MSPs: Are You Leaving Money on the Table?

JULY 3RD, 2018
Over the past year I have met with hundreds of MSPs. Something that strikes me is the varying approach in how they sell disaster recovery products and services. At one end of the spectrum are those who are selling “backup,” and at the other end are those who are delivering disaster recovery (DR). In my opinion, if you are at the “backup” end of the spectrum, this is not a very good place to be. You are competing with myriad cheap (and even free) products that all resemble each other. Customers will quibble on price and then be outraged when you can’t (as far too often happens) recover their data. If you are selling Disaster Recovery as a Service (DraaS), then you truly “get it” and know that this is where the revenue and opportunity lie.

Show Me the Money!

So how much opportunity and revenue are we talking about? Reports estimate that the current market for DRaaS is at US$2.19 billion and is projected to grow to US$12.54 billion by 2022. As a provider, you have to ask yourself, “How much of this $2.19 billion am I taking home? And is that enough?” The MSPs who provide DRaaS tell me that they typically bill £1500 (~US$1962) per month (per customer) for their services. One school of thought says that to be a successful service provider, you only need 50 clients. So doing the math ... £1500 per month x 12 months x 50 clients = £900K. So pretty close to a £1m revenue stream. Sound good? Who are these MSPs? And more importantly, who are their customers? Are they some super-elite DR ninjas with an enviable database of high-level customers? The answer is no. They are service providers who recognise that every company NEEDS disaster recovery—because the consequences are too high for businesses to be without it. Here are their top tips for selling DraaS:

Get Customers Thinking about the Cost of Downtime

In selling DRaaS the first step is for the potential customer to appreciate that the cost of the service you are selling is very small relative to the cost of downtime. Many articles and calculators are out there on how to calculate downtime. However, you can keep it really simple—don’t focus on calculating to the penny the exact cost but rather on getting the customer thinking in broader terms: How much could downtime cost me? For example, let’s say a company turns over £1m annually, and there is an average of 1,700 working hours in a year—then each hour the company is down is costing £588 in lost revenue. In many cases, lost revenue is not even the biggest issue—what can be even more worrying to companies is the “knock on” effects of an outage. Things like
  • The impact on reputation
  • Penalties imposed for missed deliveries and deadlines
  • Any legal implications for not having business continuity
Add something about GDPR requirement to be able to recover in a timely manner

Talk to the Right People

The key to effectively selling DRaaS is to make sure you are having the conversation with the right people. You may start your discussions with the IT director, but you will also need to bring in the finance and operations people. For small to midsize businesses, you’ll need to bring in the business owner. This is important as these people have to sign off on the spend—but they are also the ones who will fully appreciate the impact of downtime on revenue.

Be Patient

This can be a long sales cycle—be prepared for this. But once they have signed on, get customers to commit for a fixed period (I’ve seen this vary from 1 year to 3 years). Obviously the longer the better. Word to the wise … Underpin your DR solution with products (both hardware and software) that you can count on. Remember that a difference between selling backup and selling DRaaS is that you are committing to restoring your customers’ systems (within an agreed-on period of time) in the event of a failure. You need to be 100 per cent certain that you can deliver on these promises.For more on this topic, download our Ebook – Are you leaving money on the table?    Janet O'Sullivan is EMEA Channel Marketing Manager for StorageCraft and Chair of the CompTIA UKCC, and was named in the CRN Women of the Channel Power 100 2018.