As Economy Slides, Services RiseBy Kathleen A. Martin | Print
Credit crisis and spiraling markets are no problem for solution providers that enhance their services. Here are five steps to better services.
If you’ve spent any time surfing CNBC or Fox Financial, you’ve heard phrases such as "down economy," "tightening credit," "spreading insolvency," "extended recession" and, sadly, "deep depression." Regardless of what it’s called, the current state of the financial markets and the overall economy is enough to leave even the most seasoned businessperson feeling depressed and bewildered.
The Dow keeps rising and falling in swings that look more like a rollercoaster than a stock index chart. Each opening bell on Wall Street brings more bad news about spiralling markets, insolvent banks and deteriorating IT budgets. While the world is fixated on the markets and large enterprise, American Express reports that one in five small U.S. businesses are in danger of collapse.
Where does this leave your solution provider business? How will your business survive—and potentially thrive—in this down economy?
In a word, "services."
Services mean everything from managed service to software as a service to professional services. Services have always been an integral part of the solution provider business; it’s the "value-add" of the VAR moniker. Much has been written about how solution providers need to grow your services business, but precious little has been written about how to do it. Services allow your business to ride the choppy waves into shore on recurring waves of revenue.
These five simple steps below can help you start your services business or grow your existing service portfolio.
1. Think About Customers’ Needs: End-user businesses are experiencing the same economic challenges as your business—controlling costs and creating new revenue opportunities. Review the Web sites at any office superstore (Office Max, Office Depot) and look at what they make on the printer supplies. You can work with many of the vendors directly to drop-ship supplies to your customers and you make a nice fee for the service and the delivery. The customer saves on gas or a delivery charge from their office supplier. Don’t forget you can charge for the evaluation of your customers’ business as a value-add.
2. Offer Contract Employee Services: Now is a great time to be selling specialized contract or project labor services. Companies will tell you their largest expense is tied up in employees and benefits. You can present your team of specialists for all of their IT needs and be sure you can show the savings contracted services deliver by the project versus a full-time person.
3. Web Site Development: If you offer Web site development services, do you also offer hosting? Web site development is just one part Web site services. Consider partnering with a marketing services company if you are not offering creative and content services. The partnership will be transparent and you can offer your customers a full portfolio of services from Web site development to content and hosting. The additional services offer you recurring revenue.
4. Get on a Monthly Cycle: Traditional reseller sales are one-time events. Services are a continual engagement that comes with recurring fees and charges. When delivering managed services, you can sign up your customers for everything from leased hardware to extended professional services. All of the hardware, software and services can be billed on a monthly schedule, allowing the customer to spread the cost of services over time and provide you with a recurring revenue stream.
5. Plan Growth; Add as Needed: Don’t expand your staff faster than you receive service contracts. There is a ramp-up period as you change your business offerings that will allow you to hire later as your services grow. Invest in training and systems to allow your current staff to make the jump to services and grow with you. You can use contract labor and partnership resources until you can afford to build your own capacity. Contract marketing, accounting and human resources can allow you to take those daily operations off your plate and focus on the growth of your business while allowing your employees the benefits of a large organization.
There appears to be no quick solution for ills plaguing the U.S. and global economies. Despite the financial troubles, businesses will still exist and they will need services to operate. For end users, services are a logical means to control costs. For solution providers, it’s a means for predictable revenue streams and having greater value to your clients.
Keep it simple, listen to your customers' needs and continue to expand your portfolio of offerings.
Kathleen A. Martin is CEO of RocketComm, a professional and marketing services firm for solution providers and a regular contributor to Channel Insider. She can be reached at firstname.lastname@example.org.