By Brent Combest, Director, Partner Profitability & Compete Microsoft on August 31, 2015
In my last blog, I shared a set of five “killer” key metrics aimed at helping you maximize the profitability of project services. However, we’re seeing more and more partners move toward a managed services business model. Setting up for long-term success is critical to help minimize risk and ensure the practice is returning the right levels of margin to the business.
The number one indicator of success for managed services is gross margins. Strong managed services providers understand this, and as a result of disciplined management of the business, often realize gross margins in the range of 45-50%. To achieve this, there are three areas you should focus on: Revenue, Efficiency, and Resourcing.
Revenue
Average Revenue per Customer (ARC): For our purposes, I consider ARC to be the average amount spent per month among customers who subscribe to the managed services offering(s).
In many cases, partners are offering a line card of services and in some cases a good, better, best option for each.
My advice? Keep it simple. The more complicated your offering, the more time a rep has to spend educating the customer, leading to fewer transactions. It’s good to have differentiated offers, but enabling your sales team to position, transact, and upsell these is more important.
Sales leads are the lifeblood of any growing business. In fact, without enough leads, there may not be any growth at all. But simply generating a large quantity of leads isn’t the complete solution.
Moving to the cloud is just more profitable: we know you’ve heard it many times before, but it’s always worth hearing again, especially when so many of our partners
Do your customers trust the cloud? Moving information to the cloud requires trust. Your customers want to know that their data in the cloud is protected,
I would like to share an excerpt from my recent presentation at WPC that I am particularly excited about;that is the opportunity for partners to partner with each other to grow their business
