Productize Your Service: How MSPs Can Get More Customers And Stop Wasting Time
Joe Rojas: Today, Jeff, I want to talk about products and what a product is. I was working with a young technology company, and they worked hard on selling their time. All the time they were hustling, hustling, hustling.
Jeff Loehr: As most are doing.
Joe Rojas: They had a business built around billing time and materials. And the problem was, they weren’t tired – they were exhausted. They were working 100-hour weeks and weren’t capturing all the time. So they were always hustling to track every single hour and looking forward to the holidays so they could catch up on their business.
Jeff Loehr: I can actually spend time on the business because I have a holiday!
Joe Rojas: These guys desperately wanted to get out of it. So I told them they had to create a repeatable process.
Jeff Loehr: They had to create a product!
Joe Rojas: Right! But when I brought it up, they said, “No, we’re a services company. We don’t have products. What we do is a service.”
Jeff Loehr: Which we hear all the time. This is very prevalent in MSPs. When you charge by the hour for a service, which is selling your time, you end up doing more work than you can bill for. Service providers use the term service as an excuse not to define their process and not to define their customer, or avatar. Think about big-time law firms that charge $1,200 an hour and bills for 10 hours, expecting the client to talk them down to 8 or 7 hours. They’re creating a constant negotiation after the fact. You’ve done the work. Now you’re negotiating with the customer about the work you already did.
Joe Rojas: Was it worth the money you charged for it.
Jeff Loehr: And the effort. When you deliver a service, the metric is the hours, and the client always evaluates that number. The customer is looking at the number of hours and thinking, Oh, that can’t be right.
Joe Rojas: That’s what happened here. My client developed a masterful system for capturing hours, but they ended up in the same boat as you’re describing because they spent so much time reporting on every detail.
Jeff Loehr: So many companies spend so much time and effort managing how they track their time and effort. And then they’ll say it’s too much work to actually define a process.
Joe Rojas: And the blind spot is, they aren’t seeing that this becomes part of the work. I worked 10 hours, and it took me 15 hours to figure out how to track my time and effort.
Jeff Loehr: When you create a product for your client, you put less effort into delivery, and you can increase your price because you’re delivering faster and more reliably. From a buyer’s perspective, they want to buy things they can understand, like a product. The secret to growing your business is to get into the product space and have well-defined products. It all starts with knowing your avatar – you’re ideal customer.
Joe Rojas: For most MSPs it’s whoever’s check clears. Forget about an avatar. I ran into a guy from that company not too long ago, and he’s still in the same hustle, working nights, working weekends, looking forward to holidays, to catch up. Dealing with burnout.
Jeff Loehr: If you don’t create a product, you and everybody you bring in have to hustle. If you create a product, you can show your team: This is the product you must deliver. And they can become efficient at it themselves.
Joe Rojas: When we talk about cost decreasing, the only way to really deliver that cost decrease is to have an avatar, especially if you’re an MSP in the tech space. Because any avatar you pick, the complexity of their infrastructure is such that if you do a different one, then a different one, then another one, it’s too complex. Figure out how to fix one problem for one person that you can do over and over. You’ll decrease the cost because you’ll have a template for everything.
Jeff Loehr: When you have a product, the cost goes down, but the price can go up because you are delivering more value. But you can’t do it if you’re agnostic. If you’re doing things other than what you like in your business, you must go back and figure out why. Nine times out of 10, you don’t have an avatar defined, you still need to define a product, and you’re stuck in the hustle. Don’t be the guy who, five years later, is still working on New Year’s Eve.
Joe Rojas: And remember that you are loved.