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In our first article of the MSP Sales Journeys series, we described why it’s beneficial to set concrete sales goals before outsourcing lead generation or hiring a sales rep or marketer.

An MRR (Monthly Recurring Revenue) target can be backed into your sales funnel KPIs, which can drive other metrics and accompanying sales and marketing activities.

Transparency around those milestones helps the MSP, and those responsible for lead generation, form a strong alignment from the start. However, a blissful start can quickly go astray unless a myth is dispelled and confronted head on – the idea that merely generating appointments is all the MSP needs to prepare for.

Sorry! This may be breaking news for some of you. If you’re about to switch from reactive referral-based sales to proactive marketing-sourced sales, then buckle up, this article is going to be a hard pill to swallow.

Cold leads are a harder puzzle to solve

Imagine playing in a soccer game and you’re an unmarked striker who receives a pass 10 yards away from goal. In this advantageous scenario, even an amateur forward could score plenty of goals; just pick the head up, pick a corner, and strike!

Leads referred by a friend are the same scenario just described. Plenty of people with minimal sales experience can score new clients when handed a warm lead like this. These prospects already trust you and you haven’t said a word – all because the friend already said great things on your behalf.

According to Capterra, 61 percent of IT buyers report that colleague recommendations are the most important factor when making a purchasing decision.

However, if that exact same amateur received the ball 30 yards away from goal instead of just 10, that is a different ball game. Midfielders and the entire defense are now between the striker and the back of the net.

This is the scenario that awaits MSPs who are switching to proactive selling. You’re not just steps from the goal, it’s 30 yards out and to finish so you must be skilled, agile, and strong.

Framed another way, these opportunities are not referrals. They probably do not trust you at this stage. Not only that, but your competition may also include the incumbent IT provider, the MSP that was referred by their friend, plus any other providers the prospect Googled along the way.

The impact of bad closing on profit

In the table below, we can see the difference between a good closer and one that needs help.

If the close-won rate is 6 percent, then a 15 percent profit margin after five years would net $94K; on the other hand, a 20 percent close-won rate would net $315K, or more than 3X the profit, in the same period!

The good news is that it’s mostly green; so long as an MSP closes some opportunities, profit will eventually be realized. However, it’s undeniable that the ROI comes sooner and is much greater when we are better at controlling the sales outcomes.

What’s next?

In conclusion, when we acknowledge that we’re in a harder and unfamiliar sales scenario, only then can we prepare to win those deals.

What does win preparation look like? How do we even begin?

I believe the answer doesn’t need to be reinvented. In fact, one of our MSP partners had above 20 precent close-win rate in 2021 and he emphasizes the importance of having business improvement conversations, not just IT problem conversations.

In the next article we’ll include a checklist to help guide your first meeting in a direction that aligns with this business-first philosophy.

Photo: Dilok Klaisataporn / Shutterstock

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Posted by Derek Marin

Derek Marin is President of Simple Selling, the agency that generates predictable pipeline for MSPs. If you would rather tap dance in a minefield than add prospecting, marketing and sales team management to your to-do list, then feel free to book Derek directly from here: https://www.simpleselling.co/meetings/derek33 You can also reach him at derek@simpleselling.co or subscribe to the MRR Growth blog at https://share.hsforms.com/1jKEpsb0XSVC_UM3-w6ccRA463b for frequent sales tips and encouragement.

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