Upselling and cross-selling represent a huge opportunity for managed service providers (MSPs). Too often, we forget about the opportunity sitting within our existing customer base. It’s not that we get complacent, more like we feel we’re already garnering close to a maximum amount of revenue from those companies. However, with proper planning and management, you can take advantage of the opportunity to expand your service offering in your existing customer base as you continue to grow as service providers.
If you’re operating a reactive model (one where responses are initiated by the customer and time is billed on an hourly or block basis), you probably have the most opportunity in terms of upselling and cross-selling within your customer base. And that’s a big reason we talk about the “à la carte” methodology—it fits extremely well here, allowing you to align different services to varying business needs.
We all know a business owner is aware they need antivirus, but they also should have patch management, mail protection, and some form of data backup. These services all naturally lend themselves well to upselling and cross-selling.
Equally, if you are operating a proactive model (one where your customer pays a set monthly fee and you do much more preventative maintenance and advanced monitoring), just because you’ve already got them on contract doesn’t mean that’s the end of it. We know a lot of service providers are actually only managing a component of their customers’ networks—this could be a limited number of desktops with all of the servers and network gear or just the servers.
Layering services for existing customers
This leaves you open to the competition moving in. We want to ensure our service providers own the whole network and are managing every component of it—because it creates stickiness. As technology evolves and new services become available, you can layer those on top for your existing customers and continue to upsell and cross-sell.
On the managed services side, many don’t believe they have any opportunity for upsell or cross-sell here at all because they’ve placed the customer on a fixed-fee contract. However, new services will become available, the customer will change, their company will grow, they will add new users, and they will want new capabilities. All of these—if you’re doing proper planning and management with the customer—become opportunities for upsell and cross-sell. Take a look across your IT services:
Security portfolio—This is a fast-growing area for most MSPs and, at this point in time, an excellent area for upsell and cross-sell opportunities.
Backup—A lot of service providers will continue to manage some form of existing backups in place, especially if a customer made a perpetual purchase on it. You should ideally work to remove these and standardize your tool sets. This should create a massive amount of efficiency and utilization gains for you as the MSP; also, your customers will get a better support range as your engineers become experts in that type of product.
The cloud—Have your customers moved to the cloud? There almost always an upsell opportunity here. The cloud is a fast-growth technology, which means there’s new capabilities you can identify that might benefit all or some of your customers.
And then, of course, you can layer on professional services as needed across any of these areas.
Help making the sale
There are a number of things you can do to help you with this endeavor…
- Identify the customers with the most potential for additional sales. Don’t always focus on your largest spend customers because they may have a finite amount of money they can spend with you. It’s often the smaller spend customers that offer you the most opportunity to upsell and cross-sell.
- Define a process to approach, seed, and sell through to your customers, ensuring you have marketing behind it and you’re driving those initiatives correctly.
- Make it a business sale. It’s not a technology sale. In almost every case, there’s a business benefit to the customer you should translate to ensure you’re doing what’s right for them and not just selling. If you’re just stacking them with services and they don’t really need them, or if you’re selling them additional hardware they’re not going to use, you’re going to hurt the relationship—and you’ve created a churn point in your business. But the more you seed with services and items they absolutely require and will get a benefit from, the stickier the customer becomes.
In short, wherever you are with your customers, there are always opportunities to grow what they spend with you, if you do things properly!
If you want to understand more about how to unlock additional opportunities in your existing customer base, check out David Weeks’ MSP Institute Webinar.