8 IT Support Agreement Tips for Generating Recurring Revenue
Does your company offer an IT support agreement to your clients? If so, give yourself a nice pat on the back. If not, this post and video tutorial is urgent and required reading (and watching).
Starting from scratch each month is a tough way to sustain or grow a computer consulting business.
There is general agreement that the key to having a big, running head-start each month centers around generating recurring service revenue. What’s the best way to package a program like this so that it appeals to non-technical small business decision makers? Your business needs a highly-compelling, well thought-out IT support agreement program.
In this post and the video tutorial, we’ll look at eight ways to make sure that your IT support agreement clients consistently generate high-margin recurring service revenue.
A lightly-edited transcript follows below.
Focus Everything on New Clients that Can Generate Repeat Business and Recurring Revenue
The question is “how can you turn new clients into repeat business and recurring revenue?”
That’s an awesome question that more people should be giving more thought to.
Technology providers (such as a computer consulting businesses, VARs, IT solution providers, network integrators, MSPs, and computer repair businesses), that help local small businesses with their IT problems on an outsourced basis, need to focus on making their company as IT support agreement -centric as possible.
Everything should revolve around clients that are with your firm for the duration with ongoing annual IT support agreements. Instead of marketing to everyone, going out on sales calls, chasing bid opportunities where you are just largely reselling hardware, or focusing on companies that are too small to respond to your professional recommendations, you need a different strategy. Everything should be based on building a business that is 100% focused on the needs of the right sized clients that will get a good value proposition by committing to your company with a long-term annual IT support agreement.
Red-Flag Any Dysfunctional Relationships with Existing Clients
What are the best ways to turn new clients into steady, repeat business, and recurring revenue?
The first step is to understand that this process is much easier with new clients than with existing clients that are used to calling you at all times. You kind of have to retrain and reorient existing clients to think that they can’t call you whenever they feel like it, unless they are willing to commit to your firm for an annual IT support agreement. It is similar to the cautionary dating advice given to young women by their parents who fear that their daughter will never be proposed to by a non-committing boyfriend…the whole idea of “why buy the cow when you can get the milk for free!” This is very similar to the situation with your clients.
If existing clients are used to calling your firm only when they feel like calling you, and you do not have a proactive project plan or IT strategy, then you have a dysfunctional relationship. This is your fault, because the relationship should not be based on break/fix work. You should not be the firefighters who are just taking care of emergencies.
Let the Healing Process Begin that Leads to IT Support Agreement Clients
Most small business clients need you to come in and organize and prioritize everything having to do with their IT needs. You need to have an idea of what needs to be done right now, next month, next quarter, and what can wait until next year. How do you figure out all of these things?
From the first moment you meet a new prospect, and you take notes and get more and more ideas on what they should be doing.
You’ll see the good, the bad, and the ugly among their existing IT systems when you go out and do your technology assessment. This plan evolves over time.
In the past, most people would put these findings in simple Excel spreadsheets. Now it’s better if you use something where everyone can be on the same page using Google Docs worksheets or an online project management tool like Basecamp or Zoho Projects. These tools give your clients access to their section of the system. They can see what you have scheduled, the dates, and everything else that goes along with it.
If there is no in-house IT person, then it is your job to come up with the strategy. It is similar to being their full-time CIO, CTO, or IT manager except that you are doing this on an outsourced basis.
Be Proactive and Guide Your Small Business Clients to a Better IT Future
In order to get repeat business and steady, recurring service revenue, you should be very proactive by taking charge and really helping your small business clients figure out what they need.
Many clients know which things are broken. However, getting good value and ROI (return on investment) from their IT systems takes more than just worrying about fixing things that are broken. This is because they may not even realize that many things are broken.
Many clients have data that’s being reentered redundantly on three or four different systems. This is a huge waste of staff resources which results in numerous mistakes and inconsistent information.
There are numerous clients that don't realize that they have these problems until you point them out. It is your role to explain how much better it could be because clients don’t necessarily have an IT vision.
Clients need for you to be their IT visionary.
Make IT Support Agreement Eligibility a Mandatory Part of Your Marketing and Lead Generation
In order to have more repeat business and more steady service revenue, you need to have a step-by-step sales process in place. This starts with having very targeted marketing and lead generation activities. It is not about marketing to everyone, it’s about marketing to very specific kinds of small business decision makers in a tight geographic area, with a certain size, that are a good platform match to your skills and expertise, that are in industries similar to industries that you have had great success with, and are used to working with professional technology providers.
Your best prospective clients can’t afford to wait around for a friend or family member to come in to help out with IT and get paid in pizza and beer just because it’s the owner’s college buddy who works on the helpdesk for a brokerage firm.
If prospective clients are used to paying for their IT work in pizza, beer, and donuts, you’ve got an uphill battle in trying to convince them of the value of paying for professional IT support.
The most important thing is to have a good proactive and specific marketing plan. Marketing to “everyone” is just a recipe for disaster, unless you have the budget of a Fortune 1000 brand who will almost certainly be spending more on marketing before lunchtime on New Year’s Day than you will be able to spend the entire year.
So you have to work a lot smarter when it comes to getting repeat business and steady clients. You need a good step by step sales process, starting out with strong marketing and lead generation.
Qualify Your Leads, So You Don’t Waste Time and Resources
You need to have good, efficient, lead qualification mechanisms in place.
You want to make sure that they have the potential to become clients in your ongoing IT support agreement program. If prospective clients are too small, it’s generally not a good match.
Prospective clients with large in-house IT departments are usually not a match. They are not likely to outsource their IT business.
Prospective clients that are located too far away are geographically undesirable and are generally not a match. Handholding and face time is just too important when it comes to being their trusted technology advisor and outsourced virtual CIO.
Prospective clients that are not used to working with professional technology providers and are used to getting their help for free from friends and family are not a good match.
If the platform infrastructure that they have in place doesn’t match your skill set and you don’t have a partner or a subcontractor to fill that gap, it is generally not going to be a good match.
You need to have good marketing and realistic lead qualification, so that you are spending your pre-sales resources and lead nurturing on the right future business opportunities.
Know Exactly What You Need to Accomplish at Sales Meetings
When you go out on sales appointments it is important to make sure that you have one clear, main goal. Many people drift aimlessly with no idea what they actually want to accomplish. As a result, the small business owner or manager dominates the discussion with their grandiose vision of having their website look like amazon.com and their network infrastructure as robust as the New York Stock Exchange.
Your job is to figure out how to give your small business clients good value based on what they can actually afford on a modest budget without the need to have a big in-house IT department. You have to creatively accomplish this and to be their IT visionary.
The best strategy is to focus on selling small initial proving ground projects that can be completed in one or two visits at a cost of a few hundred dollars on a fixed-price basis that has a well-defined beginning, middle, and end. This is much more effective than trying to sell the client on a huge project.
The project could be an IT audit or technology assessment or a very well defined urgent service need. The key thing is to allow new customers to get started with your firm in a very low risk way.
This type of project will allow your firm to get started quickly with new customers and to figure out whether or not you work well together. If you have repeat business with a customer or client that is just a nasty jerk, you are going to end up having to fire him or her at some point down the road.
It is a good idea to take it slowly when you are first getting started with new customers. The one goal for your initial sales appointments should be focused on selling small proving ground projects to get new paying customers.
You can make things go faster if you provide testimonials and case studies from your satisfied clients.
You can make things go faster if you offer to apply the cost to future work and if you provide a guarantee. You should focus on selling small initial projects that small business owners can make a decision on quickly. Once they decide on these initial projects, you have new customers.
Make the Move from Proving Ground Projects to Remediation Projects…and Ultimately IT Support Agreements
Once you have a foot in the door and your proving ground projects go well, it is likely to result in follow up remediation work, system upgrades, network rollouts, etc.
In the course of these follow up projects, the natural thing to bring up is “Have you given much thought to how you would like support handled on an ongoing basis with this system once we have upgraded it?”
And they say “No I haven’t really given it much thought, what do you recommend?”
And that’s when you bring out more case studies and more testimonial letters from clients…especially those that love your IT support agreement program and have benefited tremendously.
That’s the natural point to bring up an ongoing IT support agreement. It is the way to approach repeat business. Take it in a step-by-step sales sequence. Don’t get ahead of yourself. Don’t jump the gun. It can be a huge turnoff to small business owners and managers if they think you are being too aggressive, or you are just looking out for your own interests.
Make sure you can work well together, make sure there is good chemistry, and make sure the personalities mesh well together before you propose an IT support agreement that is, at the minimum, going to be one year in scope.
So the question was “How do you take new clients and get more steady repeat business and get more recurring service revenue?” Again, it starts with having a good, coherent step-by-step sales process.
Recap of How to Generate Repeat Business and Recurring Service Revenue from Your IT Support Agreement Program
So before we wrap up, let’s just review the basics:
Focus everything on new clients that can generate repeat business and recurring revenue.
Red-flag any dysfunctional relationships with existing clients.
Let the healing process begin that leads to IT support agreement clients.
Be proactive and guide your small business clients to a better IT future.
Make IT support agreement eligibility a mandatory part of your marketing and lead generation.
Qualify your leads, so that you don’t waste time and resources.
Know exactly what you need to accomplish at sales meetings.
Make the move from proving ground projects to remediation projects…and ultimately IT support agreements.
Now that you know how simple it can be to get more repeat business and more recurring service revenue from your clients on IT support agreements, what are you waiting for? Get started today!
And please let us know where you are in the process? What percentage of your client base is on some kind of IT support agreement? What percentage of your client base would you like to have on these kinds of arrangements? Please share your thoughts in the Comments area below.