Why Not Every Opportunity is a Good Opportunity
There is nothing more exciting than a new business opportunity. That feeling of a “win” is why most of us eagerly jump out of bed, put on our slacks, and button up our shirt every morning. There is nothing that sucks the thrill out of this more than when a “good opportunity” translates to a “bad deal” for your business.
Some opportunities should be left on the table, but it takes a lot of experience to really know how to identify these “duds” and simply walk away. Most mature MSP Owners, Sales and Account Execs have learned this the hard way and have the battle scars to prove it. For those who don’t, we tried to isolate some of the most common warning signs that we have seen and why/how you should avoid them.
Breaking Business Processes
Your business has it core processes under which you operate. While these processes may change and evolve over time as you become more efficient or grow, they should always remain documented. One of the signs of a questionable deal is when the Prospect/ Customer requires you to break your process or make an “exception” to deliver their service.
Don’t get me wrong, sometimes this is a good thing and it can lead to maturity and evolution in your business. It is entirely possible that this potential contract will have a major impact on your growth and it is worth conforming to. Or even this “requirement” is something you should have been doing all along but never have. This is the evaluation process that you have to go through on every deal you make in order to protect your processes and maintain a culture of adhering to them.
Pricing For Competition, Not Profitability
Profit margins in Managed IT are tight. As competition keeps growing and pricing on core services drop, some providers are pricing away all of their profit just to win the deal. If you find yourself going quote-for-quote with another vendor, be sure to know when enough is enough.
Knowing your numbers (primarily costs) is incredibly important. You and your Sales/Account Team should have ready access to pricing calculators or charts to quickly and easily identify where your break even point is. This gives your team no excuse not to protect profit and pull away if necessary. The cost of not having this information at hand is far greater than the resource time to produce it.
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Hopping Managed IT Vendors
When meeting with a prospect for the first time, it is a good idea to dig up as much information as possible on their current vendor and their relationship with them. You may have been on the receiving end of a new customer on-boarding, only to find the losing Provider as happy as you are about your new customer acquisition. This is a bad sign.
The truth is, the customer is not always right in the way they treat their vendors. A customer that hops from vendor to vendor out of “dissatisfaction” might have skewed expectations of your services or might just be difficult to get along with. Getting as much of this information up front (and even asking around about them) will help you avoid these toxic contracts.
Cutting Corners on Best Practices
One of the primary reasons to document your companies best practices to hold your team and customer accountable for adhering to them. Customers and Prospects sometimes try to “cut corners” to save time or money on IT projects. It can be easy for your Sales team to go along with this if there is no firm standard for which they are required to consider.
If a customer is trying to save a buck on day one and they are willing to sacrifice your quality of work and service delivery to do it, then this is not likely a good customer to have. This lackadaisical attitude can easily spread to your team and suddenly the standards which have taken you years to develop can be compromised almost overnight.
Churning or Under-Skilled Workforce
Some companies take the “quantity over quality” approach to human resources. While this may be good for their own short term profitability, it tends to breed bad culture in business. Frustrated, unhappy end-users or those who lack basic skills can put a disproportional amount of stress on your Service Desk, compared to customers that differ.
An easy way to sniff this out early is to ask that the Prospect to provide a per month average for employee on-boardings and off-boardings. Comparing this number to their total user count and then stack that up against other customers of like size can help you figure how much churn is too much and how likely it is to pose a negative effect.