Retailers regularly use low margin products to drive store traffic. Even when they lose money on an item, if it’s the latest and greatest offering or simply too good a price to pass up on a necessary staple, people will come in. Those “loss leader” promotions have become a staple of electronics stores and other retailers. What would “Black Friday” be without them?
The goal for retailers is not to lose money, but to sell deal shoppers on other higher margin items when they come in. Kayak buyers are going to need life preservers and paddles. Those coming in to pick up a cheap printer have to have ink and paper ‒ and possibly a new computer!
In other words, there can be a lot of margin in complementary sales. That’s a philosophy that more channel firms are beginning to adopt, especially with the cloud. Rather than scoffing at low profit potential from these virtual technologies, progressive firms are leveraging these platforms to drive sales of their complementary offerings.
The reality is that business demand for cloud services continues to grow. Solution providers and MSPs that are slow to acknowledge that “reality” are losing out on sales and substantial new practice opportunities. Even if cloud margins are low in some areas, there’s real profit potential in all the complementary services a channel firm can offer.
Upsell Support and Security
Just like the “loss leader” items in retail, cloud drives conversations that can lead to additional, higher profit sales. For IT firms, that can mean network assessments and infrastructure upgrades to ensure customers can get the most from their virtual investments. What good is a new CRM if the company’s internet is extremely slow or its wireless systems keep dropping the connection?
Most small businesses simply can’t move to the cloud without a solid managed services provider giving them quality behind the scenes support. Uptime is essential and poor planning can lead to disaster. They want, and often need, 24/7 access to critical systems and their data. That’s where solution providers and MSPs earn their money today.
Providers who engage in more comprehensive cloud discussions have a greater opportunity to assess their clients’ business needs, and address potential pitfalls that could negatively affect their digital transformations.
With so many potential endpoints to manage and new, unvetted cloud providers coming on line every day, network and data protection is the one area where almost every customer needs help. In CompTIA’s latest Building Digital Organizations report, security was the top skill (47%) companies said they needed most when transitioning to cloud and SaaS.
Make the Link
Security services are highly profitable and can boost a channel firm’s reputation ‒ if providers follow industry standard best practices and deliver quality support. They can also be a key differentiator or selling point for pitching new clients.
The problem is that few companies seek out security experts unless they need to meet a specific new compliance requirement or they’re experiencing a significant issue. While those are great opportunities, many sales prospects are more focused on their operational improvement goals. What can you do to improve their efficiencies and similar objectives?
That’s where Cloud and SaaS applications come in to play. SMBs, like other organizations, may be looking to reduce their Capex or give better tools to their remote and mobile workforce. Those discussions open the door to topics (and services) that they’ll need before making those digital transformations.
Security applications such as firewalls and AV are the tip of the iceberg. The real “meat and potatoes” of these discussions should include ancillary services and solutions, such as:
- Backup and business continuity
- Password management
- Procedural and policy development
- Ongoing end user training
- Compliance and system testing
Those are just a few of the portfolio options channel firms should offer to boost their value to customers and increase their bottom-line profitability. They can partner with peers, vendors, and/ or distributors for delivery, or offer do it all themselves. Either way, businesses undergoing digital transformations need all the support they can get.
The cloud makes a great door opener for channel firms. It’s the perfect topic to lead off those higher margin conversations.
Brian Sherman is president of Tech Success Communications, a channel-related content and social media development firm. He served previously as the chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at Bsherman@techsuccesscommunications.com