The 4 roles that make you a high value business partner

Transforming your Basic IT Service Provider company into a high-value business partner is a study in communication - why you communicate, what you communicate and who is communicating to whom. There are four roles that are critical to your relationship with your clients. The communication from these four critical roles will determine whether your company is becoming a commodity or a differentiated brand. Let’s take a look at these roles and what you can do to make sure their communication will be excellent.

Client Engagement Roles

Client Engagement Roles are responsible for interaction and involvement with your clients in various distinct business activities, and are defined by their area of focus. As very few MSPs have yet to clearly delineate those roles, a lack of clarity creates unnecessary noise within the process of client engagement.

Your client engagement roles should be separated by the nature of the activities (Business or Technology Related) and by the focus of the activities (Tactical or Strategic).

We have four different roles segmented by nature and focus of activities. Account Managers and Technical Account Manager roles are responsible for the tactical focus and Business vCIOs and Technical vCIOs are responsible for the Strategic focus.

The reasons for doing this:

• the client audience will be distinct (CEO / CFO / Office Manager / IT Coordinator)
• the required skills of the various activities will be distinct (Sales, Planning, Strategy, Technical)
• the engagement cycles will be variable (Strategic - Annual and Tactical - Quarterly)

Without proper separation of the roles, client engagement will be inefficient and your communication will be confusing.

Examples:

• the owner of the client entity has to sit in a meeting discussing tickets and backup issues quarterly
• the account manager is asking approval for a project from an office manager
• clients are not interested in participating in business review meetings
• clients are not engaged with business conversations discussing only technical issues
  
  

Client Engagement Responsibilities

Each role has a responsibility to engage the client with particular activities. The Strategic roles engage clients typically annually with executive roles. The tactical roles do so with the office manager or another technical coordinator level.

Typical responsibilities for the Strategic-Business (vCIO) role: Make sure IT is viewed as a strategic business asset, not a cost

• IT Strategy Development
• Business Application Selection
• Data and Business Intelligence
• Office Productivity
• System Integrations

Typical responsibilities for the Strategic-Technical (Technical vCIO) role: Make sure that the IT Infrastructure is aligned with their business goals

• IT Infrastructure Roadmap Plan
• IT Infrastructure Budget Plan
• Technology Stack Adoption
• IT Infrastructure Risk Assessment
• Hardware Lifecycle Management

Typical responsibilities for the Tactical-Business (Account Manager) role: Make sure that the companies are aligned, engaged and are expanding their business with you.
General Client Engagement

• IT Infrastructure Roadmap/Budget Reviews
• Service Satisfaction
• Service Expansion/Renewal
• New Service Sales

Typical responsibilities for the Tactical-Technical (Technical Account Manager) role: Make sure that the service is delivered well and the day-to-day operation is efficient

• Best Practice Adoption
• Service Delivery Alignment
• Ticket, Service Process Reviews
• Security / Backup / DRP Reviews
• Lunch and Learn

The Business-vCIO role’s scope is usually outside of the MSP’s IT infrastructure offering. That means the goal of this engagement role is to expand the services with the client. The engagements should lead to extra sales.

The rest of the role’s scope is inside the MSP offering and helps engage with the IT Infrastructure core services.

Client Engagement People

You might be an entrepreneur doing client engagement on your own. Maybe you’re an owner trying to delegate some of the client engagement activities to an employee. Even if you’re leading or participating in teams dedicated to client engagement, the likelihood that the roles and their audiences efficiently matching is pretty low. 

Most organizations have overlapping titles for many roles. The trick is how to map different people to distinct roles. Be aware you might have to redefine your current structure to achieve this streamlining of your processes.

Best Practices:

• If you are an owner delegating the roles, let's keep the strategic role and delegate the tactical elements to an employee. This way you can keep the high-level owner-to-owner type discussions with clients.
• If you are in a team, the sales team can take over the Account Management roles for more business development pursuits, the primary technical resource can take the Technical Account Management roles and a more senior individual can step up as a Technical vCIO. The Business vCIO can be done by the owner or a full-time consultant type resource.

Conclusion:

By clarifying roles you may find it much easier to

• hire the right people to the AM, vCIO positions
• engage clients with QBRs
• provide clients with strategic roadmaps
• get clients to adopt your best practices or solution stack
  
  
  

Why vCIO Programs Fail

The industry is changing, you need to evolve or be left behind by your clients. The next step to MSPs is vCIO, but how do we get there?

I have spent the last few years coaching MSPs on how to create successful vCIO programs. There is a consistent message across every single MSP:

“We want a vCIO program but have not been able to get it going”

BE A BUSINESS PARTNER, NOT JUST AN MSP

I want to dive into why this is happening and what you can do about it. But first some history:

Technology has been around since before the wheel, helping us do things easier. When computers first came around they were used to help process data more efficiently. Businesses used these devices to solve problems and disrupt industry. When we first started out you could make a killing doing PC support because everyone was trying to use this technology they didn’t understand.

Then as more professionals entered the marketplace and technology needs evolved we shifted focus to mostly server and network support with PC support still being a staple because labor for that is now very cheap. Then things started moving off premises as business applications moved to the cloud. What this means is there is less infrastructure to maintain on site and it is more and more common to see larger companies outsource IT support.

So what we have seen is support move from PCs to Servers to the Cloud. Now what?

While technology used to be something that companies used to differentiate themselves or create unique opportunities, it now plays a critical role in their business. Things that are critical to organizations, are managed strategically, at the executive level. Your clients are making strategic IT decisions today, the problem is often times they don’t have the right people utilizing the right information to make those decisions. Strategic MSPs deliver services that allow them to take a seat at the table to help manage technology to meet the needs of the business. In other words you need to bring strategy to the table. This is what the vCIO does. But you already knew this, otherwise why are you reading this blog? What you want to know is “How do I get there?”

Here is the problem I keep coming across: MSPs think that strategy is desiging out a product life cycle.

While this is a great best practice, you will end up losing customers if you focus on it.

Your customers don’t care that you have a plan for upgrading firewalls on a schedule, nor do they care about your plans to deliver next gen products. What they care about is the same thing you do: Making Money.

In order to do this you have to do something that most IT professionals avoid like the plague. “Business Strategy” You know, all those boring business classes that you make fun of and meetings with random people that go nowhere, you need to learn it and apply it to technology. You get to become a manager. This means regularly scheduled meetings that focus on business talk.

I often refer to myself as a business consultant with a technology focus. The reason for this is because I need to present what I do to business leaders. They understand the business consultant, they are someone who helps a business solve problems. I just do it from a technology standpoint.

By setting the table like this I am able to get them to focus on strategic sessions that do not talk about technology but rather what problems are facing the business as a whole. I do this through 2 main items:

• Project Discovery: SWOT strategy sessions but any business strategy framework will do. You just need to learn about the client’s problems and opportunities facing their business.
• Audit: The next thing you do is learn their technology and business. Some standard audit will do, just as long as it is consistent. I recommend a technology stack audit and Porter’s 5 forces analysis for the business audit.

Once these are done put this all together and pitch your technology solutions and explain the SPECIFIC business problem it addresses. If you ever say “Because it is getting old” you are losing your client. If you mention firewalls or servers...you are going to lose your client. What you need to say is “We will allow sales staff to process more clients by implementing technology to increase their access to the salesforce platform” THEN you can mention the technology that will do this. Maybe it is a virtual workspace, or maybe you are implementing a more robust WAN, it doesn’t matter at that point because you have already won the customer over.

Technology is a business augmentor

This is the core message you need to get to your clients. You want to frame everything you do in this light. By understanding their business and technology, you will be able to pitch solutions that will deliver a service that makes a difference. Your clients will brag about how you helped them disrupt their industry, develop a world class classroom or break through the glass ceiling.

In the end, stop talking about technology’s gadgets and gizmos. Start talking about business strategy and how to make your clients money!

Virtual C engages clients to increase the success of their IT delivery. Want to learn more? 

BE A BUSINESS PARTNER, NOT JUST AN MSP

Client Engagement Excellence Program

Here is the Problem...

Communicating with your clients at only the technical and tactical level will eventually lead to diminished engagement. Executives are looking for more strategic and business-oriented conversations. Without a clear understanding of the roles for the Account Managers, Technical Account Managers, Technical vCIOs or Business vCIOs it is nearly impossible to leverage any process, best practice or tool to get your critical audience excited.

But without the tech-talk, it's hard to reduce the ticket noise, approve projects, get your technology stack and best practices adopted, or introduce new services. The problem is not a missing feature, tool, lack of integration or a usability problem.

The problem is a missing methodology and implementation process for client engagement excellence.

Generate client engagement with five qbrs in 30 days

Client Engagement Excellence Model

This program was developed to give you a comprehensive, step-by-step approach and the tools to take your client engagement activities to the next level. We’ve started with a client engagement excellence model to break down this problem into manageable pieces.

1. Define the foundations like your client engagement and client-side roles, the available time budget for each of your client segments and to develop playbooks for proactive client engagement.
2. Plan on how to standardize your services, technology stack, and best practices. What are the different development processes and how are those standards going to be adopted by your entire client base?
3. Implement client engagement activities to make sure you engage all the client-side roles like business focused audits and workshops for top Managers, Technology Planning for the operation leads, engaging Technology and Business Reviews for the office managers and IT coordinators.

Client Engagement Excellence Process

Then we designed a process to improve all these areas.

1. The process starts with a Client Engagement Readiness Assessment which helps to determine your current client engagement, find your bottlenecks, and discover any missing pieces. Basically, what would you like to achieve?
2. Then you form a plan - a roadmap to bridge the gaps. The roadmap has specific deliverables pointing to specific courses, masterclasses and solution sets.
3. The third part of the process is to execute the roadmap. You cannot do it all at once so you will focus on ensuring this practice is going to start.
4. The fourth and last part of the process is a repeatable accountability cycle to continually improve on all the components.

Client Engagement Excellence Program

The Program has it all

1. Courses - With access to on-demand training courses, articles, step-by-step guides, downloadable resources and videos you can learn as an individual or as a team.
2. Masterclasses - Access to Masterclasses in four topics is offered twice a week. Ask and get your questions answered by us or by your peer members to apply what you learn faster.
3. Coaching - Access is available to highly recommended 1-1 implementation program with weekly accountability coaching. We all know that excellence in client engagement cannot wait, and there's no time for trial and error or putting these things on hold.
4. Partner Content
   1. Our partners from Sea-Level operations can help to define your roles, create your client segments, calculate your budget and make sure your processes will be implemented.
   2. Our partners at Virtual-C can help you to design your standards, implement your existing best practices and implement workshops, audits, or strategic business planning sessions with CEOs as part of your vCIO engagements.
   3. Partners from MSP Sales Pros can help develop your complete Sales Engagement Program by defining your differentiators, guiding demand generation and demonstrating how to run engaging sales meetings.

Benefits

This program will not just give you direction and guidance on what to do but offer you all the help needed to make this change happen.

With that, you will implement the most comprehensive Account Management / Technical Account Management and vCIO programs available for MSPs today. You will develop and adopt your standards across your clientele to reduce ticket volume, and the need for support on myriad technologies. You will run QBRs with the right audience effectively AND engage your client’s executives with topics they want to talk about.

6 Best Practices of Top Performing vCIOs

If you think technology strategy involves talking to your client about firewalls and server patching levels you are doing it wrong!

Technology is becoming a commodity. Just a few years ago you needed an engineer just to install wireless. Now anybody with a cheque book can order turnkey solutions from amazon and manage their entire technology stack from the cloud. Businesses need partners to help them compete, they don’t need to be more educated on the greatest next generation firewall.

Becoming a Strategic Partner with vCIO Projects

In this industry technology providers need to step up their game and offer strategy to their clients that takes technology to the next level.

To solve this problem Virtual C and Managed Services Platform partnered to create a vCIO solution set that contains all the tools necessary to take your MSP to the next level.

It isn’t complicated, it doesn’t require a MBA to implement, and you can start doing it today! This solution set provides the training material, services, marketing video, and automated report to engage on a whole new level. In less than an hour you will be equipped and have the confidence to deliver a product that will generate new services and projects for your company.

Become a strategic forerunner, implement strategic processes with your clients today!

Start vCIO with Quick Productized Projects

Starting vCIO services can be a struggle not just for you and your people, but for the clients too. There are some established expectations of vCIO services, which sets a hurdle right at their kickoff of these services. There is, however, a natural way of solving this problem: use easy to sell and easy to deliver productized vCIO projects.

Of course, developing such effective and elegant solutions does take time, so we’ve set up a shortcut to start, and let you build up vCIO Project products instead. Don’t worry - this isn’t taking on new work - just solve problems you’re expected to already, but start getting paid for all you do.

Let's see seven examples of typical vCIO products:

1. IT Development Roadmap ($1500 - $4500) to build up a general IT roadmap, focusing on infrastructure while addressing typical business problems and recommending applications, security or compliance themes as well.
2. IT Budget ($500 - $2500) to develop an IT Budget in detail. If the scope is limited to the infrastructure services/investments, SaaS subscriptions and software licenses, it’s a cookie-cutter and helps you sell additional services like regular budget checks.
3. Application Selection ($500 - $1500) to select a typical SaaS based application they can buy online without any sales reps involved, such as a CRM, Project Management or any other light line of business application package. You help them set up the requirements, pre-select the candidates and facilitate the selection process.
4. SaaS Audit ($500 - $1500) to audit all SaaS subscriptions they have and check whether they have the optimal package, exhibit alternatives and integrations available. They do the heavy lifting and you coordinate the process.
5. Risk Assessment ($1500 - $5000) can be boring, to be blunt, but there is no better way to kick-off some IT security initiatives, open the discussion on compliance, or just assess IT risks beyond the scope of just their infrastructure.
6. Productivity Workshops ($1500 - $3000) aren’t only useful to office workers, but anyone using to-do apps, project management tools, Office 365, note-taking apps, chat and email apps on various devices. Put together a curriculum you can go through onsite or online with the managers/power users to help them leverage technology better.
7. Virtual IT Department Evaluation ($500 - $1500) deals with the many vendor, software and SaaS providers who constitute your clients’ virtual IT department. You can safely assume nobody is leading that herd. Evaluating the different parties involved, set responsibilities and required service levels and manage them accordingly to assure they get the most out of their vendors and services.

These are just quick tips, but how do you make them productized?

1. Write down the target customer and the scope of the project.
2. Write down the project deliverables as task lists and tasks to be able to establish the price.
3. Put together a one-pager on the problems it solves and the benefits it delivers and print out 20-30 pieces, as well as a promotional email.
4. Start promoting it with a discount to batch more projects into a given month so you can be more efficient.
5. Wait and watch while these initial projects start to push you towards a stand-alone vCIO service.

My 7 Ah-ha! moments on the first MSP 2.0 boot-camp

We just finished our first ever live 3 day Managed Service Productization boot-camp in Banff, Canada. With 25 participants we worked to crack the code in scaling up the managed services. Jam-packed with real work, the workshop groups created amazing content and generated ideas that have been sparkling. I wanted to capture some of the more intriguing ideas the MSPs came up with.

I’ll be elaborating on these topics in upcoming weeks, since I see each topic as worthy of more than a blog post, but here are the main ideas. These are my personal Ah-ha! moments.

1. The main confusion and misalignment is within the service catalogue

Traditionally, the ad-hoc organic development of services and service catalogues creates major confusion for clients and employees. This has limited the scalability of MSPs. It doesn’t define your services nor categorize services into service categories and service bundles. The problem is the failure of proper categorization, service definition and articulated value propositions leaving too much room for interpretation of services. Luckily, we’ve experienced the power of service wireframing exercises which can lead to a well defined service catalogue.

2. Make the vCIO role more tangible, to lead to greater sales

Selling stand-alone vCIO services is easier by starting specific productized projects. The vCIO can be an intimidating and abstract concept for some clients: while the vCIO activities are solving their problems, they have no grasp of the how those abstract deliverables like IT Strategy, Quarterly Reviews, Monthly Reports, Budgets, Project Scoping or Stakeholder Interviews are working. It’s easier to visualize canned, productized project services solving one specific problem in demonstrating the vCIO work. In advance of developing ongoing vCIO services, therefore, it’s much easier to develop one-time vCIO projects in a productized way.

3. Misaligned agreements lead to client and profitability issues

A systematic approach is needed to realign clients annually, as a response to many changes in tech and the environment. Either the client’s expectations change and they feel under- or over-served, or our profitability drains from additional work. Every year we need a version change on the service offering. Over the course of a year the service provider is developing, changing services as part of the development process. New services are available to all clients as "beta" functions through the year, and at the end of the year all beta services go to official services and clients make decisions whether they need the new services (they pay for) or stick with the old package. Everything beyond this gets relegated into the realm of too much communication and too many agreements in the air.

4. IT strategy upfront or spare the onboarding

One company demonstrated a great use-case, to charge $4,500 per client prospect as an IT Strategy development process. It served to qualify and differentiate the prospects, as well as to release unqualified prospects from the funnel quickly. This strategy helps acquire higher maturity clients.

Another company's strategy was to push low maturity prospects through a very systematic and specific onboarding process to get their maturity to a manageable level. The final step of the onboarding was an IT strategy creation which defines the next steps once the understanding is set.

The strategies are perfect capturing the value for the different maturity prospects.

5. Fix a leaking boat before building a new one

All the promises you make to a client, all the expectations you set, even unintentionally, are potential drains in your profitability. The problem with non-productized services is their vagueness. Unlike a coffee mug where you see the shape, size and quality these services are not tangible. So make services tangible! Fix the big hole first! Create a totally new service offering by making your current services so well-defined they won’t slow you down during your company’s development period.

6. The eroded value proposition of the fully managed IT services

A lot of MSPs set their Value Proposition as a mission statement. While it is inspiring, it doesn’t give specific direction. Breaking up the big Value Proposition into smaller value propositions helps distinguish service categories. Breaking down further defines the services. Everything stems from an MSP trying to make their clients more competitive with technology, and drilling down to specifics is what’s missing. Without it the message is too general, doesn’t engage the clients and doesn’t focus direction to the service provider.

7. Headspace + Focus + Facilitated Workshops make miracles

Seeing the team slow down and merge away from the day to day operations to a higher level focus and headspace was amazing. We went through over 20 exercises over the 3 days. The impressive small group and larger group interactivity was able to dig out major issues and opportunities and create actionable items from vague ideas. The collaboration was most notable from Australia, US, UK, Germany and Canada. I think I underestimated level of wisdom, experience and knowledge in the group. This also made me aware of the need for major initiatives like implementing stand-alone vCIO services or productizing a service offering for that type of environment to make an effective change. Some things can’t be learned in days of emails, meetings and other distractions.

• Virtual CIOs in United States
• Virtual CIOs in Australia
• Virtual CIOs in Canada
• Managed Services Platform Virtual CIO report
• Managed Services Platform Account Management report 

ROI Calculation of the Account Management role

If you’re running a successful, growing and modern managed service provider practice, you either have solid account management / technical account management practice in place, or you’re still doing it ad-hoc, and plan to develop a clear structure as soon as possible. In both cases calculating the ROI of the new role is critical, as well as setting goals and realistic expectations for the employees. Check out this ROI calculation and the huge potential of proper account management to growing your business.

ROI calculation doesn’t just make visible some real numbers from something less tangible; it’s also a great way to ‘look under the hood’, to perceive what drives your success and what rules of thumb we can implement to streamline our decision process.

We’ll go through three different aspects:

1. the data we need for the calculation,
2. basic assumptions for the model, which you can change to suit your particular experience, market and customers,
3. the formula that illustrates the potential of the role to increase revenue and return on investment.

Generate client engagement with five qbrs in 30 days

Data input

1. Client segments:

The first thing we need to know is how many clients you have under MSP contract, in each company scale.

• D: less than 15 employees ( sub $1500 MRR)
• C: 15-30 employees ($1500 - $3000 MRR)
• B: 30-60 employees (3000 - 6000 MRR)
• A: 60+ employees (6000+ MRR)

The client segments represent their buying power, and achievable up-sells / projects and additional services, as well as different life cycles and buyer's profiles.

2. account management Internal resource hourly rate

We need to understand how much time the account manager is spending on each type of accounts, to know cost of the role. The internal cost is usually the typical expense calculation: adding the salary together with all the burden and using a 70% utilization to get an annual rate. This rate typically calculates to $35 - $60 per hour.

3. Current revenue

To be able to track growth we need the current revenues from the revenue categories the account management can leverage. It’s typically the ARR (annual recurring revenue), the Project revenue and the professional services revenues like vCIO/consultation, etc.

Assumptions

For this model we assume some adoption and success rates. This will be our expectation of the account management work. It’s a very important consideration, as it sets the account manager's goals to achieve in a broader sense.

1. Adoption Rate

This is a percentage, indicating how many clients from the given customer segment will actually adopt account management. Adoption means clients actively participating in the various account management meetings, which is a direct function of how many actually see the value, invest time and develop a fruitful relationship out of it.

Typically the smaller the client is the lower the adoption rate. Their IT is not a critical part of their strategy, the budget isn’t there or we may assess that it’ll be unproductive to spend extra hours with them.

If you do account management ad- hoc, you know which clients are more tractable in this regard.

2. Additional Project Revenue Increase

A good account manager can bring more commonly implemented projects onboard. Scoping typical issues and helping close the deals are one thing. A less common practice is to sell productized projects. Creating a nice portfolio of typical projects for disaster recovery plan, security audit, application selection or any other project that can be productized and sold for a fixed fee is a huge skill you can leverage. It’s easy to sell, there’s not a lot of customization needed and it cuts down on the sales cycle, since you no longer need to plan and create proposals and customized collaterals.

We also must make assumptions of additional project revenues we can expect from the customer segment annually.

3. Additional MRR

A good account management can also sell additional MSP services, like bigger, better backups, voip, phone, print management, IT security, Managed Applications, Managed Mobile and other additional non-traditional MSP services. This will increase the MRR/user over time.

It also means that over time the client is going to be more committed, instability is less likely and our presence will grow wider with the client. This is all going to boost our profitability per client.

4. Additional Professional Services/vCIO

For each customer segment there’s a good chance to sell additional professional services. Different sizes afford different opportunities. Small clients can get professional Quarterly Planning, Annual IT Roadmaps, Training and some Project Scoping for a fixed fee, starting $250 - $500 MRR, like AM with a cool aid.

Larger clients can get budgets, project management, IT strategy plans, IT strategy execution, Application management and many other stuff for extra MRR.

The numbers given represent typical services you can sell to these customer segments with the proper education from the account management.

5. Resource requirements

Based on ouraccount management processes we perform 3x Quarterly Business Review and one Annual IT Strategy Roadmap per client. That takes about 10 hours a year per account. It does not include the quoting and additional work on the sales side. We think that is part of the profitability of the sold items, and is why we calculate 10 hours as an account management "overhead" for a client.

ROI

The ROI will calculate the investments to the tools + labour required to perform the given tasks to achieve the assumed results.

1. Cost of the tool

We include here the cost of the account management tool which is $249 per month for the functions the account management needs.

2. Cost of the labour

We just multiply the clients for whom we perform account management by the hours we need to invest at the hourly rate we calculated. As you can see that is a much bigger number. This is the account management's role cost. If you as an owner are performing this role, your expense is extremely high here.

3. Increased Revenues by segment

You can check the expected revenue increase by revenue segments. As you see it will change with your assumptions. However it is pretty clear that theaccount management role will exhibit value with the increased Projects and Additional Professional services first.

Conclusions

We can play with the numbers, but some things are obvious. Account management is a serious opportunity to grow within your established client base, but without the processes and dedicated role it will not produce consistent results. The investment is not onerous once you reach the 9-10 person company level, and past 18 it scales very smoothly. Let's check some conclusions from the ROI calculation.

1. The account management role can grow your business

Our calculation produced a 27% increase in revenue. Of course it means on January first everything is working and every client starts generating those revenues, which takes time to ramp up in the process. Allow 6 months to start generating the additional projects and service revenues. As products come together and processes get some momentum, you’ll see it take off pretty fast. You can expect results in less than 2 years from starting.

2. Doing half-assed account management is not worth the effort

"Do or do not, there is no try", said Yoda. Doing ad-hoc account management is not generating satisfactory outcomes. The investment cannot be measured, nor improved, nor managed at all. Doing something inconsistent can serve your short term revenue targets and will come across like sales campaigns. Clients will feel it. Make your decision here: there’s a chance account management is not for you and you just want to close MRRs and keep them alive.

3. Making the owner do the work is self-defeating

If the owner is the Account Manager, you’ll see dismal ROI, as the true value of your hours will be cut to a fraction. With that calculation the dream is dashed. This is a job of consistency and predictable results, and your leadership role isn’t designed to offer consistency. If you reach a client portfolio with 20-25 clients, the dedicated account management is going to be a reality. Account management activities shared with Project Management and some new sales will utilize the resources 30-50% of the time, which allows you to have somebody developing your business - current client base and new prospects as well.

4. Small clients are a burden

If you take a look at the distributed ROI, you’ll notice that the overall average is 9x, the small company average is far lower at only 3x, and for a large organization the ROI is remarkably high. That should not be a surprise, as investing the same time for different sizes of organizations logically pays better and can lead to more significant deals as well. This is economy of scale. The only reasonable path is to get the small clients to pay for account management services. You can call them "Client Advisory" services and charge $100 - $250 per month extra for doing the QBRs and the annual strategy planning as vCIO light services. This not only sets appropriate expectations and you get something back from your investments, but can also serve to qualify your clients.

20% rule of vCIO pricing

Here’s a mystery you all know all too well - pricing your stand-alone vCIO services so you’re not robbing your clients nor yourself...that trepidation when you’re putting together the proposal, or trying to ballpark a figure in a meeting. It’s always been a gamble. There’s a way to find the proper middle ground, following a simple process to help you to close more deals without risking a critical over or underestimation, of your client’s expectation or your services. Here is the formula...

We just call it a 20% rule....

The formula is quite simple. We take the client’s current expenses in managed services calculate 20% of it. This will be our baseline for a starter stand-alone vCIO package. Use this as the main rule of thumb, and we’ll take a look at some cases where we have to turn from this calculation.

Example. You’re talking with a 40 person firm eligible for a $125-per-user managed services program. That’s a $5000 MRR for the managed services. With your 20% stand-alone rate the virtual CIO program will end up at $1000 MRR.

Structure, manage and automate

your account management and vCIO procesess

Client point of view

Most often you’re selling the vCIO services as an extension of your managed services, and you’ve seen eyes spinning at the mention of the cost. But you know about the pricing effect: if the add-on service is too small, like 10%, they can feel it’s not worth mentioning, and why isn’t it in the package anyway? If it’s too much, like 40-50%, then it’ll come with the price of a totally different service category. We must keep an eye on our psychological influences.

• 20 % is an easier upsell to an existing company
• 20% is what you can give as a month of free trial
• 20% is what they’ll readily risk for a 3 month trial period

So from a buying perspective, it’s not disruptive, complex, nor risky. It’s the predictably happy medium.

Your point of view

We need to check the viability of this service from your end too. As we design a vCIO offering we must list out the diverse activities which are part of the package, check how frequently we do those activities, and calculate an annual workload, for an honest basis for the price. Usually we use $200 per hour to calculate a monthly service fee. With the 40 person client as an example with $1000 MRR, we’ll see 60 hours budgeted for a year, or 5 hours monthly. That’s a reasonable amount of work for that size of client.

We’ve developed four different vCIO Packages:

• vCIO Light - typically a teaser service at a cost of $250/month to perform, and great for triggering stand-alone services. It’s also good for small companies (check later).
• vCIO Basic - $1000 - $1500 MRR, suited to 30-40 person companies or bigger companies with less maturity. This is the typical bare minimum with no weekly cycles.
• vCIO Professional - $2500 - $3000 MRR, for the 40-70 strong SMEs where you can start to develop seriously and begin to integrate with the management team.
• vCIO Enterprise - $5000 - $6000MRR - when you’re going to nearly substitute a full-time CIO/ IT manager. This is only viable for 70+ situations.

If you’re interested in these packages, make a quick call and we’ll show you the processes, marketing, sales materials, workspaces and all the associated reports and tools we provide for a complete, professional execution.

Remark 1: Projects

Projects are never included with a stand-alone vCIO program, just annual planning, budgeting, some project scoping, some application selection, quarterly planning sessions, monthly reviews and so on. Every project is a separate item. If their IT strategy is to choose and implement a cloud based CRM solution and integrate it with Zapier to their accounting system, that’s a separate project. We can manage it as part of the service portfolio if someone else manages the project. If, however, we’re responsible for the implementation, that again is a separate line item.

Remark 2: Small Companies

As you can see, if you have no budget for at least 30-40 hours of work annually, even at $150/hour (which will end up at around $400 - $500 MRR) you cannot really accomplish anything as a vCIO. The $400 - $500 MRR with the 20% rule will give you the $2,000 MRR MSP service. Even if they have a $100/user rate it will work with a 20 person company. This clearly defines the boundary, that below 20 people there is no viable, profitable vCIO service possible. You can’t generate enough revenue, and the client will have no budget to execute projects. You might quote a $200 - $300 upcharge for "Client Advisory" services to perform the basic Account Management activities like QBR/Annual Planning and some consultation every quarter. Though extremely limited, this is their call. If they don’t want to pay for it, you still can’t do it for free.

Conclusion:

Don’t complicate. If the client asks about vCIO, just say: "Our rule of thumb is around 20% of what you pay for the managed infrastructure services."  If they’re not interested to the service with this estimate, there’s no way you can deliver your services viably with a lower price point.

3 previously posted Managed Services Platform blogs about vCIO sales:  

• How to Become a Trusted Advisor With Strategic Client Meetings
• Managed Services Platform vCIO Report 2019
• Managed Services Platform Account Management Report 2019

3 previously posted Managed Services Platform research about vCIOs

• vCIOs in United States
• vCIOs in New Zealand
• vCIOs in Australia
• vCIOs in Canada

Five principles behind an engaging Quarterly Business Review process

 In our design of the new Quarterly Business Review tool we wanted to ensure that MSPs can find business opportunities with existing clients, enhance the quality of their engagement, become a business partner and demonstrate the value they provide all at once. Achieving those multiple goals in the midst of commoditization of traditional infrastructure management services requires finding a balance among five different strategies. Let's check those success factors to make sure you deliver timely and engaging QBRs.

UPSELL YOUR CLIENTS WITH STRATEGIC QBRS AND IT STRATEGY MEETINGS

We’ve identified several common mistakes managed services providers are making during the QBR
process, leading to less and lower quality client engagement, over complicated processes and too much work. We wanted to create a tool that’s straightforward, easy to use, and guides the service provider to optimal client engagement.

1. 360 Degree view of IT

Most MSPs’ QBR is all about the explanation of their services, performance and ‘speeds and feeds’ of the infrastructure, and the motivation is to show they work hard for the money. This is hardly engaging.

Being engaging of course requires the ability to ask questions from the client’s leadership regarding their business priorities, problems they’re facing or opportunities they see or think they could find. It gives you the chance to put your services in their business context. You also need to be able to ask questions of front-line people - struggles they have with applications, processes or any user-related opportunity. This all gives the service provider the ingress to solve real problems and start scoping projects you can deliver. If you can’t focus on 360 degrees of their business with technology, you can’t have a sustainable client engagement process, so we designed the tool to gather variegated input from several distinct sources in preparation for the QBR, where you’ll have a more comprehensive, holistic view through the meeting.

2. Balance the business and technology

MSPs are often the victims of their own aptitude. When they start working with a client, that client is usually dealing with a suite of frustrations and confusion...nothing seems to be working. We can’t let them set the conversation in this miserable frame. It has to elevate from the technology issues to finding solutions to business problems in order to deliver visible business value.

It’s always a good idea to keep your target audience entertained, and for us that’s the various opportunities they can leverage with their technology. When you stay relevant you’ll generate visible value persistently. To this end we designed a specific thought-provoking mini questionnaire for the leadership team that you can run prior to the meeting, giving you the opportunity to understand their business related issues, problems and goals. Once they feel understood, your suggestions and advice will be more on target, more easily adopted and more valued by your customer. Just focus on their goals rather than your agenda and you’ll sell them new projects.

3. Nurture maturity

Many MSP client has just started their journey with you and many are your clients for years. Many client of yours have pretty big complex business models many of them has very small and simple operations. That diversity creates a wide range of IT maturity which need to be managed.

Our philosophy is this maturity needs to be nurtured all the time. If your client has a super low maturity you need a tool not to overwhelm them, however if they have a pretty mature IT you still should nurture it further. We designed the QBR tool to be modular. If there is a super small client you do not cover everything. You might just focus on the IT metrics first then quarter by quarter introduce new aspects such as the business goals or applications. However, if their maturity is high enough you can involve more people to the conversation, focus on different line of business applications or offer additional vCIO services with more IT strategy and execution.

4. Cadence of Accountability

Many MSPs do Quarterly Business Reviews once or twice a year, either because they cannot allocate the time or believe there’s no need for quarterly interactions. There is no real cadence to communication, just occasional meetings.

We believe that having a strict quarterly rhythm of the process is crucial. We even designed the report in a way that incentives regular completion - it feels awkward if a Quarter is missing. We wanted to make sure the process becomes an easy routine for the team, not a one-off. Some items in the QBR report relate to only the current quarter, while others display their progress across them. For example the latter shows the trend of fixing business problems better than just a snapshot of current issues, while for technical details we need to work on current issues with a narrower focus.

5. The right level of details

One popular strategy among managed services providers is creating standards to which all clients must comply. While this is a great initiative to simplify processes, it can create too much work and misalignment with clients at the same time.

We’ve designed service standards with enough flexibility for you to evaluate and implement alongside your processes and best practices, to increase your efficiency. It doesn’t make sense to create detailed standards nobody feels are relevant, or have the time to follow. We let you define standards for each infrastructure or application category so you aren’t bombarding clients with detailed standards they don’t even comprehend. We give you a 1-100 scale to evaluate their performance against a standard, so you can best approach the balance of compliance and effectiveness. For example one level of performance can get a lower score for a more mature or bigger organization than a small simple one. Maybe focusing on that area doesn’t deliver tangible value to a small organization, but for a mature corporation it’s a necessity. You’re able to stay relevant to your clients while implementing your skillfully crafted standards that deliver value to them and you.

Conclusion

Implementing a professional, relevant and engaging Quarterly Business Review process is a must theses days. The success of this process can literally make or break your relationship with your clients. Let's learn from other MSPs and improve your chances to stay relevant to clients in years to come!

Packaging and Delivering Scalable vCIO Services

 Carrie Simpson, Founder and CEO of Managed Sales Pros talked with Denes Purnhauser, CEO of ReframeYourClients, and shared the most common mistakes IT managed services providers make when it comes to building their vCIO offerings, and how you can increase your MRR with the correct approach.

The topics in this webinar were:

• Why vCIO services are critical to keep clients engaged in the long run
• The five biggest mistakes managed services providers are making with their vCIO services
• Why service productization is the reliable way to scale a Managed Service Organization
• How to make vCIO services scalable with service productization
• Process of service productization
• The right pricing model for MSP and vCIO services

Read More about Managed Sales Pros and cold calling best practices.

Delivering Business Focused QBRs

ADAM WALTER AT VIRTUAL C

You would like to be a high-value business partner in your client’s eyes rather than a basic technology service provider. Your Quarterly Business Review process is a critical part of influencing their engagement up to a higher level. Watch this recorded webinar with our virtual CIO expert guide, Adam Walter, who has shared his 5 step process to make any technical QBR into a business-focused one.

6 Best Practices of Top Performing vCIOs

ADAM WALTER AT VIRTUAL C

Watch this interview with our virtual CIO expert guide, Adam Walter, to learn how to be more engaged with clients by finding best practices for becoming a trusted business advisor in 6 single steps.