I recently had an insightful conversation with Tom McDougall, founder of High Point Networks. Tom is a badass when it comes to running an IT Services business. He grew from a start-up MSP to $100+ Million, and I can’t wait to share some of his insights.
I asked Tom how he got customers when his company was smaller than $100+ million and about the marketing strategies he uses today.
This was Tom’s response:
“Well, today it’s just at a different level. But back when we were a start-up MSP trying to figure out how to get customers, I’m not going to lie, there isn’t really any secret to it. We just stuck to it. I’ll give you an example of a company that probably everybody has heard of who has been bought by a larger company now. The company that manufactured snowmobiles and four-wheelers was called Arctic Cat. They are now part of Textron. But for years, Arctic Cat was a company that I wanted to do business with.
In building a relationship with Arctic Cat, I drove two and a half hours once a quarter for two and a half years before I sold them anything.
The first thing I sold them was a fiber optic transceiver, which is a very basic sell. But over the years, we eventually took over pretty much the entire IT component of their business from a sales, implementation, management, and support perspective.
I think that there are many people who believe that they can “hang the shingle out,” and people will come banging on their door, wanting them to do work for them.
And maybe that’s true in certain areas, but I think from a long-term success perspective, that won’t last.
So, that’s how we did it as a start-up MSP. We didn’t have our target list. We had a stack of papers about two inches thick from a company that did all the research back then (and it wasn’t all online like it is today). You’d buy these reports, and then you’d get a stack of paper. We would just go through them, and pick out the guys we would want to work with.
Next, we’d start calling on them, visit, bring donuts and buy coffee. And like I said, sometimes we did that for years before we got to do business with them. However, today the number of people who have left us to do business with somebody else is very small because we took the time to build those relationships.
I’ll give you one really quick story along those lines as well. We had a casino that called me on a Friday afternoon, and said,”I want to buy this model of a firewall.” I said, “Okay, great, I can do that. Let me ask you a question, though.” And I started asking him questions. And those questions led to… “Well, I’ll tell you what, let me get the right person on the phone with you on Monday morning.” Then Monday we asked more questions, which led to going on-site, which led to more questions, which led to us refreshing his entire data center and entire network. And oh, by the way, he did buy a firewall, but he bought the right model.
When it was all done, I asked him why he wanted to buy more from us than a firewall, and he said, “I worked with the same company for about seven years, and you knew more about my business in seven days than they did after seven years. So why would I not do business with you?”
I had a rep one time who lost a very large deal with a bank, and he called me whining and moaning. And I finally just said, “Stop. Let me ask you a question. How many kids does he have? Is he married?” He replied, “What does that have to do with this?” And I said, ‘Everything. That’s why you lost because you wanted a sale. I wanted the relationship.'” – Tom McDougall
I told Tom that these stories fit perfectly for my clients, who are start-up MSPs.
I cannot tell you how many times somebody will call a local MSP, and say something to the effect of “I have 65 workstations, and I need them all set up with docking stations, and we just need them connected to the network. Is this something you can help me with?”
And I have listened to calls where the person answering the phone will say, “Sorry, we don’t do anything outside of a contract. You must be an MSP customer. You have to be managed client for us to take that” and hang up or give a competitor’s number.
So, what Tom is saying is, when an opportunity comes in, it’s not always like, “Hey, we want to sign a $1,000,000 contract with you.”
It might be just a small project, but you get in there, you understand the situation, you build the relationship (provided the customer is the right customer), and you can do a good job.
Tom went a half a step further and said, “you want to get the opportunity to prove yourself to that customer. But just as important, you want the opportunity for the customer to prove themselves to you. What do I mean by that? If you’re brand new trying to build a start-up MSP, you don’t want every customer, trust me. You just don’t.
Here’s the thing that’s really interesting; somebody who might be the perfect fit for you may not fit your competitor and vice versa. So you’ve got to take this in small steps. The absolute worst thing you can do is take on a very large contract with the wrong customer.”