Over the past couple decades, business models like outsourcing, cloud computing and Software-as-a-Service (SaaS) have been booming; however, adoption of these types of models in the electronic security industry have fallen behind most other markets. There have been many reasons offered for this lag: the market is not ready for it, the technology is not there yet, or security is not “outsourceable.”
I do not agree with these claims. Sure, it is natural that it takes organizations longer to be comfortable outsourcing the management of their access control system than their taxes – and there is still plenty of work to do on the technology side – but both the market readiness and the technology have been mature enough for years to welcome a new way of delivering and managing electronic security.
Integrators have fallen behind because they are not selling managed security services correctly to end-users. Integrators have been trying to sell these services in the same way they sell new cameras; and in the same way to all customers – whether the account is a 20-year loyal customer or a brand-new prospect. The strategy should be different – much different.
Selling managed services means taking a different approach.
The End-User Perspective
I have been to dozens of sales meetings in which a speaker presents amazing new managed services to an integrator’s sales team. The presentation usually includes a ton of features that will benefit the customers – including the hosting of the technology and data in the cloud, enabling easy mobile access from anywhere, proactive service options that will fix problems before they happen, and extremely robust protection against cybercrimes. The super-cool thing is that it is all wrapped into an affordable recurring fee.
After these presentations, most salespeople think that buying these services will be no-brainers. Then they present to their customers and realize that selling managed services is far from being a no-brainer.
To successfully sell managed services, salespeople must view the situations from their customer’s perspective. Whether the end-user is a small business considering upgrading from not having an electronic security system to purchasing one that would be managed by their system integrator; or, if they are an established business considering shifting from an on-premises system managed internally to a system hosted in the cloud and managed by their integrator – they are both experiencing the same pain of change.
When selling managed services, it is not about selling features and benefits – it is all about managing change. Until a salesperson understands this perspective, they will be banging their heads against walls trying to understand why their customers do not get it.
The fact is, the customer probably does understand it, but they do not want to change. There are multiple things to consider about how impactful this change can be:
1. In today’s organizations, most ideas and decisions are collaborative. It is rare that one person works through entire decisions, even in small businesses. When discussing the shift to managed security services, there is a high probability that someone involved in the decision will not like the change and the organization will resort back to what they know. Whether it is the right decision or not, one person can influence a group from changing.
2. Although outsourcing is always a change that presents resistance, outsourcing something as sensitive as electronic security (that often includes personal data) can cause extreme push back.
3. The method of paying is different and usually seems expensive. Most salespeople do not effectively communicate the value included in the recurring fees for the managed security services. This pricing model is a major change for organizations, and it must be explained properly, or they will fall back to what they have always done.
It is Not All About OpEx vs. CapEx
When we moved into our neighborhood several years ago, I reached out to a gentleman named James about mowing our grass and taking care of our yard on a regular basis. When he quoted me $125 per month, I did not calculate the return on investment (ROI) against buying my own equipment and supplies. If I did, the ROI would have been about eight months, and I never would have moved forward with his service.
I did not do that math because the value of James is not money that I save from buying a lawn mower, edger, etc. – his value is that he does a much better job than I could do, and that I never have to mow my yard again. Also – I do not have to spend $1,000 every few years on new equipment.
Salespeople have been taught that the value of managed services is all about shifting much of the cost from being a capital expenditure (CapEx) to being an operating expenditure (OpEx). There is value to this shift, but it is only a small part of the story.
The problem is that most salespeople communicate the OpEx vs. CapEx argument as the whole story, which prompts any savvy customer to break out their calculator. Once a calculator comes out, most salespeople are doomed.
It is not all about OpEx vs. CapEx – it is all about what is included in the OpEx.
Using the simple example of hosted access control, the recurring fee (OpEx) commonly includes the price of the software, the price of the IT hardware, real-time and immediate updates, redundant back-ups, SSA fees, hardware support fees, resilient data protection, etc. Like my example of the value I receive from James, end-users pay a recurring hosting fee to receive the most optimum and updated quality, to free their team members’ time, and to absorb some capital expense.
Salespeople must fully understand the benefits of their company’s managed services and make sure to communicate all these benefits before the discussing the shift of capital expenditure. It can be as easy as talking through the entire list of items included in the service and at the very end, adding: “And of course, we are able to shift much of your capital expense to this recurring service fee as well.”
Selling to Current Customers is Tougher than to Prospects
Before any other accounts, most salespeople will approach their best and most loyal customers about managed services. After all, they know and trust the salesperson – why would not they listen and move forward? This is where human nature gets in the way, as illustrated in this example:
During my junior year high school baseball season, my hitting coach encouraged me to shift to a slightly open stance from my slightly closed stance I used since little league. I had been playing for this coach for two years and though I respected him, I did not take his advice. I was not having a problem and did not understand the need to change.
During that summer, I attended a college baseball camp for a week. In the one-on-one assessments, my instructor suggested that I open my stance slightly, using almost the same words as my high school coach. I immediately listened, and that small change made a significant difference in the efficiency of my swing. While my high school coach that I knew and trusted made the same recommendation at least 30 times without success, I acted on the advice the first time a coach that I barely knew gave it to me. Why? I think it is human nature to value recommendations of experts who one does not know more than advice from trusted friends or family. Most parents can relate to this phenomenon.
This dynamic is also true for salespeople trying to shift a current customer to managed services. When a customer that knows and trusts their salesperson is approached about shifting to a managed services model, it is likely that they will object. Typical responses sound like: “Let’s just do it the way we have been doing it” or “if it ain’t broke, do not fix it.”
The same customer might return from a seminar in which a speaker talked about the benefits of SaaS in the security department and be convinced that they need to shift to that model. The speaker did not explain the benefits better than the salesperson, but the customer listened more intently to the “expert” who is also a stranger. Again, this is human nature and the leading reason that I believe selling managed services to a current customer is often more difficult than selling these services to new prospects.
The key to selling managed services to current customers is to identify a problem that they are having before bringing up the idea of managed services as a solution. Another trait of humans is that we do not like to change until there is a problem. If a salesperson finds a problem and begins discussing it with their customer, their opinion will change from “if it ain’t broke…” to “we need to fix this.” With current customers, stay with the problem until the customer understands its magnitude, and then bring in the solution of managed services.
New prospects are different. Once an appointment is scheduled, selling managed services to new prospects is significantly easier than selling to current customers. The salesperson has the advantage of being a fresh new person, and if they present themselves well, their audience will listen just like I listened to a hitting instructor who I hardly knew.
In the end, there is an enormous opportunity for system integrators to dominate their marketplace with managed services. If channel salespeople follow these concepts, they would be able to increase their managed services business and likely find demand that they did not know existed.
Chris Peterson is the founder and president of Vector Firm (www.vectorfirm.com), a sales consulting and training company built specifically for the security industry. To request more info about the company, visit www.securityinfowatch.com/12361573.