge roughly $2200 to $2600 per month for managed IT services.
But before you get to a price conversation, think about building your sales engine. The idea is to have an “un-sales process.” When you get in front of a customer, ask them as much as you can about their business. And find out why they should NOT buy from you, Pica said.
Get the answers, and 20 percent of those customer meetings will turn into long-term managed services contracts, Pica said.
When customer say “they’re fine,” make sure you’re making a list of 5 to 10 things in the customer setting you know you’d do differently. The idea is to “reframe” what “fine” is, Pica added.
Customers who are “fine” typically believe nothing is crashing and their vendors call them back. Also, the customer thinks their IT costs are “the bill from their current IT vendor.”
MSPs, in turn, need to expand customers’ definition of fine: Predictable performance, functionality, reduced risk, capital costs and productivity. Also, MSPs need to redefine their customers’ definition of IT costs to include the impact of IT on their biggest cost: People.
Pica says his approach worked 400 times over his 12-year career, though he concedes roughly 1,500 target customers did not embrace his pitch. His key point: You can’t always win.
“Where the rubber hits the road in this business is when you’re belly to belly with the customer in a meeting,” said Pica.
Four other tips from Pica:
- Find a new hammer: Stop doing the same old same old.
- Create a vision: Instead of being a brick layer waiting for the next pile of bricks, focus on the bigger picture: Your unique ability to build a cathedral in the managed services market.
- Put your goals in writing: If it’s not in writing, it’s not a goal. “It’s amazing what happens when you work with a plan.”
- Do something now: Write down your 10-year net worth goal. How many people do you need to get in front of each week to achieve your goals.
That’s it from Pica. More thoughts from the Ingram Micro Seismic Partner Conference later today.
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Tags: Gary Pica | managed services revenue | Managed services sales | mindSHIFT | Recurring Revenue | TruMethods
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Joe—thanks for bringing us some of Gary’s insights. He makes some important points, especially that part about “defining your edges.” We’ve found that our most successful partners are the ones that set clear expectations in regards to the service they are providing and the costs. As long as MSPs position themselves correctly-—as a value-added service—-they’ll begin to build those all-important business relationships.
In addition, one thing I’d like to point out is that when an IT provider is moving more toward managed services, their profit incentive changes. If MSPs can point that out to their customers-—that now they have an incentive to keep their customers up and running instead of part-way broken—-that will help the pricing conversation along.
Joe, great job recapping my presentation. One point to clarify; although I would consider some involvement in an MSP in the future, my priority is TruMethods and will remain TruMethods. My team’s passion is helping MSP’s grow predictably and profitably. We have a ton of things in the works to enhance the experience our members have with TruMethods. I want my TruMethods members and the community to be clear of my prioirities.
Sam@1: Thanks for the insights. Looking forward to Wed Webcast
Gary@2: Sorry if I introduced some confusion. Thanks for clarifying. It was great to catch up in Dallas.
-jp
This is my first visit to MSPmentor – impressive and insightful content, Joe. I couldn’t agree more with some of the points that Gary makes, particularly defining your edges and creating a vision.
I have a few comments to contribute:
MSP’s that want to create a differentiated story or re-invent their identity should develop core competency in providing application integration and B2B integration services. It is an area where they can move well up the value-stack and cement themselves as a true extension of their customers’ business – a legitimate trusted advisor. Integration is a huge challenge for companies of all sizes, and it’s only getting more complex – and necessary – as some applications shift to the cloud while others remain on-prem, and as customers, suppliers, distributors, banks, etc. push for (or insist on) the replacement of paper and phone-based processes with automated data exchange.
Just think about all the people costs and other costs associated with internal and external processes that are not integrated. Rekeying data off of paper P.O.’s received. Mailing invoices. Faxing ship notices. Calling to inquire about payment status. The list goes on and on. Then think about the opportunity costs – foregoing preferred supplier status, getting paid slowly, lost sales opportunities, slipping competitively. Again, the list goes on.
Going back to a point Gary makes, I have never met with ONE company that says it is “fine” when it comes to integration. Most will candidly admit they are far from fine and offer specific examples as proof. Most recognize the growing importance of integration in running a business more efficiently and cost-effectively. Few will decline an offer to listen to how available technology can be implemented that will pay for itself very quickly and be managed by a trusted service provider. I don’t know why a lot of MSP’s wouldn’t be looking very closely at incorporating this into their business model and offer suite. The upside is too strong to ignore.
Joe,
I have been in attendance to the SPC for the past 2 years, during which I have witnessed some really good presentations; however Gary’s jumped out as one of the most inspirational and dynamic presentations out of all of them.
Also Joe, you did an excellent job in aiding with the “flow” of the Cloud Summit. You consistently facilitated seamless hand offs and added succint thought provoking comments. Thanks for your assistance.
- Erik
Erik: Gary is the rare MSP veteran who blends real-world experience with some drama on stage. Thanks for your thoughts on my role at Cloud Summit. I hope it’s obvious that I enjoy the audience/reader interaction. Both face to face … and online.
Best,
-jp