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Energy drink maker uses mobile campaign to drive awareness of “build-a-thon” contest
From July 7-10, it raised the bar with “Red Bull Creation,” a creativity contest held in a Brooklyn park that pitted 16 teams of the country’s most way-out “hackers, tinkerers and fabricators” in a three-day “build-a-thon.”
The teams were given a theme---“energy in motion”---the night before the competition kicked off, and then had 72 hours to build whatever they’d dreamed up---the weirder, the better.
The event’s mindset is perfectly illustrated by the winning entry from a Minneapolis team called 1.21 Jigawatts. Red Bull described it as a “massive hamster wheel, wired into a mobile network, given its own phone number that received up to 60,000 one-word text messages at a time.” Upon receiving a text message, the wheel would begin rolling and print out a perfect copy of the word on the ground.
Practical, schmactical. 1.21 Jigawatts beat out other entries, including a wheelie-popping shopping cart and a mechanical inchworm named Chillerpillar, on the basis of being “unequivocally awesome.”
Red Bull’s promotional campaign was pretty creative itself. Before the event, it posted ads with QR (quick response) codes on bus shelters all around New York City. Passersby who scanned the code with a mobile device were redirected to a video promoting the event. The campaign seemed to work; on the final day of the event the teams finished their projects onstage before a packed house
Red Bull is no stranger to unique mobile promotions. Last year, it targeted Formula 1 fans with a new racing game built for iPhones and iPod Touchs. This year, it participated in a campaign at 1,400 Canadian convenience stores that delivered instant coupons to shoppers carrying Bluetooth-enabled devices.
--- Bob PickardRead More
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When MSPs think about the benefits they provide their SMB clientele, they probably focus on internal efficiencies that can benefit the bottom line. But MSPs need to take a broader look at how their services can aid all aspects of an SMB’s operations. For example, managed contact center services can aid your SMBs clientele in providing high quality customer service, and even in charging a premium for them.
A case in point: A new survey commissioned by Fonality and conducted by Webtorials shows that on average, customers of SMBs would pay a 20% maximum premium for exceptional service. In contrast, larger companies could only charge a maximum premium of 15%. In addition, 58% of the respondents prefer to do business with an SMB, compared to only 16% who prefer to do business with larger enterprises.
Fonality is a business communications provider, so naturally this survey has a marketing angle, but one that holds promise for MSPs. Unified Communications (UC) and voice over Internet Protocol (VoIP) solutions were cited by SMB respondents as important tools to help SMBs achieve greater levels of customer service that would allow them to charge a premium rate. Eighty percent of SMB respondents indicated they were already leveraging VoIP to improve contact center capabilities while reducing operating costs or had plans to integrate the solution within the next 12 months.
Meanwhile, UC, which combines voice, email and chat communications, was either being used, or soon will be, by 64% of those surveyed.
UC, VoIP Can Help SMB Productivity
The survey also shows that SMB users of VoIP and UC-based contact centers surveyed achieved significant productivity gains and cost reduction, with 52% saving 20% or more and almost as many (46%) reporting productivity gains in excess of 10%. Webtorials concluded that smaller budgets and limited skill sets associated with SMBs made them primary candidates to benefit from the greater ROI of cloud-based VoIP and UC services, as opposed to installing and maintaining expensive, complex IT solutions.
MSPs should not focus on the exact figures quoted in the Fonality study, but undoubtedly VoIP and UC services can be of great assistance to SMBs looking to improve customer service and increase profitability. Not many SMBs are equipped to host this type of leading edge technology in-house, making MSPs ideal candidates to enable superior customer service.
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Call it a blessing in disguise. Most recent economic reports say SMBs have been slow to make hires. But most IT research indicates that SMBs continue to expand their IT spending. In theory, that means SMBs will increasingly turn to managed services providers (MSPs) and other external folks for IT assistance to fill tactical and strategic gaps.
Indeed, the US SMB tech support market will be worth more than $15 billion in three years, according to a Parks Associates study which says the combined SMB/household tech support market will reach $30 billion, with households accounting for well over 40% of the spend. That still leaves more than half of a very lucrative pie in the hands of SMBs, which by default leaves much of it in the hands of MSPs who serve SMBs lacking in-house tech support capabilities.
It should be no great surprise to MSPs with SMB experience that Parks Associates terms this slice of the tech support market “underutilized.” Study data indicates 44% of SMBs experience computer problems, but only 28% of those SMBs use professional support services.
A combination of many MSPs ignoring the potential offered by smaller clients and basic ignorance on the availability of managed services on the part of many SMBs leads to this market not living up to its potential. Of course, this is great news for MSPs who serve the SMB vertical and aren’t shy about trumpeting the advantages their services provide.
Stay Up to Date with Platforms, Channels
The study also finds that long-term growth in the SMB tech support market depends on the ability to add support for new platforms and scale services to provide for multiple channels of support. Parks Associates advises that expanding to include on-site, remote, and depot repair, with proactive maintenance services for multiple devices, is key to growing the market.
In plain terms, don’t expect to achieve long-term growth by finding some new customers for your existing services. That will gain you some initial new clients, but they won’t stick around long if you can’t grow along with their needs.
Game-changers any MSP seeking long-term growth in the SMB tech support market needs to stay abreast of include tablets, smartphones, cloud infrastructure, and integrated cross-channel platforms. Even your small clients are moving away from a siloed IT architecture toward a more holistic model, your support services need to follow suit.
Previously, I wrote an entry on how big box retailers like Office Depot are trying to capitalize on the SMB tech support market. Parks Associates specifically cites how big box retailers, as well as telecommunications companies and the OEMs themselves, are “important” in the space. But when it comes to personal SMB relationships, can anybody really compete with effective MSPs?
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Generally speaking, I think most MSPmentor readers have been building their managed services businesses for five to 10 years. But what if you were building that business from scratch right now? Here are 10 steps to consider for startup MSPs — though the steps certainly apply to established MSPs that are looking to rethink their strategies for the second half of 2011.
1. Rethink Services: Take a look at ConnectWise CEO Arnie Bellini’s Modern Office blueprint. It’s not sexy. Instead it covers all the basics of IT services — everything from printer management to VoIP. Pieces of the strategy have floated around here and there for about five to seven years. But Bellini crystallized the discussion: Even as big cloud companies move into the SMB market there are dozens of IT services that VARs and MSPs can offer. Bellini made the point last year that VARs and MSPs should focus on help desk and vendor management:
I concede: At first I thought the advice was somewhat basic. Fast forward to the present and I’m starting to see the light. Seems like the best MSPs think of their help desk as an Apple Genius Bar — deliver superior customer experience and your customers will never leave you. Also, as a small business co-owner, I can see the value of vendor management. Our own Web integrator handles a range of vendor relationships for us — which allows us to focus on our core business: online media.
2. Rethink Pricing and Branding: At the recent Schnizzfest conference, TruMethods CEO Gary Pica told MSPs to offer…
- One Comprehensive Solution: Stop promoting individual ingredients (patch management, remote monitoring, etc.) and instead sell chocolate cake (the total customer experience).
- One Comprehensive Monthly Price: Stop offering line-item pricing for each ingredient, and instead offer a complete per-user, per-month price that covers everything. Of course you need to figure out your costs before setting a price, but the best MSPs charge more than $100 per user per month for all-in services.
- A Firm Monthly Minimum: The best MSPs don’t accept business from super-small customers, and insist on monthly engagements that start at about $2,000 per business (roughly).
3. Rethink Cloud: At Schnizzfest, Pica told MSPs that they were over-complicating cloud discussions. He organized and prioritized cloud services into four simple categories for MSPs to pursue. And he reinforced his all-in pricing. Instead of charging a storage fee, a security fee, etc. — just charge a single flat fee (per user) for everything each month.
4. Rethink Devices and Bet the Business on Mobile: During meetings in Silicon Valley this week I’ve heard a consistent theme from Oracle and other major software companies: The big opportunity going forward is for channel partners to deliver a consistent user experience across all devices — desktops, notebooks, netbooks, tablets and smart phones. MSPs that master the mobility challenge are well positioned to profit for years to come.
Bonus: Start spending time at a local college campus. See and learn how students are using mobile devices and related applications.
5. Rethink Target Customers: Sure, focus on SMB. But at the same time pick three verticals to evaluate — perhaps health care, retail and financial services. Assign a specific person in your organization to own/research that vertical for three months. That dedicated person should:
- Join an association focused on that vertical, and attend relevant meetings.
- Meet with one target customer per week to learn more about pain points, legacy infrastructure and other information about the vertical.
- Create a shortlist of horizontal solutions (PCs, networking, VoIP) that can be easily sold into the vertical.
- Research a shortlist of vertical solutions that the target customers may need.
After the three months of research you should have enough info to evaluate which vertical is a potential long-term target for your business.
6. Rethink Ownership: Avoid the temptation to form a business with a partner who has skill sets that are largely similar to yours. Instead, go into business with peers who operate in different sandboxes — one person focusing on sales, the other on technology, another on financial management, etc. If your ownership team has entirely redundant skill sets you’re raising your monthly overhead without addressing weak spots in your business.
7. Rethink Debt and Lines of Credit: Develop lines of credit before you need them. Partner with vendors’ financing organizations before you need to. Check out the Channel Finance 25 for some potential financial partners.
8. Rethink Your Devices: Don’t spend outrageously on IT, but do carry the latest disruptive devices — tablets, Chromebooks, etc. Tell customers why or why you don’t like your latest device during meetings… Establish yourself as a thought leader on disruptive technologies that can either help or hurt your customers, then figure out how to monetize those learnings.
9. Rethink Talent: While you’re spending time time on local college campuses (see tip 4 bonus, above), be sure to partner up with colleges’ Career Development Centers to find potential interns and entry-level employees. Also, Always Be Interviewing — schedule one meeting per week with a person you’d like to potentially recruit to your company. Even if you don’t have positions open right now all that networking will pay dividends when you’re ready to hire.
10. Rethink Your Exit: Manage your company from Day 1 as if it was publicly held.
- Track all of your key financial indicators closely — revenues, operating margins, profit margins, EBITDA (earnings before interest, taxes, depreciation and amortization), etc. Consider using an open book policy so that employees can get a feel why they need to help manage expenses while driving revenues.
- Join a peer group organization to see how other MSPs manage their finances.
- Standardize on PSA (professional services automation), RMM (remote monitoring and management), sales quoting and IT acquisition software to automate as much of your business as possible.
And most of all: Build your own assets. Instead of “reselling” or “brokering” the sale of third-party cloud services, figure out how to build your own branded services to generate monthly recurring revenue (MRR). Keep growing your MRR and profits and you’ll increase your company’s valuation. As your own brand and profits grow, potential suitors will likely seek you out.
In short: Your exit strategy should involve (1) building a highly valuable business rather than (2) focusing on a potential company sale before you’ve even booked your first customer.
What Did I Miss?
Which of the items above directly relate to your business? Which ones miss the mark? And what strategies did I completely overlook? I’m open to constructive criticism. Also, despite the headline I’ve got no plans to ever launch a managed services business because, frankly, I don’t have your skills. I offer the guidance above based on what I hear from a range of MSPs. I look forward to hearing how your business continues to evolve in 2011 and beyond.
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