January 12, 2016
I have the privilege of leading the managed services discipline here at TSIA, which gives me the opportunity to work with hundreds of managed services providers worldwide to solve their top business challenges. Time and again, the primary challenge I find myself talking about with our members is about selling managed services. Something I’ve noticed is that there’s a lot of subjectivity and opinion-based decision making happening in regards to managed services, which can lead businesses down the wrong path on their journey to success.
At TSIA, our approach is to draw fact-based conclusions about current trends and best practices, which we do through benchmarking and in-depth studies. To address the challenge of managed services sales, we used the combined data of our Managed Services Benchmark, the Technology and Services 50 from Q3 of 2015, and results from our recently conducted Managed Services Sales Compensation Study to learn how 50 of the technology industry’s top companies are handling the sale of managed services within their organization. Based on the results, we were able to identify several different roles that are engaged in these sales motions.
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While different companies use different versions of each one of these roles in their operation, which is best? To determine this, we’d have to look at the managed services sales model the majority of our survey respondents are currently using.
More than half of the managed services providers we’ve benchmarked, 56%, use their general sales team to sell and to close the managed services deals. The primary role of the general account manager is to drive new net sales, but they also sell all products and services, have overall revenue responsibility for each account, and typically have an established sales quota for products and services. Here’s what their sales closure rate for managed services looks like compared to overall current market growth rates.
You can see that hardware is growing at -10.5%, or rather it’s eroding, as we’ve already established based on recent industry trends. Software has flattened, and services is experiencing some growth, but it is very minor. However, we see that when general sales people sell managed services, they have a 17% growth rate. This number compared to the others looks stellar, and it is, but I call this the “false positive” effect, which you will see when compared to other roles responsible for selling managed services, particularly a dedicated managed services development manager.
Companies that use a sales model that utilizes a business development management team, whether they’re the only ones engaging in the selling motions for managed services or they work closely with general sales and take lead on related opportunities, have a drastically different revenue growth rate.
24% of the companies we benchmarked use this model, and there’s a significantly higher growth rate, more than double, for managed services total recurring revenue compared to companies that use general sales.
While your general sales team is perfectly capable of effectively selling managed services, the data clearly shows that building specialized skills and resources to sell managed services is something you really need to strongly consider.
For a more detailed comparison between general sales and other roles responsible for selling managed services, be sure to check out my on-demand webinar, “How to Sell Managed Services Successfully.” In this 30-minute session, I go into more detail on these roles, including their average base pay as well as the skills needed to effectively sell managed services. Who is responsible for selling managed services within your company? Let me know in the comments!
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George Humphrey, is the vice president of research, Managed Services, for TSIA. He is a networking and communications industry veteran of over 20 years with extensive experience in managed infrastructure and application services. Throughout his career, he has held several leadership positions in managed services, including global strategy, product line management, marketing, operations, and client management.
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