MSP's and the Mortgage Industry

I spent 10 years in the Mortgage Industry in sales and management.  I am now working in MSP sales and have been for about a year.  I am amazed at just how similar the industries are from a growth and development standpoint...and it gives me some ideas on where the industry might be heading.

First let me explain that this is PURE speculation...but it is uncanny the similarities...now we just have to see if I can get those similarities down on screen as clear as they are in my head.

When i started in mortgages, the "idea" of the mortgage broker had already been around for 10 years or so...and it was a pretty mature concept already, but it just did not have a ton of consumer awareness yet.  In other words, I spent a lot of my time just trying to explain WHAT a mortgage broker was, and what we did.  I see the MSP industry struggling in this area a bit, but moving on to the next stage.  There is no doubt that with what....$25billion in revenues as a whole that this is a mature and viable concept...but I still find that outside current customers and industry professionals, most people dont know what Managed Services are.  When you are at a party next time with NON IT people... just say you do Managed Services and see how people react.  Then you will see just how few really know what it is.

Shortly after I got started in Mortgages, there started to develop a cottage industry among people that were catering specifically to Mortgage Brokers.  There were "Guru's" that were wildly successful as Mortgage Salespeople that would hold seminars and sales training specifically for mortgage brokers.  There were companies that developed JUST to source leads for brokers.  Magazines, web portals, software packages, etc etc etc all designed by people who were successful in the industry and were sharing what they learned.  Sound familiar?

That is when growth really took off.  What was interesting is that a lot of the growth did NOT come because the people that were in it early got really big.  The growth came because it was REALLY easy to start a Mortgage Brokerage.  The licensing requirements in most states were almost nothing.  Once you were licensed all you did was sell a product to the end bank...so you had almost no upfront costs.  To me, this is a lot of what I am seeing today in MSP's.   You can almost make it just reselling products and services with no real investment of your own.  If you really want to, you can spend a lot of money on Kasaya and other software...but realistically there is not much stopping most people from going into Managed Services other than maybe industry knowledge...and for a little amount of time as I have been in this business, even lack of knowledge is not stopping some from getting in.  There is just a really low barrier to entry into this business.  The important thing here that I think really does correlate well is that at this stage, a lot of the revenue growth in Mortgage Brokers did not necessarily favor the companies that had been around a long time.  Most salespeople and companies stayed roughly the same size and income levels, and all the new blood so to speak came in and generated revenue.  What was good is that with this huge influx of new salespeople, I no longer had to explain what I did.  People understood the role of the Mortgage Broker.  As more and more companies join the MSP game, there will be more and more people "on the streets" so to speak and most SMB's will at least understand the MSP game if you will.  I believe this is really happening now.  Try to get into a tips group (at least in my area) and NOT have a company there that is pushing Managed Services.  There are 6 or 7 job postings for Managed Service companies...it seems like everyone is trying to get started in this area.

There is one more stage the Mortgage Industry went through while I was still involved...and that was the economy taking a dump.  When that happened and people stopped being able to afford newer bigger, more expensive homes, there was not a need for such a large staff of salespeople, and so many splintered companies.  People started leaving the industry, small marginally profitable shops closed up, and mergers went on like crazy.  In my opinion this is when I believe people started to really do things that they should not have done...they were desperate to find a way to make money when there just wasn't money to be made.  I dont think that is really a problem so much here...I dont think we as MSP's have as much 'access' to cause the same kind of problems lead by desperation (we can create problems, but the profit motive is not there like it was in mortgages)...but I do think that we will see a point where the boom fades, and companies consolidate and instead of having 300 small MSP's in town there will be 30 Mid sized companies that really know what they are doing.

In my town, in a 18 month period we honestly lost about 2/3rds of the Brokers in town.  The companies that are left are the ones that were doing it right, had solid sales staff and back office support.  It will be that same type of company that is still around when this industry slows down.

I read that there is expected to be growth of 15% or more in each of the next 4 years in Managed Services revenue.  The bad news is that I think a lot of that growth will come from new players into the market.  The good news is that it will make explaining MSP a lot easier.  Your just really going to have to explain where your experience makes a difference!

Networking as Prospecting

Prospecting is the MOST important portion of the sales process.  Yes...THE MOST IMPORTANT part.  Why?  You have always been taught probably to ABC....Always Be Closing.  You have read job ads looking for Strong Closers, etc etc etc.  That is all great, but even if you close 100% of your prospects if you have no prospects to talk to, you have no sales.  100% of nothing is still nothing.  

I realize in some fields the prospecting might be done for you.  Maybe there is a team that sets appointments for you, even then to the COMPANY prospecting is the most important part of the sale....so much so that they have decided to invest heavily in prospecting in the form of lead generators etc.  For those of us in tech sales however there are generally no leads or prospects given to us, we must be willing to find prospects ourselves...as unpleasing as that might be.  

I am NOT a great prospector.  I'm not.  I realize that I am not though, and that makes me smarter than most sales people.  I face call reluctance like you do, i face hesitation to go make in person visits with cold prospects.  The one area that I am learning to be much better at than I was is networking.  First of all...THE NUMBER ONE MISTAKE that people make when networking is not understanding the power of it all.  I like many others out there go to a weekly meeting where we share leads and prospects for each other.  One of the things that I hear the organizers say that really hits home for me is "its not called net-eating, or net-visiting, its called net-WORKING"  I can not tell you how many times I am at events like this and all I see are huddled up masses up people talking about politics or basketball, or TV even.  WRONG!!  When you are at a networking event get someone to talk about their business.  ESPECIALLY in the SMB market the business owners LOVE their businesses.  Asking about their company is like asking about their son being the starting QB for the high school.  They will beam with pride and tell you all about it.  

Dont try to close a sale, and not try to do much more than your 30 second or 2 minute pitch about what you do.  Let them talk.  Let them tell you about their business.  The more they talk, the more likely they are to tell you about where their pain spots are...even without you needing to be pushy about your services.  One of our sales ladies was at an event not long ago.  She had given up on the event because there was just not a lot happening, and she started to talk to an HVAC guy that only has 4 computers in his office in town.  This is much smaller than our target audience...so she was just BSing with him and asking about his company.  Before long she had learned that he had another location about 3 hours away with half a dozen employees and once a week he did teleconference meetings with them.  What he divulged just in the course of talking was that he really feels like most of the meeting time the guys in the remote location were not paying attentions and at sometimes were totally away from the phones etc.  Almost in passing he said I wish I could do some kind of video conferencing that was not too expensive and monitor that better.   AHHH HAAAA.  A hot button.  Long story short this yielded an IP phone system sale, Video Conferencing, and a managed services contract for both locations. 

She was not "working" the event in her mind...in my mind that was when she started to work it.  When she cared less about trying to make a sale or tell everyone what she did, and she cared more about meeting people and getting them to talk.  

Keep your focus at networking events and work them.  Prospecting is something that you need to do some of every day.  

Do we go to far trying to look like we're more than we are?

First blog post, so I realize that I am most likely posting this to myself.  So for my own benefit and that of anyone that comes along at a later date and decides to review old posts, here I go.

Technology sales into the Small and Medium sized Businesses (SMB's) is one of if not THE fastest growing area of tech sales.  What I find interesting about SMB sales is that they are in general much more local than Enterprise sales, especially in the area of Managed Services.  The reason this is so interesting to me is that in my experience, people want to buy from people they like (nothing new here) but what most SMB's like in a person is someone that 'gets' them.  Someone they feel like is either where they are, or has been where they are now.

Think of it like this, when I was in the mortgage industry I had plenty of small business owners as my customers. When I went to see the Lawyer that runs a little 3 attorney firm, I would "suit up" (thank you Barney Stinson) and the attorney and I got a long well...he acted and felt like we were equals.  Shortly after that I had an appointment with a man that ran a landscaping business.  Wore same suit.  Everything about that meeting was uncomfortable.  He was uptight, he was almost embarrassed to be around me.  A week later he had to come to my office and bring me some documents and there I was in my Wrangler Jeans, and dirty cowboy boots.  Instantly we were friends.  His entire demeanor was different.  No signs of being embarrassed that he was not cleaned up from his day of work etc.  He saw me as an equal, and was much more comfortable.

OK, now to tie that back into technology sales.  When I look around the internet at Managed Service Provider web sites...I see a lot of the same things.  I see companies that I  KNOW are 2 or 3 people shops, with a website that looks like they are a division of IBM.  One in particular had pictures of big shiny buildings, fancy conference rooms and guys that look like GQ models with suits and gold watches...and that is for a company I know to be two guys from India in a office in a strip center behind a Popeye's Chicken.  What I am saying is...do we need all of that?  Sometimes we are so busy trying to pull off this "I'm a big boy" image that we forget that our customer wants to know how we can help them solve their problems...and if they think that we share those same problems because we are, or we used to be, a small business owner ourselves it, gives us a credibility and an insight they will appreciate and respond to.

I am not bagging on websites etc...I am just saying that its OK to show that you are selling for a company that understands their needs, because a lot of the issues they face are the same issues you face.  With SMB sales be who you are, leave the posturing behind and the sales will be there.