Social media and search have irreversibly merged the worlds of Sales and Marketing. Where marketing messages and sales relationship building begin and end is a moving target. So SMB IT providers must adopt a new set of marketing-related behaviors to thrive in this new environment.

Selling evolved long ago from an act of presenting and closing, to one of educating and consulting; but access to information via online sources (rating sites, filtering social media streams, and tools for competitive analysis) has changed the game.

Over the past five years B2B buyers have learned to research online. They don’t want to see or talk to a salesperson until they’re nearing a buy decision. That means Marketing, specifically online marketing, must create demand, nurture leads and keep them engaged until they’re ready for Sales.

Some businesses are attempting to meet this challenge by expecting salespeople to learn the ins and outs of the internet as a sales enabler, while also carrying a quota, building relationships, managing accounts and internal resources, upselling current customers, and prospecting! That’s a great way to set your salespeople up for failure.

My clients – SMB (20 to 100 employee) IT providers (hardware, software and/or services) have been evolving and they need to continue to do so. My experience with them (MSPs, SIs, VARs), is that they’ve been struggling to transition from a direct sales model to a model that better fits how their prospects want to buy.

SMB IT providers are still trying to get their web channel aligned (if they even understand that the web is their de facto channel to market). Now there’s another paradigm shift; and that’s social media. There’s the added challenge of figuring out how to reach prospects through blogs, LinkedIn, paid search, personalized email, and the new question burning up Twitter today – should we buy promoted tweets?

I want to draw an analogy here to earlier forms of media. Books were invented hundreds of years ago and they’re still going strong. Newspapers and magazines were invented later, and they’re still here, maybe not so strong. Radio is still here. So are movies and TV.

With each paradigm shift, the old way wasn’t destroyed, it was added to. That’s the situation with SMB IT providers – there’s still basic selling of boxes going on and that will continue, but there’s no margin in it. There’s still consultative selling of solutions going on, and that will continue, but now the prospect is in the driver’s seat and margins are under pressure. Effective Marketing (content marketing, inbound marketing, online marketing, social media marketing) can reduce the Cost of Sales and help IT providers to maintain margins.

There are no more blind dates. Your prospects can learn just about all there is to know re your company, your products and services, and your personnel. Some of my clients say, “Then let’s not tell them. Let’s leave that information off our website. Let’s not participate in social media. Then they’ll have to speak to our salespeople.” I disagree… vehemently. No SMB IT provider is selling any solution that prospects can’t find elsewhere. If your site doesn’t contain the relevant and useful information that people need to make an informed decision, you’ve already lost the sale.

In order to beat the competition, you need to be playing the social media game, and you need to do it well. There’s a misconception that social media is free. The platforms typically are free. Using them effectively takes time, knowledge (platform knowledge, but also business and people knowledge), and a well thought through strategy.

I have a client who asked me to help him find a recent college grad to do his company’s social media marketing. He figured that there are plenty of recent grads looking for work and they understand this social networking stuff. We couldn’t find anybody. There were plenty of applicants, just nobody capable. They didn’t understand business. They couldn’t discern what was appropriate communication, and what was not. They didn’t know the industry. When a client or prospect engaged them online, they didn’t comprehend the context of the message. They couldn’t reply in a meaningful way.

Social media is conversation. You need to make sure your end of that conversation is interesting, knowledgeable, relevant and courteous.

Social media presents a gigantic opportunity for SMBs. You can engage your prospects where they’re already congregating online, build credibility in your expertise, and (over time) gently persuade them to purchase from you. This takes both Sales and Marketing participation (and cooperation), time, effort, some money, planning, and a willingness to develop processes. It takes a concerted effort over time and across platforms. The payback is orders of magnitude greater than the Sales and Marketing ROI you’re used to.

My research opened my eyes. There are several different forces at work that make the valuation of an MSP business a dynamic process. How MSPs are valued is changing, and I was able to say, “Yes,” to my client.

Here’s what I found. The preeminent expert in this space is Charles Weaver. He’s the President of the MSP Alliance, and of a consulting group that specializes in MSP mergers and acquisitions. I exchanged a few emails with Charles. His position is that MSP valuations used to focus on annual profits. The purchaser would ask to see the books. They valued the business more if it could show a year over year improvement in net profits, and they would pay a multiple of last year’s net.

This profit metric led to MSPs choking off investment in the business for a couple of years prior to sale to pump up the size of their profits and, therefore, the selling price. Purchasers were paying top dollar for a business in decline, and they had to invest heavily to get it back into growth mode.

So the metrics changed. Instead of looking just at profits, potential acquirers also looked at the book of business. They reviewed the number of current contracts and their future value in order to get a better idea of future profits. So MSPs who were contemplating cashing out focused on signing clients to multi-year contracts. Charles feels that this is also a less than optimal valuation method. He thinks it’s actually unfair to the seller because there are many sources of non-recurring revenue that should be included. His preferred calculation method is to blend top line revenue and EBITDA.

According to Joe Panettieri, the ‘VAR Guy’ and President of MSPmentor, “effective Marketing, Sales and Consulting are the three basic criteria for long-term MSP success and maximum company valuation… the most successful MSPs have processes in place to work on social media, marketing and PR on an ongoing basis.”

What Joe is saying is that having processes in place to handle Marketing and PR functions delivers three positive influences on valuation:

1. they indicate a willingness on the part of the business’ management to build and deploy infrastructure devoted to demand generation and lead nurturing (critical sales enablement ingredients when selling complex B2B services),
2. they accrue sales assets, which are tools that accelerate and amplify the sales process, and
3. they result in company and brand visibility in the geographies served and across the online world.

Marketing is not a one and done kind of thing. Like Sales and Consulting, it’s an ongoing process that needs to be worked on all the time. Especially today when everyone is dealing with ’short attention span prospects’. Fresh, relevant and useful content is needed on websites and for social media platforms. You have to give prospects a reason to keep coming back (i.e. new information that educates and gently persuades), until they’re ready and willing to sit down with a salesperson.

So how do I help my client pump up the valuation of his business? By doing the same things I do with all my clients… get them to:

• focus on Marketing as a strategic part of their business;
• stop doing ‘promotional activities’ on an ad hoc, opportunistic, haphazard basis;
• plan, budget and execute Marketing functions just as they do with Consulting and Sales functions.

It got me to thinking about how we at acSellerant might help our MSP clients build trust with their prospects. Using Covey’s universal tenets, I’ve come up with the following guidelines:

Talk Straight

Tell the truth. Be transparent. Work hard to communicate clearly so people understand exactly what to expect. Communications can get foggy for many reasons. What I see most are these three:

1. You’re rushed – slow down, make the time, think it through. It’ll save time in the long run.
2. You don’t completely understand the function/process/technology yourself – do your homework. Don’t communicate to the client until you’re confident you understand.
3. You understand a complex function/process/technology very well – be aware that the client may not be as versed in it. Slow down. Don’t use jargon or acronyms.

Right Wrongs

Mistakes happen. When they do, come clean immediately, apologize, and make it right. See what you can do to prevent the mistake from reoccurring.

Get Better

This is one I think most MSPs do well. They have the systems and the metrics in place, and they’re constantly trying to improve service levels. That’s great, but your clients are probably unaware of it. Think about things from their perspective. You know that fewer help desk calls means more profitability for you. The case can be made that fewer help desk calls also means better profitability (or at least productivity) for your clients. If you have stats that show you’ve brought the number of help desk calls down over time, SHARE THEM with your clients, and connect the dots for them re increased productivity.

How many other metrics that you work to improve can be framed as a benefit to your clients?

Listen First

We all know this is important, but most of us don’t practice it as often as we should.

Covey has thirteen tenets, but I think if you put the four I’ve listed above into practice 100% of the time, the rest will take care of itself.

I’ve been on  the other side of the fence at DEC and EMC, and it was blasphemy to allow the channel to mess with our collateral. “They might go off message!” That was then, and this is now. You can’t protect the marketing assets anymore (and after all, the whole point is to spread the word). Much better to assist resellers in leveraging all those expensive white papers, case studies, etc.

I wrote a post about how those corporate assets miss the mark when you get down to street level. They can’t address local environments and competition. I call the process of customizing corporate vendor collateral, ‘Sales Enablement‘.

This is a great opportunity to cost effectively add useful and relevant content (which Google LOVES) to your website. btw - acSellerant specializes in customizing generic vendor content for your market and distributing it via social media. View this well reasoned video from Cisco here…

Relevant, useful, interesting… even entertaining copy is no longer enough to hold the interest of harried, starved for time, inundated with information business prospects. I’ve spent a lot of time and effort researching and building a process to develop multimedia storyboards that can deliver a significant amount of information in a short amount of time. The idea is to use sight and sound simultaneously to compress the amount of time, and increase the ease, in which information is communicated.

You’re thinking, “Wow, Bob. Alert the media. Ever hear of television or the movies?”

This process might include video, but it doesn’t have to, and it’s designed to be deliverable at less cost, with less equipment, and less prep time than video. It’s designed to fit the budgets of my clients. It’s untried, though.

So, I’ve been thinking about how to launch it. I first vetted the idea with friends, colleagues and clients over the holidays. Then I submitted discussions to a half dozen groups on LinkedIn. I was surprised at the response. Many smart, talented, creative professionals joined in the discussions. The consensus was, if I can pull it off, it’s a winner.

Then I went to three online custom publishers I have a relationship with. They were positive. They all said the same thing, they can sell it, IF I can pull it off. So now it’s time to develop a proof of concept and get feedback.

I’ve built a prototype with a voice over script, some on screen text, and a story told in cartoon format (with my crude stick figure drawings). I realized I needed a professional cartoonist to do the eight or nine frames necessary to tell the visual part of the story. So I’m using iFreelance and contacting other cartoonists I found on LinkedIn and through graphic designers I know.

So stay tuned. I’m going to blog about the process as I reveal the proof of concept online, try to build buzz via social media, and crowdsource tweaks to the process/product to improve it. By the way, one of the outcomes of the discussions on LinkedIn is a name for the product: acStream.

Should be interesting.

Alas, you’re not Apple, and I’m not Steve Jobs. That doesn’t mean we can’t pull off highly successful product launches, though.

Due to the tools we have available today, the research phase (which is an absolute must) can be combined with test marketing and some early promotion of the product.

The problem in developing successful new products is not a shortage of ideas, but the expense of bringing a new product to market without any guarantee of success. How much better to continually seek feedback from prospects along the way, and fine tune the product so you know it’s going to be a winner.

Research, Research, Research

Social media platforms like LinkedIn and Twitter constitute mind-boggling tools for accomplishing research on the fly with built-in feedback loops, and rock bottom pricing. Five years ago you’d have to pay tens or even hundreds of thousands of dollars for the information you can get at virtually zero cost today. Here’s the process:

1. Determine who your best target customers are. “Everybody” is not an acceptable answer. Be as specific as possible. The better you know who you’re selling to, the better you can custom fit your product, and the more persuasive your marketing messages can be.
2. Determine how you want to go to market. Are you going to produce the product in-house or outsource the production? Will you sell the product yourself or through resellers? If you’re going the partner route, thoroughly research potential partners to determine best fit.
3. Market Research Phase:
   a. Research market size and potential.
   b. Interview end users, resellers and sales reps (you can do this via online polls on LinkedIn and Twitter, although you should also conduct some qualitative, in-depth interviews in person or over the phone).
4. Analysis and Development of the Marketing Plan:
   a. Competitive Analysis – review competing products and how they stack up against your proposed product. If there aren’t any closely competing products, research how else people are solving the problem. If they aren’t solving the problem and they’re not suffering any pain, pull the plug. If they are suffering, but don’t realize they have a problem, you need to add in the overhead cost required to educate them.
   b. Evaluate the product’s Strengths, Weaknesses, Opportunities and Threats (SWOT). Develop a Proof of Concept so people can understand what it is and what it does. It’s OK to use smoke and mirrors, as long as you can build the real functionality when the time comes.
   c. Develop an Online Marketing Plan that leverages the unique capabilities of the Net. Successful online launches create a series of interactions with current customers, employees, prospects, suppliers, trade media, resellers and any other appropriate audiences.
5. Execute the Plan and Launch the Product:
   a. Develop online (easily and inexpensively edited) collateral materials.
   b. Begin placement dialogues with the first step in the preferred channel.
   c. Have enough dialogues with enough different entities to uncover any previously undiscovered objections.
   d. Review and revise the Plan as necessary with the new information.
   e. Repeat until you’re satisfied you have market acceptance.
   f. Explore relationship extensions with partners.

I’ll come out with more details in shorter blog posts over the next several days.

It reminded me about the disconnect between large vendor Marketing and the sales messaging needed by SMB MSPs, SIs and VARs. That VP had a slick PowerPoint presentation developed by a corporate Marketing department. It leveraged information purchased from major IT research vendors – Forrester, Gartner, IDC, etc. It was a good starting point, but almost worthless to sales people on the ground trying to sell specific solutions.

Sales Enablement is the process of arming an organization’s salespeople with information that will help to close profitable deals. Sales Enablement delivers the most relevant information for a specific sales situation.

Sales people are what I call “just in time learners”. They are extremely busy. They are action-oriented. They have little patience for sitting, reading and digesting reams of information so they can later distill and communicate the most significant message for a particular sales situation. Salespeople learn what they need to know when they need to know it. Sales Enablement should bridge the gap between the 35,000 foot PowerPoint and the, “I’m sitting across the table from a decision maker who is willing to take the next step… if I can show her that we are capable of solving her specific business problem.”

The specificity need not be deeply detailed, but it should address the particular problem… not describe issues that are universal across an industry. It should bridge Sales and Marketing departments. It should augment market research and global messaging with:

• Competitive Intelligence – not at the vendor level, but of local MSPs, SIs and VARs
• Tribal knowledge – specific to the client industry in the local geography
• Product knowledge from the minds of the technologists who have developed/integrated similar solutions, and
• Answers to questions and objections encountered by salespeople who have sold similar solutions in that market.

Here are three common mistakes salespeople make when attempting to bridge the gaps described above:

Mistake #1: Giving the Feature/Benefit World Tour

These tours often happen during demos, presentations, proposals, and in printed and online collateral. They’re an attempt to show prospects everything that your product/service/solution can deliver. Don’t give the ‘List of the Top Ten Features and Benefits’. Your website should have that information. When in front of a customer you want to pick the two or three features and benefits that are meaningful to them given their situation.

A savvy sales enablement provider will help the salesperson pick the three most relevant features and benefits, and will translate them into higher-order value statements. As an example, the three most relevant value statements for an Electronic Records Management solution might be:

1. A 25% increase in productivity due to improved access to information for daily tasks.
2. An average 40% savings on paper storage costs.
3. A 99% reduction in fines and penalties due to regulatory non-compliance.

If you know that all three of those are primary concerns with that prospect, you’ve just reduced your sales cycle significantly.

Mistake #2: Let Me Tell You All About My Baby

This happens most often when an engineer is brought along on a sales call. They are (usually justifiably) proud of their baby. They built it, and they love to talk about it… what it does, how it does it, why it does it this way, and so forth ad nauseum. There’s a time and a place for this conversation – when your techie is talking to their techie. When that occurs, it’s usually quite late in the buying process and the business people have already decided to go ahead.

Don’t throw the baby out with the bath water, though. Summarize the solution effectively (and briefly) using graphics, then provide a link or a white paper which details the technical information. Your decision maker will be more at ease if he can give those details to his trusted technical advisor.

Mistake #3: No Proof Points… Just Trust Me

This is a situation that’s as old as B2B technology sales itself. Salespeople understand the effectiveness of case studies and testimonials. They constantly ask for them. But they never want to take the time to elicit them from clients. Your salespeople, and your technicians and customer service reps too, should be alert for positive statements from clients. When clients make these statements, the automatic response should be, “Thank you. We’d love to be able to use that in our promotional materials. Can I have someone contact you about it?” Then, whoever is handling your Sales Enablement should quickly follow up with a written testimonial, or if appropriate, an outline for a case study, for their approval. Don’t wait for the client to write it. It won’t happen.

Also be alert for situations where your solution has made a hero out of someone in the client organization. Those people will be happy to sit down with your Sales Enabler and tell them all about the problem that was solved, and how it came about, and the results achieved. Case studies with a client hero or heroine resonate with prospects. After all, who doesn’t want to be seen as a hero by their company?

Consider incenting everyone who has client contact to submit potential testimonials and case studies.

These three Insurance Technology pundits are Ellen Carney, Barry Rabkin and Ara Trembly. All three of these people make their living consulting to technology vendors in the insurance space. They are all well-connected in the industry, and they all have valuable insights.

Barry’s blog is called ‘Rabkin’s ROI – Rants, Observations and Insights from an Insurance Technology Analyst‘. Barry has a unique point of view as a result of 30 years of experience in what he calls the ‘InTech’ world.

Both Ellen and Ara have blogs on the Insurance Networking site. You may have to register to access the blogs, but it’s well worth the five minutes. You can also sign up to receive IN’s enewsletter. Lots of good information. Here’s an excellent post by Ellen listing the findings of a recent Forrester research study re how insurance execs are planning their IT spending; and an insightful one by Ara discussing the demise of homegrown insurance systems (or not).

These people are bona fide world class experts in the field of information technology in the insurance industry, and you can peek inside their brains for free! Relevant and useful information to help you make better business decisions. It’s a wonderful world.

So I gave him a call.

Bob:  Customer knowledge across lines of business has been an issue since we worked together at Aetna all those years ago. When I went to Digital, it was an issue we tried to address with data warehouses. Then, years later at EMC when I was the Insurance Industry Marketing Manager, we tried to address it with CRM and Enterprise Storage Networks. Is customer knowledge across lines of business still the holy grail for insurers?

Ken:  Maybe not considered to be the holy grail, but still very, very important in many different aspects.  First and foremost is the data. I believe, as do many companies, that data is still king. It indicates past performance of customers and predicts future traits in terms of buying patterns, needs, claims modeling and rate setting for pricing of products. Literally as we speak, Travelers is doing some heavy spending on data analytics and modeling based off this data. I have never seen an insurance company to date making such a tremendous commitment to acquiring and analyzing the data as they are currently doing.

Bob:  How is Safeguard Guaranty solving this issue?

Ken:  Well, we’re lucky in that we have no legacy systems to deal with. We’re putting systems in place that can truly capture customer data in an Enterprise fashion versus traditional segmented type systems by line of business or market segment.

Bob:  Do you think insurance industry executives are finally ready to tackle this beast?

Ken:  Certain firms like Travelers, Progressive and Geico are definitely committed to this, but many of the others are not yet prepared from a human resource/expertise perspective to understand the value of solving this issue… let alone ready to commit the substantial dollars needed to resolve it. They won’t do it, until the reality of losing their market share to companies like Travelers, Progressive and Geico hits them smack between the eyes.

So, it’s still an issue in much of the industry, and in Ken’s perspective, vendors need to educate their insurance clients on the competitive dangers they face, and the potential solutions available.

IT vendors who supply more innovative Card Company solutions will see their projects sidelined for the next 12 to 18 months. Opportunity always accompanies change, though. Innovative IT providers should study these new regulations and attempt to partner with the Card Companies on applications that can help them comply while also adding customer service functionality.

COMPLIANCE

Card Co’s Day of Reckoning Hits IT

Bank Technology News  |  July 2009

by Rebecca Sausner

The new federal regulations overhauling credit card industry practices seemed radical, until President Obama signed a law in May that upped the ante in terms of timing and restrictions, and then in June proposed the Consumer Financial Protection Agency. Either alone represent a sea change for card lenders, requiring them, as the American Bankers Association puts it, “to overhaul their entire business models, eliminate specific practices, and reconstruct the way they extend credit and interact with customers.”

“Overhauling” and “reconstructing” have technology implications, but not always good ones. What will happen with the proposed new regulator is unknown – every bank lobby in the country opposes the idea. But the card law is a done deal, and represents such a major short-term challenge for lenders’ technology operations that one banker told MasterCard Advisors that compliance could absorb as much as 70 percent of the coming year’s IT resources at his institution. Everything from customer service technologies, billing and payment processing systems, disclosure processes, and pricing models must all be rewritten or replaced. Best guess is that most lenders will band-aid existing systems to meet the deadline – or face stiff fines – and overhaul down the road. “When you combine that the changes affect every part of the process, and when every part of the process involves technology, it’s going to be a drastic and very burdensome thing for IT departments,” says Michael Brauneis, director of regulatory risk consulting at Protiviti.

Certain provisions require entirely new processes to be added to the customer information file. Among them is the requirement that consumers opt-in to the product feature that allows them to pay a fee in order to exceed their available credit limit. For this, banks will have to build permissions functionality. Some institutions are looking at ways to comply without losing revenue. One solution: instant opt-in via a text message sent to a consumer at the point of sale. “They’re looking for something that could realistically be done so that it will be legal and consumers will accept the charge for the over-the-limit transaction,” says Greg Hedges, managing director at Protiviti.

The changes in how card issuers can utilize delinquency and other information to adjust credit availability will also be onerous, requiring that the links between the risk analysis and servicing side of the system be revamped. “I think it would drive even more the move towards more flexible technology where you could have three pricing tiers or have thousands,” says Dennis Dixon, president of Zoot Enterprise.

The new law may also “serve to wash a lot of the innovation that’s existed in the market out of the market,” Hedges says. “Organizations that had very sophisticated risk-based pricing, who started to look at consumer behavior, are trying to look at how they can keep those practices in place and still stay in compliance.” And for some, the rules may be too much to handle. “I strongly believe a lot of the smaller firms are just going to exit the business,” Brauneis says, adding the understatement of the week, “It’s already less attractive than it was a few years ago.”