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Wasteful with no Remorse.

Friday, October 31, 2014

Selling Managed Services: Whose going to get Slapped Around?


The oldest profession in the world isn’t prostitution, it’s selling.  One to one; one to many; many to many; retail; B2B; to that hottie in the corner; to your girlfriend, wife, sons, daughters, mothers, fathers, sales manager, cop, judge, jury; to ourselves – we all sell, and we always have.

Today, our industry is turning another corner – contracting and expanding at the same time. We’re looking for the next frontier and eyeing the IT cluster.

You're pondering selling servers, storage, networks and network management, aren’t you? Putting those monitors, PCs, switches and hard drives under one contract tied into a 36-month “rip and replace” strategy, right?

Sure.  How hard can it be?

Copiers have been connected now for more than a decade. All your devices scan; you’ve sold or heard of a “fax-server.” Your dealership has at least one “Content Specialist,” and RiKon/Xerox employs thousands of cycle-extending PS peeps – not that there’s anything wrong with that.

Again, how hard can it be?

Well, there’s good news, and there’s bad news. The good news is better than we hope; the bad news is worse than we think. It usually is.

The Bad News:

We have approximately 1,500 effective, well-run, imaging dealers/resellers in the U.S. The number of VARs is 15,000. The figure may not be accurate, but the scale certainly is; there are 10 times as many of them as there are us.

They are already in your accounts; they own the network, hold contempt for most salespeople and think they know more than you – which they probably do.

Hubris permeates.

They hate copiers – still – and love brand names. Even if Dell servers suck, once a Dell house, it is difficult to displace. They distrust those who wear a tie and can spot a Polo-shirt-wearing poser with their 'peripherals' – they are militaristic in the use of acronyms.

The Princes of the VAR are the customer-facing subject-matter experts (SME), the guys with all the letters behind their names. They are smart, certified and can speak in front of crowds or directly to CIOs – as peers. But don’t tell them that; most believe they have no peers.

Their deals are complex, multidimensional and project-managed. And I mean real project management – with resources, GANT charts and such.

Most likely, the VAR front-line salespeople, often called BDMs, never physically receive a PO or process an order; they have an inside team to do all that stuff. This gives them more time in the field, in front of their clients – your prospects.

The Good News:

VARs/IT folks don’t really sell; they take orders and write SOWs. They tend to throw technology at everything, yet employ little in-house. They’ve been trained to believe “real cold-calling” happens on the phone. “Sales training” is nothing more than a vendor like Cisco, Lenovo or HP coming in, spewing product, pricing and distribution data, then leaving “leave-behinds.” Yeah, I know – that part sounds familiar, doesn’t it?

Most VARs define “service” as pricing, logistics, deal registration, imaging (not the kind we know), prompt delivery, discounts and accurate billing (again, not the kind we know). Client relationships are built on “lunch and learn” giveaways and trading POs for iPads.

Transactional margins are in the single digits; charging for shipping equals margin. Back-end rebates equal margin for the house. Trip-fees are the norm, they have no idea how to manage to “call avoidance,” and trunk-stock is a foreign concept.

So, what to do?

Competing with a VAR head-to-head can be difficult. Especially when your prospect has bought into the belief that copier companies aren't sophisticated enough for real IT issues.  If you can get in under the VARDAR, you have a good chance, since most are not looking at MpS as a serious value-add.  Those who do are experiencing the same mistakes we did – YEARS AGO. They’re stuck in the “powered by” stage of MpS.

Three ideas, 2011:

1. Work with your existing purchasing/facilities contacts without raising much dust. Sell S1/S2 without talking about software, business process management or EDM. Don’t set off any IT red flags.

2. Shore up your internal IT services pedigree. Now is the time to re-evaluate your current talent pool. Tough decisions — there are fewer devices out in the field; therefore, fewer service calls. Figure that one out.

3. Reach out and establish a solid relationship with a VAR as their MpS engine. This is a temporary, parasitic relationship filled with teachable moments. Again, figure that one out.

The times, they are changing. At our core, this niche, the imaging industry, is crowded with resilient, business-minded problem-solvers. We can do this, and for a profit.

Three more ideas, 2014:

Prospect/Sales side:

1. Seek out companies who do not employ any internal IT support staff - resistance is guaranteed
2. Talk to the owner and confirm he values IT is a strategic component of his business model
3. Look at your internal IT. If you don't value IT services, you'll attract folks don't as well

Internal/Infrastructure side:

1. Partner with a master managed services provider like Collabrance.
2. Train your copier reps how to recognize and qualify IT services prospects
3. Do not call in 'managed network services' - why be chained to a network?

Originally posted by Greg Walters on 08/08/2011, 1105 Media.

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