It’s a Tuesday afternoon and you’re burnt out from sending quotes. You’ve been sending out quotes constantly for the last 3 months, but now you realize that you’re wasting your time. You’ve been sending quotes to businesses that you’ll never win. On top of that, you found out last Thursday that you’ve lost a client to a cheaper, local competitor.
Sounds familiar, doesn’t it? That’s because this is one of the most common issues that MSPs face, but what if I told you that this time next year, you could be turning down clients instead? If you’re ready to waste less time in sales meetings, win more business, and have clients of such high quality that you’re excited to pick up the phone when they call, here’s what to do:
The Importance of Identifying your Ideal Customer
One of the biggest mistakes MSPs make is failing to identify their ideal customers. Ultimately, there are 3 types of customers:
- The customers who are a joy to work with, respect your time and experience, and pay you on time. These are your ideal customers.
- The customers who are easy enough to deal with, mostly listen to what you and your team say, and almost always pay on time. These are your average customers.
- The customers who don’t value your advice, nickel and dime you on your quotes and invoices and don’t care to pay you on time (if at all). These are your bad customers.
The key to closing more sales quotes is to prioritize selling to your ideal customers and to spot bad customers early enough that you don’t waste any time on them. That’s right, not every customer is the right customer!
It’s important to note that the size of the customer and even the amount they will pay you is irrelevant. If they are a bad customer they will waste your time.
How to Identify your Ideal Customer with BrightGauge
Like many other aspects of business, identifying your ideal customer starts with data. With just 3 gauges, you can begin to identify your ideal customer:
Top 10 Tickets per Endpoint
Monitoring your top 10 tickets per endpoint will help you identify which customers create disproportionately large amounts of work for your MSP. In the image above, Al’s Coffee Shop is submitting 500 tickets, and you may be tempted to put them into the bad customer category, but you’ve got to dig a little deeper before jumping to conclusions.
Say you have a customer with 1000 users and they submit 500 tickets. That breaks down to 2 end users per ticket, which is probably pretty profitable for you! Now let’s say you’ve also got a customer with 100 users who submits 200 tickets. That breaks down to 2 tickets per end user, which is not so profitable!
It’s all about finding your sweet spot. Which customers have the best ratio of users to tickets?
Lowest 10 Tickets Per Endpoint
In addition to monitoring top 10 tickets per endpoint, you should take a look at your lowest 10 tickets per endpoint. Generally these will be your smaller clients who submit few tickets because they have fewer end users, but you may be surprised to find a few customers who have a large number of users but are in your lowest 10 tickets per endpoint. Spot the customers that are outside of your norm in both good and bad ways. This might be a sign that your team needs to spend more time with them as they might not be calling you for issues if they are off the normal “range” for your sweet spot.
Effective Hourly Rate (EHR)
Effective Hourly Rate is a metric that many MSPs measure, but few realize its true potential! While it may be tempting to look at your clients with the highest EHR and call those your ideal customers, it’s best to find a balance between EHR, Revenue and Hours. Your highest EHR clients may contribute a very small revenue, for example, and if you tried to only sell to those customers you’d not have enough revenue coming in to survive! At the same time, your highest revenue customer may have a low EHR, in which case pursuing these types of customers would result in very low profit margins.
Once you’ve got those 3 gauges set up, you need to create a baseline. Monitor them over the course of at least 3 months and then start grouping customers by category. Create buckets for each type of customer: average, ideal, and bad.
Once you’ve done this, take a look at your ideal customers and bad customers. What do the companies within these categories have in common? Here are a few examples of what to look for (but I encourage you to find as many trends as possible):
- Industry
- Number of end users
- Revenue (theirs, not yours)
- How much they pay you
- Number of workstations
- Number of servers
- Location
- The source they came from (Referral, Print Ads, Pay Per Click Ads, Blog, etc.)
You should begin to identify what your ideal customers have in common. Once you’re armed with this information, you can create a buyer persona which reflects your ideal customer. This is who you will target and sell to. Similarly, you’ll want to look for the trends which your bad customers have in common. Use these to create a list of red flags which indicate that a customer will be a bad fit for your MSP. Avoid these customers like the plague.
Once you’ve created those two documents, you can begin selling to the right customers while turning away the bad ones. By doing this you’ll be able to more effectively sell since you know who to be selling to.
Learn More by Watching Our Video on the Subject:
Taking the Necessary Steps
Here are the 6 actionable steps you need to take to ensure you’ll stop losing sales quotes:
- Track your Top Tickets per Endpoint, Lowest Tickets per Endpoint, and EHR with BrightGauge.
- Identify customers that have abnormally high or abnormally low EHR and Tickets per Endpoint.
- Use this data to find your sweet spot (in other words, your ideal customer.)
- Create a Buyer Persona and a list of Red Flags.
- Begin to market and sell to your ideal customers more aggressively, while learning to identify red flags early in the sales process so you can turn away bad clients.
- Profit!
Have any tips for growing sales and retaining customers that you didn't see here? Share them in the comments below!
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