Sales Metrics For Managed Services – What Good Looks Like3 Feb, 2015 By: Chris Ryne, Growth Achievement Partners
Are you interested in selling more Managed Services contracts? Would you like to learn the difference makers in helping you do that? Then read on!
In 2013, Growth Achievement Partners (GAP) developed and co-authored an industry first Managed Services Business Model with industry-leading Managed Services provider Continuum. Within the Sales section, we outlined guidance for Sales Activity, Pipeline Measurements, and Initial Contract Value to include volume, contract revenue, and number of users, based on our experiences and what dealers were delivering in the market.
That work has and continues to evolve. But well before that, we also tracked, analyzed, managed, and consulted dealers of all shapes, sizes, and go-to-market strategies (whether built, bought, or partnered) on the key sales metrics and benchmarks for what good should look like across a number of other critical areas.
GAP has captured and analyzed data on nearly 1,000 MS transactions sold from within office equipment dealerships since 2013 alone. And we have actually been collecting pipeline reports from our clients since May, 2010. In an ever-increasing Big Data world, I believe no one has more deal-level MS sales data than GAP. The managed and cloud services market is ever-changing.
Keeping our finger on the pulse to the market has allowed us to spot trends quickly, and help our clients to adjust and accelerate their success. We have been able continually update “The Model,” and establish best practices on what works as well as what does not relative to marketing, prospecting, rep integration, sales process management, and on-going account expansion and retention, with it, our clients are learning faster, gaining greater competitive advantage, and winning more deals.
We’ll be sharing some of these trends, Model updates, and sales best practices during our ITEX Expo presentation: SALES METRICS FOR MANAGED SERVICES: WHAT GOOD LOOKS LIKE on Wednesday, March 11 (2:30 PM). This article is intended to give you a preview of that session, as well as provide some additional insight.
As described in the Managed Services Business Model, managing a consistent, repeatable sales process with defined targets and metrics is of course critical, but one of the challenges is understanding what they are and what should they be focused around. The pipeline phases reflect steps in a repeatable sales process that fits into a classic “sales funnel” management activity. The pipeline should be measured by the number of opportunities, number of seats, and dollar amount of contracted, recurring revenue. Traditional pipeline metrics should be based on a multiple of quota requirements at each phase of the pipeline. Average transaction size, number of closed transactions, recurring revenue per month, number of seats, and the ensuing revenue per seat indicate whether the sales organization is calling and proposing on the right types of accounts (within the ideal target market) as well as incorporating the right types of services. These items need to be tracked, analyzed, and actively managed within your MS practices today.
But beyond the pipeline and the items listed above, dealerships must establish and analyze additional key metrics. Below are the sales trends we have seen over the last year:
- 18 initial appointments within the target market per month equals 2.4 new deals
- Average sales cycle has been 39 days
- Average number of appointments to close has been 4.2
- Close Ratio has been 56% of Phase 3 Pipeline
- Average Price Per Seat up 49%
- Deals with Current Accounts has been 56%
- Account Expansion is generating a 26% contracted rate increase within the first 9 months
- There is a HaaS component within 51% of the expansions
- 15-50 seat environments represented 21% of the total deals but nearly 40% of the total revenue.
If you have started selling Managed Services, as many dealers in the industry have, ask yourself if you are achieving these types of results? If not, you should definitely attend ITEX and this session to become better informed. In addition, you can contact us by phone or email in advance and we would be happy to talk with you about where you might seek improvement.
We increasingly hear dealers say things such as, “We have closed some deals, so we have proven that we can do it. The account reps are starting to participate more, and we know there is business out there, but how do we generate enough activity within the target market to find and close more?”
In other words, selling Managed Services is not the issue for experienced dealers, but finding and prioritizing the right opportunities is. Look at your historical experience against the information outlined above. Whatever level you are achieving, opportunity exists to capitalize on what you are doing well, improve in areas where you are having challenges, or both. Join us at ITEX to learn more.
Chris Ryne is a Principal of Growth Achievement Partners, along with Mitch Morgan. Growth Achievement Partners is a recognized leader in providing strategic sales and operational consulting within both the traditional and emerging markets exclusively to growth oriented companies throughout the country. They help progressive dealerships take advantage of the changing market landscape by speeding the transition into an effective hybrid model, capable of sustained growth and reoccurring revenue within the four key areas of Core Sales, Solutions, Network Services / Managed Services, and Business Model.