Q: I want to know exactly how to start selling managed services. You keep saying we have to build recurring revenue, but how do you get started?
A: The first step is to fully understand why this is so important. As pointed out on our webinar last week, the average NSCA member company derives 87% of its annual revenue from a one-time transaction. That’s right … a contracted project is a one-time transaction unless you do something either on the front end or near the end of the warranty period to turn that project into an account. A project is not a customer until an ongoing relationship is developed. That’s the first step in this. You need to evaluate what recurring monthly revenue (RMR) can mean for the worth and ROI in your business. Once that’s determined as a priority, you need to do research. Eventually, you will learn from the cost of providing warranty, training or whatever else the service entails how to price managed services.
Because of the Sherman act, anti-trust laws and restraint of trade issues, I’m unable to give out suggested pricing models. But, I can tell you that the biggest hurdle NSCA members face is learning how to price and sell these services. Fortunately, we offer programs and conferences covering this subject matter, the best of which is the annual Business & Leadership Conference. Mark your calendar for that, March 1-3, 2012, in Dallas, TX. –CW