NSCA has been beating the “as-a-service” drum for a while. In fact, a few years ago, they began offering their annual Pivot to Profit event, which helps integrators successfully make that transition to selling managed services. (This year’s Pivot to Profit is scheduled for Sept. 24-25, 2019, in Irving, TX.) Perhaps you have begun to build service bundles into your day-to-day business but would like to improve your results. Or the inclusion of service bundles is an item on your wish list right now.
Recently, a Southeast-based VAR approached my company, CareSight. It was looking for a vehicle to build different relationships with hospital customers. As I got to know more about this company, I learned that moving the mix to services has been aspirational for them.
Here, I’m sharing some of what we learned as we built our “as-a-service” offering. But, first, a back story …
Our First Approach to Services
In 2003, I was the right hand to Tom Cafora, owner of TPC Systems. TPC is a low-voltage VAR in Milford, CT, with a strong hospital customer base. At the time, Hillrom (a competitor with a national and international footprint) was making noise with some of TPC’s local customers.
Hillrom was already providing beds to many of TPC’s customers; enough of Hillrom’s nurse call systems had seeped into TPC’s territory that Tom became a tad paranoid. And, now, the bed and casket people were showing up with sexy, wearable VoIP WiFi badges from a California upstart, Vocera. How was the little local TPC Systems going to keep customers’ attention after they saw that?
We were nervous.
In spite of looking just like every other low-voltage company (think trucks, tool belts, and Nextel phones), and having no expertise in enterprise technologies, TPC made the gamble that local hand-holding would trump the glad-handing, designer-suited out-of-towners. We would somehow find a way to fill in the expertise gap.
We did our charming best to become a Vocera reseller (trust me, this was not a slam dunk because Vocera thought the whole “low-voltage thing” was a stretch). But there was we had to do to make this work beyond having the fancy, high-tech Vocera product line.
Back then, TPC wasn’t a services company beyond fire alarm preventative maintenance. But the company had “take-care-of-the-customer” DNA, especially the front-line technicians who were often the face of the company.
I instinctively knew that, if we could engineer ongoing facetime with the customer, we could overcome those big company carpetbaggers. And while I’d been around the industry for a while (I worked for Rauland for seven-and-a-half years in the ’90s), I hadn’t come up through the contractor ranks as a technician or salesperson. It was easier for me to think outside the box.
When I suggested to Tom that we regularly plant a friendly face (aka customer engineer) at Greenwich Hospital (whose Vocera project in the operating rooms was our first opportunity to sink or swim), his initial response was, “Nobody will pay for that.”
And they didn’t pay for the first few months (call it a trial). But when the internal IT staff didn’t have the time or resources to replace us, we were off to the races. The end-users had become dependent on our “guy.” Our work was simply too important and too visible for them to not pay for the ongoing services.
Lessons Learned Along the Way
In 2007, we spun out our “as-a-service” business for hospitals. Today, CareSight is a direct descendant of the work we started in 2003.
Our services were initially specific to communication systems, which was a natural adjunct to the nurse call systems that were TPC’s bread and butter. Over the years, CareSight’s service business has evolved to focus on analytics as a service, where we hold the same customers’ hands but do it with ongoing, data-centric services (which you can learn more about here).
Here are some tips and tricks to apply to your business, whether you sell to hospitals or other verticals.
- The best service providers deliver demonstrable ongoing value.
There are many valuable, ongoing services needed by customers that you can resell or provide contractually. Commodities have their place. The great potential of being a VAR is the “value” the customer feels—not a monthly or annual service bill for something that is required but not felt or seen. Your best, most loyal customers want you to have their backs. The service you provide can be concrete and impactful, not just an annual maintenance visit.
- You can probably charge more upfront than you think.
In capital-heavy industries like healthcare, customers are accustomed to interacting with VARs for large-dollar, project-centric work. Assuming that your relationship is not simple and routine, your first year can include a meaningful, upfront setup/configuration fee that acts as a foundation for ongoing services.
- Make sure you have a tight SOW.
Unclear expectations hurt many things—not the least of which is your relationship with the customer. Customers will engage you because they believe it makes business sense to have an entity take care of important business functions. Don’t wait for them to tell you what they want: build a program that you believe fits their needs and guide them through the process.
- The first year is unpredictable, but it gets easier (and more profitable) if you correctly manage the engagement.
Your service term is about making your as-a-service arrangement predictable. It’s where the “managed” part needs to establish itself with a structure that the customer understands and anticipates—and that your team executes on. Keep up with that discipline and your contracts will get renewed and expanded while your customers become an important source of referral business.
- Make sure customers understand that they’re buying a service.
If the buyer is used to capital expenditures, they may be surprised when they get a renewal notice toward the end of the service period. Educate the customer upfront and find ways to remind related stakeholders of how important you are to their day-to-day business. As your contract/subscription nears completion, don’t just drop the renewal over the proverbial transom via email.
- Clear, ongoing customer communication is essential.
With technical businesses especially, engineers and technicians may not, by nature, be communicative—especially in formal interactions. To ensure repeat business and a sustainable, long-term business relationship, follow a disciplined communication plan that continually validates the cost/benefit of having an MSP. Do you have a support ticketing system that customers can interact with online? Are you documenting and summarizing ongoing activities for customers with quarterly, semi-annual, or annual reviews?
These are some of the most valuable lessons we learned as we built our “as-a-service” offering. By sharing them with you, I hope you can get your services offerings up and running smoothly. CareSight will be at NSCA’s 2019 Pivot to Profit event on Sept. 24-25 in Irving, TX, if you want to learn more about our transformation! –Kenny Schiff, CareSight Founder and CEO