How I Fired 981 Demanding Break-Fix Customers And Added 91 Quality Managed Services Clients To Double Profits To 31.3%

Posted On May 1st, 2019
Charles Swihart

Charles Swihart,
Preactive IT Solutions

A Holistic Better Your Best Transformation:

Failed Marketing, Arrested Clients & Payroll Nightmares

“This is too easy.” After I opened my business in 2003 and put out roadside bandit signs at night, the phones lit up. I quit my day job as a software developer and began hiring employees. My business soon moved from my study to my garage to a real office.

Soon we were making enough money to fund our first two (failed) marketing campaigns: a $6,000 Yellow Page ad and $4,000 in cable TV commercials. Nothing but crickets.

After a few years, we had nine employees and were booked all day. Problem was, our “anything for a buck” break-fix business came with a truckload of stresses. We dealt with so many hot checks that I had to document a process for submitting them to the district attorney. Plus, in 2015 we had 981 customers. Servicing that many customers took a toll on our employees and turnover was scary high.

The worst part? Every month your revenue starts over at ZERO! It’s not a good cash-flow model. Have you ever spent all night wondering how you’re going to pay the bills? Have you ever borrowed against your house just to make payroll? I’ve done that, and it’s the worst feeling in the world.

The daily stress of this break-fix lifestyle wreaked havoc on my body. Imagine crawling under desks when you weigh 375 pounds. My business was in bad shape. So was I.

I Was Ready To Make The Leap Off 2 Cliffs

I knew something had to change, but I didn’t know what. That was about the time I got an invitation to Robin’s Roadshow in Dallas in 2015. And I felt like I was standing on the edge of a cliff, but frozen in fear. After encouragement from my wife, I jumped off two cliffs! I joined Producers Club and I had a gastric sleeve surgery to finally do something about my weight.

The first thing we realized was that our sales process was mediocre at best. Through tools on the Dashboard, as well as great authors like Mike Michalowicz of The Pumpkin Plan, we realized that engineering and construction firms are where we shine.

So we started doing the marketing and we started getting more clients. Even better, we started getting rid of the low-quality and demanding break-fix clients and trading them in for bigger and better clients. We followed what Robin told us: “Don’t be afraid to put big numbers on paper. All of that crap is in YOUR head, not their heads.”

The Reason We Doubled Our Profit In 2017… And Doubled It AGAIN In 2018? My Why:

For the past 12 years, my “why” has always been crystal clear. It’s not the money. It’s what the money can afford you.

But what if you must have brain surgery? What if you have to have 10 brain surgeries or 15 or 20? And the doctors are cutting skull bone and putting in pressure-relief valves over and over again after they fail. But what if the patient wasn’t you … it was your kid! What if it’s not just one of your kids but ALL FOUR: Caroline, Isabelle, Charlie and Nicholas.

Yes, all four of our children have been diagnosed with Ehlers-Danlos Syndrome (EDS) and Chiari malformation. These conditions are incurable but manageable. But our children have required 87 surgeries over the past 12 years. That’s 87 times you’re sitting in a waiting room hoping and praying. That’s 87 times the kid comes back home and just wants to recover, go to school and be a normal kid.

This is what drove me to join Producers Club. This is why I invested a ton of time into transforming my client base, my sales process and my marketing. This is why I’m proud of the results I created after just three years in Producers Club.

  • Total revenue grew from $869,515 to $1,403,968, all in managed services.
  • Revenue per tech went from $96,556 to $280,793.
  • Monthly recurring revenue grew from $27,710 to $110,000 (with another $20,000 out in proposals)
  • Net profit went from 15.6% to 31.3%.
  • And my weight dropped from 342 pounds to 239 pounds.

When you’re making considerably more, love your business and have the systems in place to take off 60+ days every year to be with your children, there are ripple effects everywhere. We had the privilege to help out employees with their homes and cars after Hurricane Harvey. I was able to give a sick employee six weeks off with pay. Our employees are making 25% more today than they were just three years ago. The result: because we treat them like family, the average technician has been with us for over four years.

The Secret To Bettering Your Best? Bettering Your Marketing

Do you know what happens when you hire a marketing assistant? You have to do MORE marketing! With our marketing assistant dedicated to the details – scrubbing and cleaning our lists and stuffing envelopes – Preactive IT Solutions was poised for results.

The Godfather Campaign Made Us An Offer We Couldn’t Refuse: Total Value $509,000!

We ran the Godfather campaign in early 2018. We started by purchasing a list of engineering and construction firms. Next, we used LinkedIn and prospects’ websites to scrub that list. Then we customized the Godfather letter to address that specific market.

We cleaned the list down to 158 total prospects, mailed them out and made three follow-up phone calls. As this was our first properly executed mail campaign, it was the first time most of these firms had heard of us. We were pretty shocked that we ended up with 14 total leads, resulting in seven meetings. From those meetings, we landed a sizable client worth $12,850 in MRR and $509,000 in total contract value!

Our New Targeted Website Delivered 28 Leads And $20,230 In MRR

Most every MSP website today targets anyone who can fog a mirror. With our focus on the engineering and construction niche, we had Pronto build our Robinized website around that target market and we customized the home page to target the common pain points that engineers and construction teams experience. Even better, we created client video testimonials and added those to the home page.

In 2018, our new focused and targeted website generated 28 leads, seven meetings and four proposals. All four proposals resulted in contracts signed for $20,230 MRR, with a total contract value of $794,000!

Our goal for 2019? For Preactive IT Solutions to appear on the top half of the first page of Google for local IT services searches. We are investing $32K in SEO to ensure this happens.

Dedicated Referral E-mails Added $14,865 MRR To The Coffers

As MSPs new to marketing, too often we wait for PERFECTION before we execute. As a result, that execution NEVER happens. While we wanted to have a creative referral campaign and an automated system to deliver a continuous stream of referrals, we aren’t there yet.

So, rather than wait, we took ACTION! We sent out a few referral-focused e-mails to our clients. Simply by asking, we generated 16 referrals, which resulted in nine meetings, six proposals and two contracts for $14,865 MRR. That’s a total contract value of $562,000!

Converting Our Client Base To Managed Services

Remember, I used to have 981 mostly break-fix clients. By January 2018, we fired or converted most all of them to managed services. To convert the few remaining break-fix clients, we simply had contract conversations with them as they called in for service. This generated four meetings and two contracts worth $3,850 MRR, for a total contract value of $161,700.

Top-Of-Mind Awareness With Postcards And Newsletters

After finishing the Godfather campaign, we knew we needed to build continuous brand recognition for Preactive IT Solutions. We started a monthly postcard campaign to our farm list. In November, we stopped the postcard campaign and started sending the monthly Done-For-You Newsletters to our farm list and existing clients. While we cannot attribute any contracts resulting from these mailings, we know our target market will know us in 2019!

From Zero Marketing To A Marketing Machine

Boy, if the Charles Swihart from 2003 could see me today! While I was tipping the scales at 375 pounds back then, my marketing was light as a feather because we executed practically nothing! In addition to the aforementioned marketing successes, we executed many more marketing campaigns throughout 2018, including:

  • An impressive Shock-And-Awe box that includes a Done-For-You book, MSP Comparison, Client Bill of Rights, Niche Client Testimonials and brand-building Swag
  • ID Agent Sponsorship at Golf Tournaments
  • Tradeshow Booth at Engineering Conference
  • Poker Chip Direct Mail Campaign
  • Google AdWords
  • Cyber Security Seminar
  • TechTip E-mail
  • Decline of Service Letter

Strategies That Quadrupled My MRR And Tripled My Net Profits

While multiple marketing campaigns (oil wells) brought in new leads, new clients and new recurring revenue, I had to first build the sales, marketing and operations foundation. These are the strategies I used to build that critical foundation:

Strategy #1 – Proven Sales Process

Our new sales process includes a Shock-And-Awe box, Dark Web Scan, Handwritten Letters, a Network Audit and a Custom Technology Action Plan.

Strategy #2 – Learning from the Pros

I subscribed to Audible and listened and learned from the following audio books: The Pumpkin Plan, Profit First, Surge, Clockwork, Hyper Sales Growth, Rich Dad Poor Dad, The Art of the Deal, The Perfect Close and Think and Grow Rich.

Strategy #3 – Get Faster, Get Better

We implemented Infusionsoft and Turbo Dial to track campaigns and speed up the dialing. This also allowed us to drop prerecorded voice mail messages.

Strategy #4 – Help Desk Help

We began working with Seal-Level Operations to improve help desk and service delivery processes so we are poised to grow beyond $2 million.

Strategy #5 – Pumpkin Planning

We utilized the ideas in Mike Michalowicz’s The Pumpkin Plan to transform our customer base from 981 mostly break-fix customers to a few dozen big pumpkins. This is the step-by-step process we used to slowly choke off tiny pumpkins as we brought in record-setting, managed services pumpkins.

  1. Moved from one-hour to two-hour on-site minimums.
  2. No more on-site visits for consumers. We required consumers to bring in their computers to our office.
  3. We ran a break-fix campaign to turn commercial clients into managed services contracts.
  4. We locked the front door and referred all consumer work to a “Chuck in a truck” operation nearby.
  5. In early 2018, we stopped all commercial break-fix work and went fully MSP. Our “Active Customer Count” in 2018 was 90. We expect it to be in the low 50s for 2019.

In the last three years, my business hasn’t simply improved. It has TRANSFORMED. First, I’ve dramatically grown employee loyalty. Second, we’ve transformed from 100% break-fix to 100% managed services. Third, we have quadrupled monthly recurring revenue. Fourth, we have tripled net profits. And all of this while I have taken off 60 days or more per year to be there for my family.

Living in Houston, I often recite the famous quote from the Apollo 13 mission: “Failure is not an option.” It’s not an option for myself and the health battles my children continue to go through. And it shouldn’t be for you either.