Monday, September 10, 2007

Managed Services in a Month - Part Five

[ KP Note: The entire "Managed Services in a Month" series has been collected, collated, and indexed. Still free. You may access it now at ]

Where we've been:

Topic One: Start making a plan
Topic Two: Create a three-tiered pricing structure
Topic Three: Weed your client garden
Topic Four: Finish the plan
Topic Five: Write a service agreement and have it reviewed by an attorney
Topic Six: Print up your new pricing plan

And now (perhaps the most important topic of all):

Topic Seven: Client Sit-Downs

If you're not a Soprano's fan, don't visit

Satriale's Pork Store.

That's one of the places Tony would go to have a sit-down. He'd draw a line and after that the relationship was refreshed and re-defined going forward.

Here's the lowdown. You have to have a sit-down with your clients. That means face to face. That means in person. That means you and not an employee.

You started this relationship. You're the contact, and the personality, and the company. You're the beginning and then end of the business.

If you want to lose a client for sure, email your new pricing sheet and wait for an answer. [Insert slow hold music here.]

Here's an overview of the sit-down process:
  • Gather your data.
  • Prep your binders.
  • You'll meet with each of your clients.
  • You'll have them pick one of the new plans.
  • You'll drop any client who does not sign a new agreement.

Stop: I'm serious. You honestly and sincerely, deep in your heart have to be ready to walk away.

Look at what you've been through already: You've defined your ideal client, and your pricing structure, and your service agreement. You've got an awesome 3-tiered price sheet. You know what you want and you've defined it quantitatively. You've listed services and put a price on them.

You're 100% ready to go.

Now you just have to have the guts to walk away.

Important negotiation tip: If you're not willing to walk away, you will lose (or pay too much, or get too little).

So, we're going to help you get to the point where you have the self-confidence, experience, and gumption to walk away.

Sort Your Clients
You already did this: In Part Three you made three sets of lists. We'll call them Platinum, Gold, and Silver. Now try to guess which agreement each client will sign, based on past performance.

The result is: a new list with three columns. The columns are "Most Likely to Sign Silver," "Most Likely to Sign Gold," and "Most Likely to Sign Platinum."

Gather Data, Prep Your Binders

For each client, you're going to show up with a nice presentation folder. If you already have them, great. If not, scoot over to Staples and get some. I wouldn't have any printed just for this. But whatever you want to do is fine.

At a minimum, show up with a nice presentation binder with your business on the front and your card inside.

Remember that report on labor sales per client? You're going to run that report for the last 12 full months. Print up two copies so you can go over this with the client. The report shows all the money this client has paid you for labor over the last 12 full months.

Note: If the client basically spends nothing, skip this report. We went to one client who had spent about $1,000 over the last year. We believed 99% that they would drop, but we wanted to let them make the decision. They signed for $500/month. That's $6,000/year. Happy to have them onboard!

Also in this binder, you will put two copies of your newly-minted Service Agreement, two copies of the price list, and one copy of your credit card agreement for recurring billing. You'll need this if they pay by credit card.

That's it. No marketing material (they know who you are).

Clean and simple.

Make Appointments

The order in which you talk to your clients is extremely important. You've got your three tiers: Most Likely Platinum, ML Gold, ML Silver.

You're going to start at the low end (most likely Silver) for several reasons.

First, you believe many of these people won't sign at all.

Second, these people are really the least likely to sign.

Third, if they sign, they'll probably sign Silver.

Here's the strategy: You haven't pitched your awesome new plan before. So you're going to start with the least likely clients. You're going to explain your model, and the features of each level. And you're going to say the words "We think Platinum is best for you."

And you're going to listen. You're going to write down every question, every objection, and every time they say "That's a good point."

In other words, the strategy is that these silver suspects are going to teach you how to sell this product to the next level of clients. You'll learn all the sticking points and questions. And you'll develop answers.

Along the way, you'll develop absolute confidence in your new system. In justifying it to everyone else, you'll justify it to yourself. You'll drink as much kool-aid as you serve up to others.

For now, only make appointments with Silver Suspects. You'll schedule Gold Suspects after you're about half done with the Silver.

Important safety tip: You have to make these appointments!!! They cannot be over the phone. You can't email the price list.

This is a sit-down.

Your business will come to a stop for 15-30 minutes while you sit across the table from your client and talk about how your refreshed relationship is going to work. Similarly, your client's business will come to a stop for 15-30 minutes. You'll force them to stop, sit down, and go over this.

Don't get discouraged if clients don't jump at the opportunity to meet with you. They're busy and you're just another vendor. Plus, they might suspect bad news or a price increase. But mostly they're just busy.

Don't meet with the office manager or your primary contact unless that person has the ability to sign a contract.

Don't meet with anyone who can't say yes.

Lots of people can say no. But only one or two people can say yes.

Don't meet with anyone who can't say yes.

Part of redefining this relationship is that you have to have an owner-to-owner discussion. You're going to tell them what the new system is and they're going to pick a plan.

If you give your pitch to anyone who can't say yes, they're going to interpret your offering, and your pricing, and your past relationship. And even if they're an advocate, they may not convince "the powers that be" to sign your deal.

Don't meet with anyone who can't say yes.

If you show up and the person who can say yes is not there, be polite and ask to reschedule. Don't go through your pitch.

Don't meet with anyone who can't say yes.

[Can I stop kicking the dead horse yet? Don't meet with anyone who can't say yes.]

Prepare for your meeting

You need just a few more things before you show up for your meeting. This is extremely important if you are not a one-person shop.

Before you show up to any appointment, make some client-specific notes. You already have the money printout. Now you need to make sure you have information on the following:

1) Are there any outstanding billing issues? Did the client recently question an invoice, overpay something, underpay something, etc. Anything. Just be aware.

2) Are there any recent technical issues that are "sticky?" In other words, are you walking into a sales meeting while the server's down and email's not flowing? That would suck. Similarly, was there a recent issue where your team did a spectacular job?

3) Are there any other client relationship issues outstanding that you should be aware of? If you go into the first five sit-downs and all five clients say that response time is really suffering, you better pay attention and take that back to the shop for fixing.

4) Are there any technical requirements that must be met before the client can get on a plan? For example, one of the first clients we signed had resisted paying good money for a professional backup system. They were using plain old NT Backup. So, one of our conditions was that they needed to buy Backup Exec, which they did!

5) Was there a recent incident that would have been covered? This is particularly good for the Platinum Plan. That 10-hour ordeal with the ISP when they changed your IPs? That would have been covered. Cha-ching.

All these things can be distractions. You're going into a high-level meeting with someone who can say Yes. And that person has a right to bring up anything and everything related to your relationship going forward (or backward). Don't get surprised. Don't get hijacked.

After all, you're going to start out by saying "I trust everything's going smoothly." You want to do whatever you can to make the answer "Oh, yes, we're extremely happy with the service."


To Be Continued.

Sorry this topic is so long. But it's super important. This is where it all comes together for your goal: Sign at least one agreement this month!


Part Six will get right to the actual meeting. Aren't you tingling all over?


  1. Anonymous1:08 AM

    Hi Karl,

    I had been planning moving my clients to managed services contracts for quite some time now. Reading your great posts over the past couple of days have really help me confirm most my decisions. If only I had read the last post sooner.

    I decided to test my new service plans on my two oldest and closest clients (we're basically friends now). The one signed immediately the other is thinking about it.


    The one that signed, I spoke to the person that decides, the other I spoke to 2 of the 3 partners.... Damn.. Damn.. Damn...

    Could you write a little faster please ? ;)

    Off topic but I also wanted to ask about your pricing . The amounts are irrelevant (I'm based in Athens, Greece) but I see that over a certain amount of workstations I would need to start discounting the per/workstation fee. Do you discount the fee over a certain number of workstations?

    Thanks for everything

  2. I'm trying, Theo. I have two other businesses to run, you know. :->

    As for discounts: We give larger clients a break. I think it's fifty desktops and above. They get the Platinum program for $45 per desktop.

    Obviously, with them we make money because of the scripting capabilities in Kaseya and taking advantage of group policies.


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