You may have started your IT company as an IT consultant, selling professional or technical services by the hour. Typically, you’ll let your clients buy products from another source, maybe even a source you recommend, because you feel that it’s just too hard to make money with all the competition and small margins.
Then you realize the downside to this strategy when you lose a client to a competitor who sells products, but then bolts on the associated servicing of those products in a one-stop transaction. Even loyal clients might not think they are violating your business relationship, feeling like they are simply buying from someone something you don’t offer.
I know this happens, because I experienced it back in the day when I ran my own IT services company, and still see it happening to the service providers I meet every day in my role here at Autotask Corporation.
Products drive services revenue in all forms including: professional services, integration services, managed services, and warranty work. And in fact, the most profitable and successful IT companies have a balance of products and services in their portfolio. However, service companies find it hard to expand their product sales. Here are a few typical reasons why:
- You feel like you cannot make money selling product anymore because of low margins and competition from e-tailers and the big box stores.
- You consider yourself a "pure-play” managed services provider and can’t see how product sales fit in your portfolio.
- You consider yourself a "consultant” and don’t want to appear as if you’ve lost your objectivity, or the ability to recommend a technology solution that meets or resolves the very specific business needs shared by your clients or prospects.
You can begin by documenting the specific business needs and wants that you have already solved for a particular client or group of clients. Maybe you have a client or two in a vertical like Healthcare or Construction. Take a look at the problems you solved with the solutions you implemented for them. Turn those problems into questions you can ask in the sales process or retain as listening points during discovery conversations. You can also pose them in your marketing materials.
If you are focusing on the construction vertical, as an example, you might ask questions like:
- Do you work with paper plans and store them in file cabinets located in expensive office space?
- Are you still using paper timesheets?
- Are you using a tape measure, and markers to measure, color and complete takeoffs?
- Are your expensive estimators using calculators and green sheets to prepare your bids?
Next, define the products and services you have used before that made your solution work. You can start with a simple Microsoft Excel workbook, or use a robust advanced quoting tool to build a quote template. The key to a solution set is to standardize on specific products and services you know will work, since you have used them before. Confirm the hard costs of those items, that is, what you paid your distributor or other supplier to buy the goods. Add in the effort and time you expended to integrate those items into a solution. Put them together to understand your costs, and build in your profits. Building a solution set this way helps you understand if this will be a profitable endeavor for you.
Now, when you begin the sales process with your next construction prospect, you and your sales team will be confident you understand the potential problems, needs and wants you will encounter. And you will be confident you can help. With a few tweaks, you can propose a solution set that has worked before, and you will be able to sell both products and services where no one can question your motive.
Soon you will have a critical mass of clients to qualify you as the local "expert” in that vertical, opening more doors. And by working over and over to sell the same basic solution sets, you’ll become a lot more efficient doing repeatable processes rather than reinventing the wheel with every sale.