Building a True MSP Sales Engine (EP 809)

[Uncle Marv]
Hello friends, Uncle Marv here with another episode of the IT Business Podcast, the show for IT professionals and managed service providers, helping you run your business better, smarter and faster. Well, folks, we are continuing, even as we are into the month of April, this idea of marketing and money is a big one for all of us. We all want to know how we can do more and grow our business.

But there is one thing that we usually don't ever talk about on this show is what do you do after the marketing? And I'm not talking about, you know, onboarding and stuff like that. I'm talking about setting the appointments, closing the deal, all of that.

And I have somebody who I think will help answer those questions in very great detail. Robert Gillette, founder of MSP Dojo, a platform designed to improve sales performance in the MSP space. Robert, welcome to the show.

[Robert Gillette]
Oh, thanks for having me, Uncle Marv.

[Uncle Marv]
So MSP Dojo, sounds like a cool name.

[Robert Gillette]
Yeah, it's a catchy one.

[Uncle Marv]
So how many people walk up to you and do the little judo, taekwondo moves, all those?

[Robert Gillette]
You know, I want to encourage people to be who they need to be. But man, if I see another guy karate chop when he sees me coming, I might actually have to karate chop somebody back.

[Uncle Marv]
Do they ever do the crane from the Karate Kid?

[Robert Gillette]
You know, I see all kinds of great imitations from people that have clearly never thrown a punch, and that's OK. If that makes you feel good about who you are, you do it. You know, you be you.

[Uncle Marv]
All right. So Robert, your background, I mean, you've been around for a little bit, worked for an MSP, I believe in what, the San Francisco area?

[Robert Gillette]
Yeah, yeah, the Bay Area.

[Uncle Marv]
But this MSP Dojo is fairly new. So let's first talk about how that got started, and then we'll dive into the details here.

[Robert Gillette]
OK. Yeah, so I was with an MSP in the San Francisco Bay Area and helped them grow from ten to thirty million as their lead account executive. Obviously, I wasn't responsible for all that revenue, but I think at the time I had closed their biggest deal and I was kind of their lead sales guy and did that for about seven years.

It was a lot of fun and then realized it was just time to move on to something else. And so I quit unceremoniously and had to figure out what I wanted to do after that. And a handful of my local competitors had reached out and said, hey, come work for us.

And I said, I'm not going to do that. We're good. And they said, well, can you show us how to do what you do?

Because you've been kicking our butt in the market a little bit for a few years. And so I took them on as coaching clients. And what I found in the first three to six months was these guys didn't have a lot to learn.

They knew a lot of stuff. But what would happen is I was the guy that coached them and said, you know, what you got to do is get out there and throw the left hook and use your combinations. And then they'd go into the ring and then they'd get punched in the face and the plan would fall apart and they would just survive for the whole round.

And they'd come back and I was trying to coach them again. And it wasn't that they didn't know what to do. They just had a hard time doing it.

And on sales teams I've ever been on, what happens is everyone gets into a room and practices together. But when you practice with just your coach or your mentor or your boss, it's tough because that guy's never going to hurt you, because either you pay the money or you work for them. And also you tend to be the one that taught them everything they know.

So what happens is you don't have these realistic practice environments where there's high pressure but no risk. You know, and so what happens is we go straight from low pressure, low risk of practicing with your coach or your mentor or your boss, straight to the high pressure, high risk of needing to get money from somebody. And so I needed to find a way to do something in between those two.

And so what I did is I just put them in a room together and I made them practice with each other because they have no problem punching each other in the face. And they were definitely going to be able to at least surprise each other because they knew different things than what I had taught them. And so that was kind of the birth of the MSP Dojo.

And what I ended up doing was after they got good and beat each other up for a while and I was able to create that high risk, low, like real actual, I'm sorry, high pressure but low risk environment. Then I said, well, let's just bring in like a couple other dozen MSPs and let my guys beat up on them. And it turned out that even the new guys that weren't getting the coaching from me, they also tended to know enough to get started.

And so this kind of thing emerged where instead of really coaching people and telling them what to do, everyone just brought what they already knew to the environment. And all we do now is shine a spotlight on bad salespeople, process and techniques because like who else is going to tell you if you're bad at this? Your customers just won't buy from you.

And chances are you don't have a really good sales mentor. And so someone has to help you start to see where you're bad and then you have to personally connect with, oh, this is the problem before you're really going to be willing to fix it. So that's really what the Dojo does and what it's for.

[Uncle Marv]
So this seems to go beyond what we consider the old scripting where, well, you know, if they give you this, here's your counter, here's your battle card, all of that, because you're not going to get any good feedback on a battle card from a customer.

[Robert Gillette]
Oh, absolutely. I mean, well, you will. They'll say you're too expensive and they'll hire someone else.

It's just not very helpful feedback, if that makes sense. Like it doesn't help you identify what the real problem is. And this is one of the reasons why I love and hate AI practice tools.

There's a ton of them out there now, and I think they're great. Like so many of them, especially what AI is really good at is pinpointing dead center average. So if you're like at 20%, you can get from 20 to 50% really fast with an AI practice tool.

What should I say to someone when they say this? Or, you know, jumping into a sales program or, you know, reading a sales book, they're going to help you answer that question of getting you to 50% of like, what do I do? But then there's that whole next 50% of, well, how do I do it?

You know, there's my favorite rule is the 73855 rule, which is in a heightened emotional conversation. When you talk to a person, science tells us that 7% is the words you use. That's the tactics of what the AI bot or that book or that program taught you.

But then there's 38%, which is your tone of voice and the way you present that information, you know, with your neuro-linguistic programming and all that stuff. But then there's this 55%, which is like micro expressions and how it feels when you say it and stuff that like, I just don't know how to grab a hold and fix that stuff other than intentional practice, because that's where you, you take all that knowledge you've learned and you filter it through your limbic system where your adrenaline lives and your identity and all this crazy stuff we don't like to talk about as, you know, IT people or men. And you have to then that's what people hear. People hear that.

They don't hear your words. They hear all that other stuff. And so I don't know.

That's what the dojo is really good at sniffing out and helping people work their way through.

[Uncle Marv]
OK, so I just had to write this down. So 73855 rule, never heard that before.

[Robert Gillette]
I'm surprised I haven't shouted from the mountaintops for like five years now. I just rocked my world. I got this from I think I first heard about it through Chris Voss's book, Never Split the Difference.

But it wasn't his rule. This is like a thing that scientists discovered and clinically tested. And there's like some research there.

But that 73855 rule was a game changer for me.

[Uncle Marv]
OK, I've heard the name Chris Voss and I've only known you for a month or so. So that's just me.

[Robert Gillette]
We're stepping up then.

[Uncle Marv]
That's just me being under a rock. That's all that is. OK, so the idea that we need to, you know, most of us, yes, we know what we're supposed to know.

It's just going out there, doing it and executing it. And you guys are helping us practice in getting feedback, realistic, real feedback from real people as to what works and what doesn't work. So I guess the next question then is, by the time somebody gets to you, I assume that they've done all the marketing stuff.

They've talked to all the marketing people. They're like something still isn't working. Their perception probably is still that it's the marketing that's not working.

But how do you change their mindset that, no, your marketing's good? We've just had to tweak some other stuff.

[Robert Gillette]
Oh, this is a tough one. And there's some like I'm going to like I have. I have some opinions about this.

And so we're leaving the world of fact, going into strongly into suspicion and interpolation here. But I can tell you when I first started the MSP Dojo before I started it, I didn't want to start another sales program. I'm like, look, there's you know, there's a ton of them out there.

Some are great. Some are bad. But realistically, a lot of them are established.

It's what you would call a red ocean. I'm like, did we really need another, you know, middle aged white guy telling us how to sell stuff? I was just like super not excited about that.

So I called up 100 MSPs, just literally cold called 100 MSPs. I was like, hey, what do you need from a guy like me? What's your biggest problem?

And I think I'll have to go look at my numbers. But my brain is telling me 100 percent of them said in their top three, a version of I need more better leads. I just need more better leads.

And they'd say things like, man, if I get the if I get in the room with a qualified prospect, I close them 90 percent of the time. You know, we have a great product. We do really well with a qualified prospect.

Like I heard that constantly. And something like 87 percent of them are also spending over a thousand dollars a month on marketing. And so I have to look up my numbers.

I've got a spreadsheet somewhere that tracked all this. But the overwhelming story was for me is everybody feels like they're good at this and everybody's spending money on this, which is really interesting, because when I look back at my career, almost none of the money I made came from marketing. I had to go out and get my leads.

I had to go find them. And so I have a couple different strong opinions about this. I don't know how many of them are true.

But my first one is, is that if you're in a market with 10 MSPs and one of them is good at marketing and nine of them aren't like and someone goes through all the hard work of saying, look, I need a new MSP. I'm going to go find them and I'm going to I'm going to convince that I need to spend money on this or make a change. And they can identify their pain and they can start a buying journey.

Like it doesn't matter if there's one good MSP at marketing or there's 10 that are good at marketing. There's only one lead to go around. I think where you really make money, like not just doing OK, but really making money in your MSP is being able to go one or two steps ahead of that and helping people identify that they have a need and somehow bringing them to a conversation about how they need to make a change.

Because then not only are you uncovering a new opportunity that isn't in the market with everybody else, but a lot of the time you become the only option for fixing that problem. It's like it's like an off market real estate deal. It never even shows up on Zillow.

It just goes straight from one owner to the next. And if you don't know about it, you don't ever get a crack at it. And so like marketing has its place.

And I think it's really important to represent and present your MSP well. But there's this whole huge economy of revenue that never really shows up on the marketing. Scene, if that makes sense, am I making sense here?

[Uncle Marv]
Well, it makes sense. I'm thinking of it from this perspective. I've heard the numbers that customers are only ready to buy 10 percent of the time or whatever that number is.

Our issue is being there at the right percent because we're upset that they're not ready to buy on our time frame. Yeah, we need to be available for them on their time.

[Robert Gillette]
Yeah. The way I explain it is like, man, if zero is the day you sign your new MSA. And 100 is the day before the meeting where you'll sign the next one.

We really only have a shot of selling them something from like 82 to 92. And so if you get to them at 93, they're too far down the sales process with their one or two vendors or three vendors. It's really hard to start introducing new information.

And if you get to them at 81, they're not ready to buy from you. And so I think marketing is a huge there's huge value in trying to target that that, you know, maybe 20 to 81 of the scale that I've just imagined. And this is also, I think, why I love this idea of not just abdicating all of your sales to the marketing department, because I would sit there and go, well, I want to go find these people at 50.

And make sure I'm the first phone call when they hit 82. And marketing will help with that. But I can't just this is my business.

I'm not just going to just delegate or abdicate all of my ability to grow to like an employee at my company, a marketing person or a contractor that's just promised me some stuff. Like, I think we in an attempt to not have to do sales because we're all afraid of it and it's not fun. I think in an attempt to avoid ever having to be sales, we look at our marketers and we were like, save me, just save me.

I'll pay you any money if you just save me. And I think it's not hard to understand why marketing fails to meet those expectations a lot of the time.

[Uncle Marv]
OK, so I'm OK with that opinion that you had. That's your first one.

[Robert Gillette]
I don't know if it's as spicy as it is. I think it is, but I don't know. I never want to piss off my marketers because I love them and I need them.

[Uncle Marv]
Well, it's so what got spicy is the very end where business owners have to take responsibility for their sales.

[Robert Gillette]
Yeah, that's the tough part. This is I tell people that like MSP Dojo is literally it's the raw head of broccoli of sales. It's like the it's really gross, but it's very good for you.

Like no one really wants to eat it. And that's I talk to marketing companies all over the country that work just for MSPs, and they started off just doing lead gen and they do lead gen and appointment setting, and they do lead gen and appointment setting, and then they grow into like maybe qualifying these clients for you and doing the first sales meeting. And it's like.

How much of this are we willing to just abdicate to someone else? Because if you really had a marketing company that could find qualified leads, qualify them, convince them to engage in a sales process, do the whole sales process, close the close the business and then give them to you like they just start an MSP. They already did the hard part.

They'd be so much easier to just buy an MSP that point and just have them serve the client. Like how much of this do we expect other people to do for us?

[Uncle Marv]
You know what, that's an interesting thought. I just started thinking about if we're outsourcing that most of those marketing companies are not doing marketing for just one MSP.

[Robert Gillette]
Mm hmm.

[Uncle Marv]
So who's to say that they're not taking those qualified leads and giving them to another MSP?

[Robert Gillette]
I don't want to create suspicion and all that stuff. There's more than enough MSP marketing companies that just do MSP marketing that are really good. I think the challenge and like what I would what I would want to say to the MSP owner that's sitting in front of me that spends X amount on marketing and isn't getting the results.

It's like in any relationship, there's no such thing as a fully at fault. Even if you're a half a percent at fault, usually you're at fault. There's always something you could have done better in a relationship.

And so the question is, if you're a marketing company, if you're giving them money and you're not getting results, you have to be honest with, well, what's my percentage and how much of and what is my fault here? And I've found with many of the MSPs I've talked to where that percentage lies and what they could own if they were honest and authentic is that they've abdicated sales. They just want someone else to do it for them.

And if they could wave a magic wand and just pay for someone to bring in revenue, they would do it. And they often try that. It's called hiring a sales guy.

And then they just go, go forth, young son, and close revenue. And then six months later, they don't work out and they go, well, that was a bad sales guy. And that might be partially true.

But there's also this part of it that we just it's really hard to address at the MSP owner level of just like, what was my percentage? What part of this failure do I own? Am I responsible for whether it's a sales guy or marketing or whatever?

And that's really hard to like figure out and be authentically transparent about even with yourself. Well, like, how did I what's my contributing factor here?

[Uncle Marv]
Yeah. So I apologize. I went off on a tangent in my head because Florida is a no fault state when it comes to auto insurance systems.

Yeah, we won't go into that.

[Robert Gillette]
Yeah, that's interesting. Another podcast episode.

[Uncle Marv]
Yes. Yeah. So when we were when we were first talking about doing this show and I don't let me know if you need to go through some of those other opinions first, but the term or the phrase latent risk came to mind.

[Robert Gillette]
Oh, yeah. This is another one of those things that just like traps my hide a little bit when I talk to people. It's the MSP that says, hey, I've been in business for 10 years.

And I go, OK, well, how many of those years was your churn over five percent? And I go, oh, none. And look, I've never I'm not an accountant.

I've never done the math on this. Like I I've never had to own this part of the business before. So I'm not going to say I know a lot about it.

But when I hear from other experts, when I hear from accountants, when I hear from guys that have sold 100 million dollar MSPs, they go, that's a big problem because the average, according to Connectwise, I think Connectwise maybe because if somebody gave me this, this data, the average churn for industry is like five to 16 percent. I mean, if I just look at if I had 100 companies I was trying to go sell to, I would know that 16 percent of those people are going to be in the market for new MSP every three years or like every year. 16 percent of those guys are going to buy from somebody on average.

And maybe some years there's more than other. But when I look at, you know, a seven year horizon, all those people are probably going to change MSPs at some point. But then we think about our own MSP.

We're like, well, that's never going to happen to us. That's not my number. And so usually what happens, even if you run a top tier MSP, I'm told five percent on average.

And so if you're like two, three, four years in and you go, man, everything's running great, I don't have to do client sales. All my clients grow a little bit every year. I'm seeing like eight percent or 12 percent year over year growth.

And I go, OK, you're basically paying an interest only mortgage. And at some point, that payment's going to come due. Just the math tells us this, that one of your clients is going to go out of business or be acquired or cut their staff by half or I don't know, another recession is going to hit or something is going to happen.

And you've got this algorithm now of like revenue that comes in and employees you have to pay. And then the revenue goes up a little bit and you can afford to pay for more for that tool or for inflation or for your employees. And like this algorithm, it all just works out.

And for years, it'll just churn in that steady growth, balanced way. And then something will happen. That big client gets acquired or they decide they're going to go internalize.

And there's nothing you could have done to prevent it. And in fact, maybe it happened because you've done such a good job. And then you find yourself with a 20 percent revenue gap.

And you go, oh, no, I have to start selling again. But that takes time. Like even the best MSPs, it's going to be hard to go out and scoop out 20 percent of your revenue in the next three months.

[Uncle Marv]
Yeah.

[Robert Gillette]
And how much cash reserves do you hold? And it's like, I'm just always trying to encourage some of these MSPs. Like if you haven't, if you've been lucky enough to not have to invest in your sales engine, that's awesome.

But that's not like a good plan for the long term.

[Uncle Marv]
Do you think that we and I put myself in this category as MSPs, we mis categorize churn? Because if we are declining new business because of certain criteria or we're firing a client. I think most of the time we don't think of that as churn.

[Robert Gillette]
Yeah, maybe. I don't know. This is, again, outside my domain expertise.

I call up Casey over at Stride Accounting and ask him how he should classify this, this kind of a thing. I think most MSPs don't understand their books very well. And I can say this because I don't understand books very well.

And so, you know, how it's miscategorized is, I don't know. But this is another I can give you the sales example, sales examples. I'll talk to MSPs and say, yeah, I close 90 percent of the people that are qualified.

And I go, OK, but if we were to somehow look back over the last two years, which we can't because you probably don't have a good CRM and you probably don't put notes in it. But if we could go back and look, I bet we'd find all kinds of opportunities that you just blew, like you just didn't do a good job at. And maybe that was the right call.

Maybe a lot of these aren't great prospects for you. But even then, they don't they don't count those in their close ratio. Even for my business right now, I'll meet with someone who wants to talk about MSP sales.

And the temptation is to go, well, that's not I'm not going to count that towards my win loss ratio because they're not a good client. That's not how this works. You got to count them all.

And then then you figure out which ones you actually close based on the numbers coming in. And so I'm sure a lot of people do that with the churn. If I'm going to extrapolate to that next one is that they go, well, this client left for a really specific reason that doesn't count.

Well, it's still churn, man. You know, you still got to think about that.

[Uncle Marv]
Yeah. So there's a part of me that feels like what you started out doing with MSP Dojo doesn't always get to happen because you're spending a lot of your time educating on the back end as to why they're in the situation that they're in, whether it's the latent risk, whether it's the churn. So it seems like there's a big part of you mentioned the term sales engine earlier.

A lot of us don't have a true sales engine. We have a we have a switch that we want to flip from time to time.

[Robert Gillette]
Yeah, I know I probably count on. Well, I shouldn't say that. There are very few MSPs that have a true sales engine.

Most MSPs just do stuff. And if they're lucky, they get enough referrals from their current clients that they can replace any revenue loss or hit their growth goals. I just talked to an MSP eight million dollar MSP yesterday that grew, I think they said 12 percent year over year for the last two years, all through referrals.

And when I really grilled into them, every single one of those referrals were just a client singing their praises somewhere. And that's great. That's awesome.

What a.