Episode 88: Special: How this MSP built his business

Episode 88: Special: How this MSP built his business

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Paul Green's MSP Marketing Podcast
Paul Green's MSP Marketing Podcast
Episode 88: Special: How this MSP built his business
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In this week’s special episode

  • Have you ever wondered how you’re going to generate millions in revenue for your MSP? In this special episode, you can hear how one owner did it
  • Jamie Warner of eNerds joins Paul to explain exactly how he grew his MSP organically to over A$9 million in revenue
  • Also in this special episode find out how he commercialised a solution to fix an internal issue, and created a new customer experience (CX) platform

Show notes

Episode transcription

Voiceover:
Fresh every Tuesday for MSPs all around the world. This is an MSP Marketing Podcast special.

Paul Green:
Hello, and welcome to another MSP Marketing Podcast special. These are our most listened to episodes and no wonder we have an amazing guest for you today. I’ve got a guy from Australia who’s going to tell us how he did it. Now, over the last 21 years, he’s built up, with his brother, from scratch a business that’s now doing around about 7 million US dollars a year. It’s an incredible story that he’s got for us today. He’s also going to tell us how he’s along the way become the owner of his own vendor. How he saw a problem and actually launched his own solution for that problem as well. It’s a fascinating story, and I’m delighted to welcome you to the subject of today’s very, very special episode.

Jamie Warner:
Hi, Paul. Thanks for having me. My name is Jamie Warner, and I’m the CEO of eNerds and Invarosoft.

Paul Green:
We’re going to talk about both of those businesses today. I want to start, Jamie, with the eNerds story. Thank you so much for joining me on this podcast. eNerds has got to be one of the best names I’ve ever heard for an MSP. Did you come up with that yourself?

Jamie Warner:
Yeah. Well, look, I started the MSP when I was 22. At that point in time, eNerds as a name sounded pretty cool. I’d just finished a marketing degree and I was trying to think of something that would cut through the noise of all the sort of bland names that were out there. eNerds is the one that we settled on and we’ve been living the nerd dream ever since.

Paul Green:
I love it. Absolutely love it. You started the business, I think you said it was around 21 years ago. I guess we’re looking at around roundabout the turn of the century. What was it that made you want to start a … I guess you wouldn’t have called it an MSP back then. It would just be a tech support firm, wouldn’t it? What was it that took you with your marketing degree and made you want to get into this world in the first place?

Jamie Warner:
Well, I was always struggling to figure out what I wanted to do. I guess the entrepreneurial flame was there through my parents. My parents actually ran a recruitment business and I was looking at how they got their IT support. Now it seemed like it wasn’t the best service experience. I had a friend that was quite technical and I thought, “Well, why don’t I have a crack at starting an IT support business?” Yes, they weren’t call MSPs then. It was just IT support. It was really to flex my entrepreneurial muscle of wanting to do my own thing. It started from there.

Paul Green:
Does your brother have a tech background?

Jamie Warner:
He didn’t either. When I first started, he was still at university and had about six months to go. Eventually, he came on board after he finished uni and said to me, “Well, I don’t really even like business or marketing.” Even though he just completed the same degree, and started to become the head technical person of the business and is now our CIO. Really probably starting an MSP with not a lot of experience and very different from most of the MSPs that are out there that are fundamentally started by a technical person.

Paul Green:
Well, that’s what I was going to say. It’s really rare to talk to the owner of an MSP who isn’t a technician. I mean, obviously you’ve been doing this for 21 years. Through the power of osmosis, that technology has rubbed off on you, hasn’t it? You’ve got that technology knowledge now. But in those first few years, did you find that it held you back or did you find that it actually gave you an advantage over your more technical based competitors?

Jamie Warner:
I always liked technology. Talking about in those days servers with hot swap drives and power supplies and UPSes, all that sort of stuff, I didn’t know most of it. I had to learn through osmosis, learn through the process. I mean, I would sit there in sales meetings and people would talk to me about all this technology that they wanted us to support and I just basically said yes to everything. Then we’d come back and have to Google or ask somebody what they were actually talking about. It was a bit weird. The reality is, you do obviously get better at selling if you know what you’re talking about. But it just goes to show that really it’s not about you, it’s about the customer. If you keep saying yes to everything or acknowledge and listen, then you can actually get a certain distance ahead. At that point, you do need to learn and become a good consultant. Definitely became a great consultant in that space, and that’s when the business really started to go places.

Jamie Warner:
But was it an advantage? I think it is an advantage to be non-technical because I was never in it. I could never be in it. If you’re not in it, you’re generally working on it. I was by default, always thinking sales and growth, and that’s probably the small advantage I had.

Paul Green:
Let me just ask a couple of practical questions on that one, Jamie. There you are starting this business from scratch. You don’t do tech stuff, your business partner, your brother doesn’t do tech stuff. How did you actually win your first couple of clients and service them?

Jamie Warner:
If you recall, he was at university for the first six months. I did have a technical people around me on an ad hoc basis. Around the time that Tristan, my brother came on board, I did hire someone that I always wanted to work with. I knew him prior to starting the business. He was one year older, but he’d been working in IT. That he’s 23, I’m 22. He’d been working since he was 17. He had quite a big track record, knew everything about everything, SMB, IT related, networking, all that sort of stuff. I did get him on board. Pretty much all the money of the company went to paying this guy’s wage. At that point in time, he became the anchor of the business not long after my brother started. That’s who mentored my brother. He stayed for a couple of years. Through that relationship, my brother was able to harness and learn his skills. But let’s be honest, I would send out my brother on jobs and he’d be like, “But I don’t know how to do it.”

Jamie Warner:
I said, “You’ll be fine. It’s fine. You’ll figure it out. Just go on the internet and search it.” I’d be throwing him in the deep end. Really, he copped the hardest part of that journey in the early days, I have to say because maybe being ignorant and young and just trusting your older brother, he’d go out and have a crack. Now, it’s jumping in the fire obviously, but he was able to learn fairly quickly. It wasn’t a long time he had to do that. When this other chap came on board, that’s when his skill set started to really accelerate. We built the early part of that business around that particular first employee.

Paul Green:
That’s so funny. I can imagine you just sending your brother out with, I guess it would be a PDA back then, wouldn’t it? And say, “Just go and Google it. It’ll be fine. It’ll be fine.”

Jamie Warner:
I don’t even know if Google was really being used then quite frankly. It was probably AltaVista or something.

Paul Green:
Yeah. But you can’t use that as a verb, can you? Just AltaVista it. It’ll be fine. It’ll be fine. Was the goal always for you to build up something big? Because as we said at the start of the podcast, you’re doing, I think, it’s 9 million Australian dollars, which is around about 7 million US dollars. It’s a fairly sizable operation. Was that the goal? Did you always want to build something that was going to stand on its own two feet and have a certain impact, or were you just making it up as you went along?

Jamie Warner:
Yeah. I mean, you’d think I’d have a very strong plan after doing a business degree. It was probably making it up as we went along, to be honest. I didn’t really know what I was getting into. Didn’t understand the model. What did I want to do as a vision? I don’t think vision was that clear. We got clearer in the future when we engaged coaches and all those sorts of things. Probably 5, 6, 7 years into it, we started to be a little clear. But at the start, it was really just trying to have a business, I think was the key. The funny thing is, the one critical decision I think I’ve made well at the start was to identify that an ad hoc approach was not going to be a sustainable business model. I actually used my father to get a quote from the really, really big IT support company in Australia at the time, and realised that they were actually charging monthly fees for their services.

Jamie Warner:
For a while I was thinking, “I just don’t know how you’re supposed to sell block hours and support packs and then all your costs are monthly wages and rent and electricity, al this sort of stuff.” It just seemed a complete disconnect between the two things, especially when the ad hoc revenue wasn’t very much on an average basis. You couldn’t force people to use these packs of time. Adjusting it to a monthly model, really set us away. That probably gave me a better insight into the vision of what we could build. Prior to that, I was a bit circling going, “Well, I don’t know what I want to do here.” I’m a pretty simple person in terms of the way I think about things. Once I realised it’s all about monthly, I went, “Okay, well, if I just sign up X dollars a month in monthly support, then I can cover all that cost and I can keep building.” I remember when we had our first sort of $300 a month, I was like, “Wow, someone’s paying us $300 a month.”

Jamie Warner:
The other chap I had, by the way, who had never seen that model before was like, “Nah, that’ll never work.” I said, “Well, it better bloody work because if it doesn’t, I can’t see where this business is going.” It worked and I got $1,000 a month. Then I went, “Wow. If we can get $1,000 a month, maybe I can get $10,000 a month.” Then we eventually hit 10. Now, all these years later, we’re actually at about $250,000 a month in that monthly support. That’s the metric that I’ve always been focused on, and it enables you to have a better vision about what you want to build. Interestingly, if you fast forward to 10 years, we were very much in it. Like most of the MSPs you see today, we were absolutely getting flogged around 2008, 2009.

Jamie Warner:
I remember sitting there with my brother saying, “Look, I don’t know if we’re ever going to make squillions out of this thing because it’s clearly taking a while to grow.” We were starting to scale. We went from 900K to 1.6 to sort of 2.1 to 3 million all in a space of three years. Which it’s not rocket ship compared to other businesses. But as an MSP, it wasn’t too bad, especially organically. We were getting busy, but we were busy, personally busy. The vision changed to being, “Well, okay if we’re not going to make squillions, let’s try and build something that actually doesn’t require our effort and time.” The vision 12 years ago, 13 years ago, it was very much to build an asset that you have as opposed to a job that you have. it’s the whole E Myth thing. I started to break out of that concept of seeing the business as my job and seeing the business as an asset that I just want to run. Because I had that mindset, it started to happen.

Jamie Warner:
It’s like the law of attraction. You tend to just start to do the things to get there. That’s obviously what we’ve got now. It’s evolved and interestingly, a lot of MSPs are, “I don’t want to get bigger. I don’t want to do that.” There’s more money and it is easier. Don’t let anyone tell you otherwise. It actually gets easier as you get bigger.

Paul Green:
I completely agree with you having done it a couple of times. Not quite to the scale at which you’ve done it, Jamie, but having done it with a couple of businesses, it’s so much easier when you don’t have to be involved with something yourself. I think the thing that many MSP owners struggle with is how to get started on that. You obviously had made that big mental decision. This is what we’re going to do. We want the business that’s going to thrive without us having to be here, so we’ve got the choice of whether to be here or not. But from a practical point of view, how did you actually get started on that?

Jamie Warner:
If I was to give one piece of advice, it’s, it is to have a sales growth mindset, first and foremost. Which I can completely appreciate is difficult if you’re technical, because virtually everything you do can suck you back into the business. A customer has a technical something’s burning, an S1, a severity one issue, or it could be I need to get back to them with an advisory quote. Or whatever it happens to be, it’s so easy to just get sucked in because we’re basically professional services businesses just in technology. Therefore, mindset wise, I would put it to the market that 95% of them just sit there thinking about servicing client rather than growing their business. They’re thinking job, not asset. Trying to get that through your head is probably the first thing. If you’re going to be sales and growth focused, you still need to be focused on operations and all that sort of stuff. But maybe if I could metaphorically explain it, that growth and sales mindset wise should be the platform by which everything’s based on, not technically servicing your clients.

Jamie Warner:
Because if you have the basis of that, and that’s your underlying primary goal, then you will grow. If your underlying primary goal is to do technical stuff and keep changing your stack and worrying about vendors, then that’s what you’ll be good at, and you won’t be good at growth. Because my mindset could only be that of sales and growth because I’m not technical in that way, then obviously you start to do the things over and over to grow and succeed. Very early on, we were trying to be more efficient around how we sell. Even just at the procurement level, we found out that there were quoting tools that can enable you to speed up that whole process. Through pure sales efficiency alone, of being able to pump quotes out faster, order things faster, that’s when we grew from 900K to 1.6 million in one year. We didn’t sign up any more clients ordinarily. We just were faster at getting through those quotes. I made a particular effort personally to do that.

Jamie Warner:
Now at our size, I have all these people that do the roles that I used to do. On the procurement side, that’s where the efficiency counts. But in terms of the growth side, it was always a focus of working on my support proposal. On how I present myself, on how I can sign up new business. That’s all I cared about. Once I realised, as I said earlier, the whole monthly model of signing up support deals, if it’s not already abundantly clear to those that are listening, your support deals are the most profitable line item in your business. It is literally the concrete slab you build your business on. Without it, you don’t grow. You just don’t grow and you’re not profitable. The only metric you should be caring about is signing up more support deals than you lose every year, and actually having a sales target taking into consideration your churn. I keep banging on about this and it is abundantly clear to me that there seems to be a lack of understanding of that core metric. There is no central spreadsheet that most MSPs use to track it.

Jamie Warner:
Not that we did in the early days. I didn’t have a spreadsheet, but I was definitely trying to hit a target of new business every year. That is all that building an MSP is, signing up more support deals than you lose. It’s not about selling more internet and selling more phone and selling more Office 365. All of that stuff is low margin. To me, in my simple brain, that’s your with fries with that. You just want to sell the hamburger, which is your support deals. If you sign more support deals than you lose every year and you have a pretty good gap between them, dollar wise, I mean, not badge wise, you will grow your MSP. If you don’t focus on it, you won’t do it and you won’t grow. When I go to bed at night and I drive home in my car, the only thing that relates to eNerds that I really care about at the top level … I care about all the other stuff, don’t get me wrong. But as I said before, the platform by which all my decisions are made on is to sign up more deals.

Jamie Warner:
If you do that, you will always have a thriving and growing business. It may not be a rocket ship business, but if you bludgeon your way there, like we’ve done over 21 years, it’s always an upward curve going to the right. That is probably the biggest thing you need to get in your mind, is signing up more support deals than you lose and having a growth and sales mindset.

Paul Green:
I love this. However, let me throw you the most common objection I hear when you talk about stuff like that. It is that, “Hey, it’s all very well being focused just on sales and adding new clients. But if I don’t look after the existing clients, they’re not going to stay very long. I can’t do both things. I can’t look after the existing clients and go looking for new clients.” Now, obviously you said today, Jamie, you’ve got lots of people to go and get new clients for you and look after your existing clients. But back when you were a lot smaller, how did you manage that? Because those are conflicting demands, aren’t they? Retention is as much an important part of that as is signing new clients.

Jamie Warner:
Think about it this way. A great business coach explained the time that you spend in a business in colors. They talk about sales activity, and that type of thing is blue time. They talk about operational stuff and infrastructure stuff as red time. Then they talk about the strategic thinking and strategic stuff you might be doing as black. For those that are listening, have a wee think about how much time you spend in the blue, sales, and how much time you spend in the infrastructure and operational side. All I’m saying is, is that if as a percentage you spent 60 to 70% in blue and 30% in red, because it’s not as if we’re having to higher staff every month. These businesses are very slow. Worrying about stack and worrying about org structure is something that you can just deal with in the 30% time because that’s all you really need to spend on it. But you do need to spend the time on it.

Jamie Warner:
You do. I love it. I love org structure, and we’re constantly changing our org structure to cope with demands. The problem with an MSP, is it’s a very complicated business to run. As you scale, it’s going to keep changing. I mean, we went from an engineer artesian style where every engineer had an allocation of clients. That started to fail. Then we centralised to a service desk and had that as the primary focus. We’ve had to adjust and improve that whole … It’s just endless what you have to keep doing to iterate and change as you grow and get bigger. These days, we have three account managers. In the early days, it was just me, I guess, pseudo being an account manager. You go through all these different changes, and I really love that part of the business. But that’s when you need to focus on it. That’s not 90% of the time. You don’t spend 70% of your time in the red time. That’s crazy.

Jamie Warner:
It’s, you fix it, you service clients, then you grow. Then the wheels fall off a little bit and you fix it again. But it’s not like you have to constantly keep fixing it. If you’re in this mindset of, “But I’ve got to do that.” Yeah, you do have to do that, but do that when you need to do that. I would put it to you and challenge everyone’s thoughts, that, that is not the majority of the time you should be worrying about because the growth of this business is so slow. My wife’s business is in retail, and she’s doubled her revenue in a year from a really high revenue number. She’s going from 60, 70 staff to 150 staff in a year. Imagine doing that. Obviously you’re going to probably spend a bit more time in red when that’s happening. But in our type of world, let’s be honest, half these MSPs will be going from 500 grand to then maybe 700 grand, maybe then to 900, maybe to 1.2. That’s not rocket ship growth.

Jamie Warner:
You might have to sort of hire one or two people. Come on. If that’s the challenge you’re thinking, think about it in colour. Think about it in that, if you really want to grow, if that’s what you want, you want independence and all that sort of stuff, start to move the blue time, your sales and marketing time and that sort of thing … It’s not just in your business. It’s your procurement side as well. That’s a big part of growing an MSP. Half that is being at least 50%, 50, 60, 70% of time. Just think of that and you will grow. It’s amazing. I know it’s hard. I know it’s hard if you’re technical because you cannot help yourself. You want to get stuck in. That is the way your brain works. I get it. But if you want change, you’ve got to start thinking a different way. Otherwise, it’s the definition of insanity or a golf swing. I mean, I’ve tried to do it with a golf swing where you keep changing the bloody swing. You think you’re changing the swing.

Jamie Warner:
You’re like, “No, I’m changing it.” Then when you look at yourself in a video going, “No, that looks kind of similar and no wonder the results are the same.” You really have to make a concerted effort to change the mindset and boom. There’s no surprise that when you speak to MSPs that are doing really well, they’ve got a fairly strong sales mindset. But I like to keep things simple because it’s too complicated. Just think of signing up more support deals than you lose every year and try and sell as much stuff to the existing clients you have. Simple.

Paul Green:
Okay. Let’s look at new client acquisitions. What are you doing now and what have you done over the years that absolutely works the best for you?

Jamie Warner:
There’s two parts to that. The second part, I don’t think gets spoken about enough. The first part of course is to generate leads. The second part is conversion. Let’s talk about generating leads. There’s lots of ways of generating leads. There’s a guy called Paul Green that’s really great at helping you generate leads. I advise you how to think about that. But aside from that, you’ve got to have the concept of your oil wells or the ways in which you can generate leads. You’ve got to find what works for you. What’s worked for us has obviously been referrals. Everybody has referrals. If you provide an outstanding service and customer experience, which is the whole Invarosoft platform that also doesn’t get talked about enough, if you have a great customer experience, then you will get more referrals. The funny thing is, as you grow, you’ve got more clients, you’ve got more end users. End users are the ones by the way, that actually give you a lot of referrals.

Jamie Warner:
Because if you’re delivering great customer experience with great tech, client portals and apps and those sorts of things, they go to the next client and then they go, “What, I’m in email again? I have to go off a sticker and a mouse pad?” That is a black and white experience difference. Those are the times that you get referrals. But it is a multiplier. The bigger you get, the more referrals you get. You’ve just got more relationships out there with vendors and all these sorts of things. Referrals is always going to be in a professional services, relationship type business, your biggest, easiest oil well to nurture. The next one for us has been AdWords. I’m a massive fan of it. I’ll explain to you why it works. The reason is, is because when a customer is looking for a new partner, they’ve probably given their existing partner a few goes before they finally get the sh*ts and go, “Right. I want to change.” They look around to each other and they say, “John, do you know anyone?”

Jamie Warner:
“I may know one person.” “Great. There’s one. All right, we need to see three.” Can you go on Google and find the other?” Then they Google it, IT support London or New York or LA or whatever. They bring up the list. That is the point, is that Google and the reason why they have billions upon billions upon billions of cash in the bank, is because they worked out that the best advertising ever is when someone searches for something, they find that something instantaneously. If you’re not in AdWords, you’re not in the game because it is the new Yellow pages and it is where customers go to search for things. You want to obviously have your ads there, and that’s how you’ll get those leads. That’s worked really well for us. It’s not a rocket ship thing, but you’ve got to think more over a whole year. If you were spending $1,000 a month on AdWords, and by the end of the year you signed up three deals worth $5,000 a month, you’re now $4,000 a month ahead. Then the next year, your spend is still one. You sign up maybe 10 grand that year.

Jamie Warner:
Now, you’re at 15 grand and you’re 14 grand ahead. That’s pretty much how it works. It’s one of those set and forget things that you can just keep cranking. You have your remarketing going, so when people kind of are traversing around the internet, they start seeing your ad saying, you’re still looking? You’re still looking for an IT partner? It’s just an absolute gimme in this day and age. I’ve also tried all the other oil wells of how to do it. They do work. They do work. It requires a consistent effort to do it. But the two biggest ones by far are your referrals and AdWords. I started doing AdWords way back in 2009. Lo and behold, we kept signing up more deals than we lost every year and we kept growing the business. I think it’s about finding an oil well that suits you and something that’s repeatable and something that you’re willing to give it a long period of time to do. For me, those are probably my big tips around growth.

Paul Green:
I completely agree with you with AdWords in theory. The theory being that, and it’s what AdWords was 10 years ago, isn’t it, probably when you first got started, someone search for something, you could pay to put your message above other people’s messages. At as is basis, that’s what makes AdWords beautiful. I think some of the issues that some MSPs run into these days when they try AdWords is, because there’s now a restricted number of messages, there’s a … What is it, three adverts? I’m not a technical expert at AdWords and I’ve never claimed to be and never will do, because I think you need to get your hands dirty with something like this. But you’ve got a limited number of messages. In big markets, like you mentioned IT support LA, Los Angeles where there are probably 500 to 1,000 MSPs … I’m not exaggerating. Los Angeles is just an insanely large area with an insanely large number of MSPs there. In situations like that, is it still possible to win at AdWords or is it simply a case of you just have to spend more than your competitors?

Jamie Warner:
Firstly, I would say 5% of MSPs are doing this. You can chop out most of those competitors you’re talking about. Secondly, the best scenario to be in is in a city like LA, which Sydney in Australia is the same land mass area as an LA. It’s not bigger. It’s a massive city Sydney, but it’s only got about 5 million people. But still a big number. I would be licking my lips if I lived there because there’s just more people searching. The problem actually happens when most MSPs are in smaller townships and towns and counties and that type of thing. Therefore, they have to kind of cast a wider net around the townships around them to try and get the search volume. Because this is the problem with B2B, and this is the double-edged sword of people searching. The reason why most MSPs are the size they are is because we are relationship businesses. Relationship businesses don’t scale very well. The reason they don’t scale very well is because people are quite loyal at their relationships and they will give people a go.

Jamie Warner:
It’s why we have amazing retention. It’s why the MSP model is just pretty much wouldn’t thrive, but it’s survived very well for the most part, most people, through COVID. Some struggled. I know that. But generally speaking, an annuity model like this is pretty stable because they don’t churn. But if they’re not churning, it means it’s hard to sign them up. if they’re not constantly changing their IT partners all the time, that means the search volume on AdWords isn’t actually that high. Even now, in a city of 5 million people only get between zero and three leads a month. It’s never been more than that because there just isn’t that many people searching. But this fact still remains that when they are searching, you need to be there. If you understand the concept … There’s a concept in SaaS metrics called unit economics, which I wish had that spoken about early on.

Jamie Warner:
But when I learned about unit economics, which talks about your ARR, your MRR, so monthly reoccurring revenue, your annual reoccurring revenue, your lifetime value, your churn, these are all metrics of a SaaS business because it’s all about monthly subscriptions fundamentally or billing annually, whatever. What is the difference between that and an MSP? Absolutely none. If you understand lifetime value, you understand that … I bet you a million dollars that most people listening to this will have a lifetime value of maybe five years or 60 months for a deal. Even if the rates to get in that top three of the ranking gets higher and higher and higher, and mine’s close to $30, who cares? You can cap your monthly anyway on AdWords. If you want to spend 500 or 1,000 or two grand, whatever. But the reality is, I’ve got mine set at $8,000 a month. Maybe 10. It’s been like that for a decade, but I only ever spend one or two because there’s only so many people searching. Therefore, to get at the top of the list should be your main goal.

Jamie Warner:
If you’re signing up deals of a lifetime value, let’s say your average deal is 1,000 pounds a month or $1,000 a month, then you’ve made $60,000 when you sign up that deal. Who cares whether you give away or it costs you even five grand to get that deal? It doesn’t really matter in the context of lifetime value. That’s a concept I’ve written about years ago. I know MSPs get it, but I don’t know if they really, really get it and really actually focus on that. AdWords is an absolute gimme. If you’re not doing it, you’re not in the game. Only thing that I can see where it doesn’t work is if your search volume area, which is a problem, so I’m not sure what the solution is to that, is so low. If you are in small townships and you can’t do the wider area, if it’s quite a low population, then it is a bit of a struggle. That’s probably the one thing I’ve noted that can thwart the AdWords. But it’s absolutely worth giving it a go.

Jamie Warner:
It’s absolutely worth casting a wider net and seeing if you can get it going because you only need two or three conversions a year for you to go, “Yep, worth every penny.” Does that make sense?

Paul Green:
Yeah. That makes perfect sense. It really does. You’re saying it’s a mindset thing as much as it’s a spending thing. Before we move on to conversions, very, very briefly I want to touch on referrals. You’re right, it’s a great source of new clients for every MSP. Jamie, in your business, do you have a formal referral scheme or do you just wait for happy clients to just refer you to their friends because they know you’re good?

Jamie Warner:
I’ve tried formal. The problem is, when it’s formal, any sort of marketing, like for example, having banner ads in your email saying, “Hey, refer me when you’re ready.” It turns into white noise, and so they don’t care. I was giving away trips overseas and whatever, but it didn’t really make much of a difference. I think if you just do a good job, people will refer you. Saying that, putting some structure around it, is always the holy grail. The problem is, is that it’s not as if people stand around a barbecue talking about their IT support partner or that at any point in time would know someone looking for IT support. I mean, they’re all focused on being lawyers and accountants and just doing their jobs. It’s not an easy thing to do. Where I feel like we could go with it is getting a much better linkage, and some of the CSAT tools are doing this. We want to build it into our platform so it does a better job of it.

Jamie Warner:
I just think this could be the key. When someone’s giving you a nine out of 10 experience, immediately ask them to post something, or if you can automate the process, post something on social. These are the little things you could probably do. But outside of that, it really comes down to just doing a great job, and those referrals come when they come. If someone could tell me how to structure it and make sure you could do it, then I’d be all ears because of the lack of knowledge of the other person. It’s like, “Well, I’d love to refer you, but I just don’t know anyone that’s looking.” It’s not that easy. That’s why maybe linking it with social these days and having an automated process like striking when the iron’s hot. Someone’s giving you a nine or 10 out of 10, it’s like, let’s try and harness that happy energy into something that might generate a referral or at least be good from a promotional perspective. Tricky one. I’d be interested in your thoughts on that one.

Paul Green:
Well, I’ll defer to a guy called Steve Gordon on this who wrote a book called Unstoppable Referrals. It’s a great book. What Steve Gordon says is pretty much what you said there, which is, referrals are unnatural. People don’t sit around, well, most people don’t sit around and saying, “How can I refer my suppliers?” There’s also what he describes as a social risk of referrals. If I say to everyone, “Jamie’s business is brilliant. They’ve been looking after us for five years, go and have a chat with them.” When someone’s in touch with your business for whatever reason, they don’t quite have the experience they were looking for. We all have days where the wrong person picks up the phone at the wrong time. His argument is that, if that happens, it becomes a social risk on me, the referrer, and it’s almost a social embarrassment for me. Plus, people refer the wrong way.

Paul Green:
That they’ll say, and this perhaps wouldn’t be applicable to a business your size, Jamie, but to a smaller business, “My IT guy, Dave, he’s brilliant. I can ring him at 10:00 PM on a Sunday when my home printer’s not working and he doesn’t mind that.” nobody wants that referral. But for the clients, they think because actually they were David’s first client and 10 years ago, they could do that and they think they can still do it now. Unstoppable Referrals by Steve Gordon is definitely worth a look. Jamie, let’s move on to conversions because I think you were absolutely spot on earlier when you said there is two parts to winning new clients. There’s generating leads and there’s then converting them into clients.

Jamie Warner:
Yes. It is an area that sadly just doesn’t get talked about enough, I have to say. Now that I’m learning more about my own industry, because I was in a bubble for quite some time prior to starting Invarosoft, I didn’t really associate with a lot of MSPs and didn’t know what everyone was doing. I didn’t even know that our business had actually got a wee bit bigger than most. I had no idea. It was all a bit of a shock in that sense of learning. One of the things, as I told you very early on, I was always about the proposal, always about the proposal. How could I make the proposal better and better and better? When I finally hired a dedicated GM of sales to basically take care of new business and the advisory part of what we sell to clients, I was able to move to a more sales director type role. That is probably just a mini golden nugget there, by the way, and I’ve spoken about this a lot.

Jamie Warner:
Is the fact that if you do hire a sales person, you become the sales director. They are there to convert deals, but they need a sales playbook that you generate to make their life easier,. Giving them devices, giving them the tools that they can use to be awesome at what they do. It is not their job to dream up all that sort of stuff. They are there to execute and be your proxy in that sense. In that frame of mind, I spend even more time on our support proposal, on the layout of the proposal, on the order by which you say things in the proposal, talking about the why, talking about the how. The whole Simon Sinek thing we put into the proposal. I believe that the way you present is just the biggest part of conversion. I have presentations like this. If you’re a Tech Tribe person, you can go and have a look at this. The mistakes people make are, not spending any time on the proposal, only talking about the what you do. “I’m really good at Microsoft and I’m really good at Azure. I’m super good cool at security.”

Jamie Warner:
Who cares? Because remember, when the customer was looking for a new partner, did they sit in the room saying, “Hey guys, I think we need another security solution.” No, they’re looking for a partner. Because they’re looking for a new partner, your proposal must be more around that. Why are you the best partner for them? How you present, how you lay out that proposal, all these sorts of things that are important. You don’t want to speak about the what, you want to actually talk about the why first. You want to actually lay out your pricing in a way which is easily to consume. These are all parts of it. You want to bind it, put it in a folder, present well. You want to dress up to mirror the person you’re selling to. If you’re selling to a lawyer, probably wear a suit. If you’re selling to a nonprofit, you can be more casual. You don’t just rock up in polo to every meeting. You’ve got to dress up and down accordingly. The sales process itself, when you get a lead, do you book it in straight away?

Jamie Warner:
Most of the other mistakes people make is they rush out and want to do an audit first. In my view, remember this is just my view of the world, but I still think it’s wrong. They don’t want you to do an audit. They want to find out whether you’re going to be the right partner. You still may have to do an audit, but do that second and then have another meeting. Now you’ve got two meetings with them. You’ve got two chances to build relationship with them. The other thing they’ll do, is they’ll put stack in their good, better, best support plans. If you do that, you are now complicating a relationship discussion with a solution discussion. That’s going to slow down the sales meeting because you’re not only talking about partnership, you’re talking about widgets and stuff that they would buy. What a waste of time? Plus it inflates your price. It’s the silliest thing I’ve ever seen. I didn’t realise that they’ve all been coached to do it. It’s the wrong way to do it. You can do it that way, but it’s all about increasing conversion.

Jamie Warner:
I just want to say this, you can sell whichever way you want. Most referrals you get, you could turn up with a A4 full piece of paper and probably sign up the client because it’s a referral. But it’s all about increasing the number of conversion you get from the deals. You’ve got to do all the one-percenters to increase conversion. I believe by putting stack in your packages, it slows the deal down. Then I’ve heard this concept that you should only have one package going back to one. Buying psychology proves that if you have options, people choose to buy. If you give them one option, it is a yes or no proposition. When it’s a yes or no proposition, that’s why they’ll go running away and hiding. Talking about how you present your solutions in your proposal, like your support proposal. This is why Invarosoft, we’ve built a VCIO platform that enables you to also use good, better, best because we’ve been doing that for 11 years in a Word document.

Jamie Warner:
It works a treat because clients go, “that’s great. You’re going to come back with options. I’m going to be able to build my solution. Perfect.” They love it. That lap it up. It’s why we sell so much. Think about all the little one-percenters. Do you have a page in your proposal that explains what engagement looks like? Do you get them in the mindset of actually having bought from you? You don’t want to just go, “Here’s the stuff I do. Are you interested?” No. “Hey, this is what it’s going to look like. When you come on board, we’re going to do this. You just have to sign the paper and we’re going to go through this 27 step process and we’re going to take care of everything. Hey, look at this cartoon video we’ve got that we’re going to show. We’re going to meet your stuff, but we’ve also going to train them. Look at our amazing client portal and IT support apps that your clients get. How amazing is that?” You have to be focused on your proposal and on conversion. You have to be a purple cow. Read the book by Seth Godin.

Jamie Warner:
You cannot rock up into these meetings and expect you’re going to differentiate with a ho-hum, this is what I do approach and spending little to no effort on how you present your services to a customer. It ain’t going to happen. It is the biggest mistake I see MSPs make. Is they spend all their time worrying about leads and virtually no time, no blue time, remember the blue time, on the proposal. It is mind-boggling. It’s the thing you’ve got to focus on. There’s my diatribe about conversion. I guess maybe the final comment here is that, if you’re converting … Most people convert in sales, somewhere between 10 and 30%. We convert at 47%. If you can actually go, “All right, well, normally I’m winning one deal out of four.” And you can pump it up closer to two or 1.8, you’ve almost doubled up your growth just by improving your way that you present yourself.

Paul Green:
It makes perfect sense. Same amount of work, double the results. Who doesn’t want that? Jamie you’ve mentioned Invarosoft, I think it’s about 74 times so far on the podcast. You definitely win the award for most subtle plugs, which is pretty good. I’m looking at your website now for Invarosoft. It looks amazing. It’s a customer experience software, and I can see that I’m not giving it justice just by explaining it as that. I’m going to ask you to explain exactly what it is in a little while. First of all, you are an MSP owner. We’ve heard your story and how you worked your way through. What was the problem or the wants or the needs that led to you creating what has gone on to become this software that you now sell to other MSPs?

Jamie Warner:
There was a day in 2009 where I was sitting in our boardroom with a quote for 2,000 mouse pads, thinking to myself, “Firstly, far out they’re a dollar each.” That’s expensive. Probably 10 cents in the US. But in Australia everything’s expensive. a dollar each for a mouse pad. Then I thought, “Are we seriously still at mouse pads?” What I was trying to do was have our brand, because we’re supposed to be their IT team, across all the devices that we manage so that the users can easily contact us, call us, email us, and that sort of thing. That was one of the problems I had. The other problem I had at the time … It was a customer experience problem in that sense. The other problem I had was more around productivity. We were getting a lot of emails with the incorrect ticket information in it. if you understand the ticketing system, it’s all about ticket type, subtype, putting workflows and the right tickets to where they need to be. We do auto allocation and load balancing of tickets, so getting the right information means you don’t have to triage tickets.

Jamie Warner:
We were getting a lot of phone calls unnecessarily for things like change requests, which is a waste of everybody’s time. They should just be logged. I sat there thinking to myself, “This is 2009.” The iPhone has just come out, a few years in. Apps are now becoming more apparent and it’s this whole app economy starting. I thought, “Surely we could do a digital mouse pad.” Is what I was thinking. That’s where the idea started. Going, “Well, if I put this app, if we build something that’s basically a much better like our own app across all these devices, would that make it easier for them to log tickets and so on?” We built it out to do that. Would it mean I don’t have to do the mass pads anymore and it won’t get old and tired and thrown out? We decided to do that. I wish I was smart, but it actually turned out I wasn’t thinking that right at the start. But as we were building it, I realised, “Oh my God, this is going to be a massive purple cow when we’re selling.”

Jamie Warner:
I was right. It absolutely is because it’s about the only thing the customer gets when you’re pitching to them. Everything else is behind the scenes. Their infrastructure sits in the corner in the cloud. They just basically get a voice at the other end of the phone, which is the incumbent way of doing it. Or the odd dude turning up in a polo, or the odd consultant rocking up in a suit. There’s not a lot that they actually get on day one. Again, I wish I’d actually realised that will be the case, but it was something we quickly then incorporated into that whole support proposal side, because we realised, “Gee, this is a visible thing they would use every day.” That’s where it all started.

Paul Green:
What did you put together and what was sort of the first iteration of that? What was the moment that you realised, this isn’t just something we could use in house, we could actually sell this to other MSPs?

Jamie Warner:
By 2010, we’d built this hard coded app. We went through a couple of designs and we settled on one that actually looks more like the mail client of an iPhone. If you look at the native mail client and the way it’s laid out, we realised, okay, well, let’s have a crack at using that sort of button arrow style. I personally called up 10 clients and said, “Look, we’re going to phase out support@. You don’t give us the right information. Because of that, we play this ping pong match between us to confirm what you were talking about. I’m going to give you an app. It’s just accessed off your desktop, easy peasy, and we’ll guide you. Just through a couple of drop downs, you’ll be able to take screen capture and we’ll get device diagnostics, we’ll have forms for you to fill in and approvals. All that sort of stuff in there and make your life easier.” The client’s like, “Sure. If it means faster, great. Sounds good.” Zero pushback. We rolled it out to just these test people.

Jamie Warner:
They went, “Oh my God, this is amazing. Roll it out to everybody else.” Since day one, the utilisation has been out of control. We get over 100 tickets a day. We get 50 to 60% through the app. At that point, after a few years of this, I was like, “”This is really good, and I don’t know why the PSAs haven’t built something like this.” I thought, “Well, should we commercialise it?” I went through a big decision-making process, and it took me a year to make the decision to do it because I felt like if I was going to do it, I wanted to give it a good old crack and build something quite significant. So we decided to commercialise it. It’s now a patented technology. We decided to commercialise in ’14, started building in ’15, and launched in ’17. Since then, it’s gone through a massive evolution. It’s been fascinating. The app itself has always been a hit for end users, but the reality is, MSPs didn’t quite get it and didn’t almost believe that customers would love it.

Jamie Warner:
Unfortunately, because most MSPs think from themselves outwardly rather than from a customer backwards, which I think is also a mistake and mindset wise, it didn’t really have the biggest hit. What started to really get the momentum was when the market spoke and they said, “No, we want a client portal. We want Office 365 integration and a client portal over and above just the app itself. Hey, we want tech tools. We want live chat. We want identity security. We want all these sort of things.” We now have the three pillars of this platform being the end user experience, the Office 365 integrated cloud portal and the tech tools, chat, VCIO, all this sort of stuff. Now, what you’re seeing with these CX platforms is this ability to help fill the gap between the PSA and the user. That’s where our customer experience new category is playing. We’re giving you all the tools and the ability to really supercharge that whole experience. Interestingly now, we’ve calculated that over 2,000 MSPs have picked a CX platform and this is going to be the next big category in the market.

Jamie Warner:
For years and years and years, all you hear MSPs go on and on about is the PSA and RMM tools. If you go on Reddit, they just go on and on and on about those two tools. There is going to be a time where CX is going to be that next tool that they go on, because this is where the game’s going to be won. I think that the game has already changed. The momentum shifting and all the early adopters and innovators of the market have already got on board. It’s a fascinating time. Fascinating what’s actually going on. But that’s kind of the journey we’ve been on from internal product to commercialising, to listening, to evolving. The market, you guys listening, are the ones interestingly that are really shaping where these platforms are going. It’s been a fascinating journey.

Paul Green:
Yeah. It’s just wonderful to hear you talking about this. It sounds like you had the right idea, the right motivation, the right drive and the right time to get in with that. Because I guess for Invarosoft, your competitors as such, Jamie, would be people like CloudRadial. Would that be right, that kind of company?

Jamie Warner:
Absolutely. Yep, CloudRadial, though CloudRadial and Invarosoft are probably the ones focusing more on the bigger platform, priced less than most VCIO tools, by the way. Think about it. You’re getting a stack of stuff that’s priced less than one tool. Then you’ve got Helpdesk Buttons, is more sort of the end user experience. Pillar, if you think of the three pillars, end user experience, client portal, and the tech tools, they’re probably more end user experience. Then you’ve got DeskDirector, which was really the ones that were the first to commercialise it. I think we may have built our tech prior to them, but they were the first. They’ve sort of got probably a little bit of portal and mostly end user experience. Those are the four players now running around doing this. It’s fascinating to see how everyone’s tackling the problem slightly differently.

Paul Green:
It is. Which of the big vendors do you think is going to acquire someone first?

Jamie Warner:
Who knows? Got to get some scale first, but I think the horse has bolted quite frankly. The way we like to say it is, the days of being a Nokia MSP, a Nokia analog MSP are gone. You need to be an iPhone digital MSP. This is the transition. You cannot be sitting there with a mouse pad or a sticker with your contact details on it and expecting customers to believe that that is the approach that is aligned to a modern consumer digital experience. These customers of your clients are coming into their office on the bus, walking, listening on their phones to Spotify, checking the weather, checking social media, doing all this sort of stuff. Then when they come into the office, “Hey, I’ve got a printer issue. John, how do I get a hold of them?” “You got a call or email.” Are you kidding. That’s not the world that they’re living in. We are supposed to be the technologists, yet the technology we use to interact with our customers is bordering facsimiles. It’s horrendous and it does a complete disservice to productivity, communication, all these sort of things.

Jamie Warner:
With these apps, just so you know, you can do things like push notifications. When Office 365 is down, you send an alert, beautiful branded alert. The game’s changed. It’s fascinating, but it’ll be interesting to see how quickly everybody will adopt it.

Paul Green:
Jamie, you have been so generous with your time. Thank you so much. I could actually talk to you for another two or three hours. Despite the fact that as we’re recording this, it’s 11 o’clock at night here in the UK. I know it’s just 8:00 in the morning for you in Australia. I’ve got to go to bed sadly, so we’re going to have to-

Jamie Warner:
Yeah. Sorry for that.

Paul Green:
… end things there. No, it’s genuinely fascinating. With your permission, let’s get you back on the podcast in 2022. Perhaps we can hone in on some more of those specific areas rather than just have a big general chat as we have done today. Just tell us very briefly, give us the 30 second pitch on Invarosoft and tell us where we can get more information.

Jamie Warner:
Firstly, go to Invarosoft, I-N-V-A-R-O-S-O-F-T.com, and you’ll find out all about the platform there. Really it’s about filling in the last mile between the PSA and the user in your stack. If you want to see what the new client portals look like, their Office 365 integrated, you want to have some tech tools around VCIO, you want to reduce stack bloat, improve productivity, you want to improve communication, these sorts of things, you want to help grow and differentiate your services, then that’s why you would be looking at a CX platform. It is fast turning into the must have tool set for your stack, and the only one that is customer facing. Go to invarosoft.com. You can do a 14 day free trial, get it going and look out for the new stuff that’s coming. We’ve got a Microsoft Teams app that’s launching soon, we’ve got push ticket updates. When you do an update in your PSA, it’ll pop up a push notification so that the user sees the update and can comment.

Jamie Warner:
Then imagine you get your feedback in those push notifications with smiley faces as well. Lots of exciting things coming in this space. Check us all out, all the vendors and I look forward to speaking to you.

Voiceover:
Coming up next week.

Kevin Coppins:
Hi. My name is Kevin Coppins and I will be here on the show next week and we’ll be talking about how you can boil down all of these compliance regulations that are coming your client’s way into fundamentals so you can help them make a difference to protect what matters most.

Paul Green:
We’re also going to be talking about the risk of something called scatter work. Do you know what scatter work is? It’s where you’re constantly interrupted by either your staff or your clients, and you never really get to spend huge amounts of quality time focusing on getting proper things done in the business. We’ll look at the risk of that next week, and I’ve got a number of suggestions for you to never be interrupted by scatter work again. We’re also going to be talking about the holy trinity of monthly recurring revenue. There are three core things that you’ve got to have in place. I’ll tell you what they are next week. See you on next week’s show.

Voiceover:
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