Small Business Computer Consulting Blog

10 Tips on Selling IT Solutions for Much Higher Hourly Rates

Posted by Joshua Feinberg

Oct 29, 2011 11:03:00 AM

10 Tips on Selling IT Solutions for Much Higher Hourly RatesWhen you’re selling IT solutions to small business clients, do you have an easy time or a difficult time establishing your value proposition? And is it easy or difficult to command higher hourly billing rates? 

In this IT sales tutorial, you’ll learn 10 ways to improve your marketing and sales process, so that you’re selling IT solutions to much better clients, with a lot less sales resistance, and for much higher, premium hourly billing rates. If any of these struggles sound familiar, you need to stop leaving money on the table and watch this tutorial now.

A lightly edited transcript follows below.

Question:  How can you get your customers and clients to value your service at the rate at which you think it should be valued?

Answer:  How do I get my customers to value my business so that I actually make what I think I should be making? Value is in the eyes of the beholder and it can be a pretty subjective concept. However, there are a couple of best practices for selling IT solutions that I want you to pay attention to, to make sure that you are able to clearly and effectively explain your value proposition to your prospective customers and clients. So you can get the highest possible hourly billing rates with much less sales resistance. When you take those two variables (hourly billing rates and billable hours) and you multiply them together, it can make an enormous difference to the profitability and growth rate of your business.

Select Appropriate Marketing Campaigns

It really all starts with marketing that is appropriate to a business like yours. Let me repeat that. If you want to be able to get rates that compensate you and your staff at the level that you feel you should be compensated, it really all starts with marketing that is actually appropriate and specific and relevant for a business like yours as a professional service firm. Does it involve knocking on a lot of doors? No. Does it involve putting ads in coupon packs side by side with pizza restaurants and dry cleaners? When it comes to promoting B2B professional services, this is not necessarily the best place.

If you are still going with an outdated computer dealer model that is focused on pushing boxes and being a commodity broker, just focused on reselling the desk tops, etc., bragging about all the certifications that you have all over your marketing material to the point that there is more real estate on your business card and on your Web site for your authorizations than there is for you, again that is not the way to go.

Explain Your Value Proposition When Selling IT Solutions

When selling IT solutions, you need to focus on explaining and being able to clearly and effectively articulate your value proposition, what you bring to the table, and not just being an evangelist or a cheerleader for some channel program that you belong to. I want you to stop depending on situations where you are playing the commodity broker game. It is something that quite frankly should have gone away 5, 10, 15 years ago. It kills me that there are still people holding onto it because it is really hurting your business.

Generally in order to be an effective commodity broker, you need economy of scale that is way beyond the realm where 98 or 99% of the people are in our industry. In other words, if you are not prepared to scale your business to the heavy seven figure or eight figure level, and you don’t have capital to be able to do that in a relatively short period of time, you are not in the position to be a commodity broker or a box pusher. It does not work anymore.

You won’t be able to afford the overhead to do it the right way.

Be Proactive So You Arrive Earlier in the Sales Cycle

To be able to get those higher hourly bill rates, you must get there much earlier in the sales cycle so that you can plant the credibility seeds and train these small business owners and managers that you are the only one that they should even remotely consider calling when they are thinking about their IT needs. You want to explain what you do for your other clients and want to talk about some of the case studies and some of the problems that you have solved for your existing clients. The key thing is capturing their mind share and building up that relationship equity before they go searching based on a criteria that boils down to nothing but price.

The reality is for someone who is a non-technical small business manager and owner, who does not know the first thing about hiring an IT vendor, they know exactly what they need to know about hiring staff in their own kind of business, but when it comes to knowing the right questions to ask to distinguish between the good, the bad, and the ugly among IT vendors that are out there, chances are they are going to make the decision solely based on price. If they are going to the phone book, it’s solely based on price. If they are going to the coupon pack which is even worse, it’s the same thing. If they going to the search engine, they are calling you simultaneously as they are calling ten other vendors.

You are really being put on the defensive bidding price, a profit-destroying kind of situation. Don’t put yourself into that kind of situation.

Plant the Seeds Before You Need the Leads

Get there much earlier in the sales cycle, plant the seeds and train them, and be able to demonstrate your expertise and credibility and value proposition so that when they have the need they are going to come straight to you and completely shortcut the need to go out there and get competitive bids. What it comes down to is investing and producing white papers, getting out there in front of groups of small business owners and managers in speaking engagements, and things like economic development organizations, chambers of commerce, lead-sharing organizations, speaking in front of user groups, speaking in front of industry trade groups, anywhere where you are able to get in front of a group of small business owners and managers that are in a position of authority to be able to hire your company to come in and take care of all of their IT needs.

So usually they need to be big enough to be able to afford to pay for professional services, but not so large that they have a big in-house IT department. There are an awful lot of great ways to be able to reach those folks inexpensively in your local community, by being able to demonstrate your expertise in the form of white papers. Whenever you do speaking engagements and hold your own seminars, have them video tape you, or at a minimum audio record them so that you can offer a CD or MP3 or streaming or a DVD of your talk to other small business owners and managers who were not able to be at the live presentation. Note that the applause and the testimonials and things like that from the audience afterward help even more.

Get in Front of the Right Influencers at the Right Time

Having meaningful participation in local business-to-business trade shows can make an enormous difference to being able to get those higher hourly billing rates. If you truly want to succeed at selling IT solutions, establish partnerships with other trusted business advisors that you know of in the community. You can build up strong friendships and relationships with accountants and management consultants, attorneys and graphic designers, and SEO consultants, or experts on Salesforce.com and (Microsoft) Dynamics, non-competing technology providers in your local area and other trusted business advisors that already have relationships with the small business owners and managers where you want to get a foot in the door.

Qualify Leads as if Your Company’s Survival Depends on It (Because When You’re Selling IT Solutions, It Does)

The key thing of all of this is that size matters a heck of a lot. You have to qualify vigorously, find out how many employees they have, how many workstations they have, how many servers, how many locations they have. It can make an enormous difference. Home-based businesses: I hear so many people struggle with it and sometimes even their customers play the sympathy card with them, and they feel sorry for them. How can I possibly turn business away? Well, let me just tell you, home-based businesses will never spend anywhere near a $500 amount or a $1000 amount with you on a regular basis. They are calling you the same way that they would call in a plumber, an electrician, or someone to powerwash their house, or redo the roof.

They are hoping that they see you once, and that they don’t have to see you for years and years. On a long shot they might give you a referral to someone who is in that exact situation as they are. Home-based computer repair work is largely a charity. It is not a business. Professionals should not be wasting their time with one shot deal kind of customers, because they are never going to be able to commit to an ongoing support agreement. Generally this is the only way that you are going to be able to recoup your customer acquisition costs. Qualify based on size, qualify based on what their predominant platform is, what they invested in, their OS, their NOS kind of thing, what industry they are in, how they are receiving support now, how they have received support in the past, and focus on selling that initial small proving ground project.

Focus on Selling IT Solutions as Small, Initial Proving Ground Projects to Get Your Foot in the Door

Don’t get up and every time you go out on a sales call try to hit the ball out of the ballpark, or grand slam home runs. That is when you get dragged into the sales cycle that goes on for months and months – and in some cases even longer – and they don’t seem to go anywhere.

Focus on selling that small, initial project, a few hundred dollars or your local currency equivalent to get that foot in the door, to be able to build up the mind share of the relationship equity, and go from there. “There” is almost always going to be (if things go well) a follow up project or a remediation project or an upgrade. Then you are in a great position to talk to them about how they want support handled on an ongoing basis following that installation. Focus on selling relationships, focus on selling the credibility, the solutions, the problem solving that you bring to the table. Focus on ROI, the results that you get for you clients. It is not about pushing products out there, it is about demonstrating your value proposition.

Don’t Give Away the Store

Most of all, when it comes to selling IT solutions, stop giving away the store! This largely is almost a self-esteem thing for a lot of people in our space, whether they call themselves consulting firms or IT service providers. You need to look at yourself in the mirror and say “I am worth it,” because for the clients that I work with, for the clients that I have had great success with, they tell me that over and over again.  I need to get more clients that are just like that. If you want to get more clients that are just like your best clients, you need to be a lot more specific about where you spend your marketing resources, promotional time, and promotional budget. Remember that no customer is ever going to tell you that you ought to raise your prices. I am serious. No customer or no client is ever going to come up to you and say “Gee, you have been giving it away for so long, why don’t you double or triple what you ask?” That is not going to happen, so you have to figure out what your value proposition is. You certainly can figure out who your competitors are. And I would be very careful about how you qualify who your direct competitors are; they may not be exactly who you think they are.

Again you want to focus on small businesses that are big enough to need to see you on a regular basis, but generally not big enough to need a full blown in-house IT department. If you charge too little, it can be nearly impossible to recover from that later on. A lot of people come to us and they want the plan for fixing it. It can be fixed, but it is awfully expensive and time-consuming. It is so much easier to get it right from the beginning.

Again the question was how do I get my customers to value my services enough, so that I make what I think I should be making.

Watch Your Profit and Loss Statement

Of course there are many related financial decisions that go along with selling IT solutions as well. I can’t give you specific financial advice, but I can tell you that you need to know what your expenses are, and what you want your profit margin to be, before you can decide what you can charge, and of course you need to keep track of utilization rate too, the number of billable hours you generate in a week relative to a traditional 40-hour work week.

Don’t Sell Yourselves, or Your IT Business Solutions, Short

So when it comes to how you can get your customers and clients to pay you at the hourly billing rate that you think you should be getting, you really need to

  • Be very proactive

  • Be very deliberate about the types of clients and customers that you go after

  • Have a good strong proactive marketing plan

  • Have good lead qualification criteria in place

  • Use a logical step-by-step sales sequence 

Most of all, just start by looking in the mirror and realizing, “I am worth it. I solve business problems very effectively. I apply IT to solve those business problems extremely effectively. The clients that I work with get spectacular results for every $5K that they spend with me and my company; they see $50K worth of new revenue opportunities, and reduced overhead expenses. It is a fantastic deal and value for them.”

Of course, for selling IT solutions more effectively you want to capture those stories and firsthand accounts as much as possible to include in your case studies, and you want to be able to very clearly articulate that to your prospective clients and customers. 

Share Your Feedback

How do you make sure that your firm gets the highest hourly billing rates possible when you’re out in the field selling IT solutions? Please share your feedback, tips, and war stories in the Comments below.

And to follow-through on the tactics introduced in this tutorial, download your free special report on 7 IT Sales Secrets for Attracting High-Lifetime-Value Clients.

Creative Commons Image Source: flickr Keith Allison

Topics: IT sales, managed services