Every computer business owner dreams of striking a gushing sales and marketing pipeline that pumps out reoccurring IT Sales like clockwork! In fact that is the reason most tech pros have adopted the managed services model, so that they could build a nice revenue stream that could be counted on in the future. Unfortunately, most technology providers are coming up empty handed from their marketing efforts or at least they’re not getting anywhere close to their dreams of becoming millionaires. The burning question is how can you develop the perfect sales machine that churns out consistent sales every month? We will consider in this article specifically how a computer consultant could conservatively generate $945,000.00 in reoccurring revenue over a five year period.
Build Your Sales Pipeline
In my 10 years experience I have seen a few benchmarks that work over and over again… the first one is that out of 10 technology sales leads it can conservatively be expected that one lead can be converted into a sale . Second, I have seen that most of the sales generated from IT telemarketing have averaged around $1500.00 in reoccurring revenue. The third rule which I have seen hold true over the years, is that if a good solutions provider stays ahead in technology and has excellent customer service, then they can count on retaining those customers for at least 3 to 5 years if not longer.
These three principals can work in tandem to produce a powerful revenue stream for the few VAR’s that have the resources and faith not to waiver in their marketing spending every month. What I have witnessed is that there is a pitfall that stops most consultants from reaching their riches. This is the dreaded sales cycle, there is on average a 2 to 3 month sales cycle you must go through before you can close most managed services opportunities. The gut reaction of almost every computer consultant I have ever seen, is to instinctively hit the brakes on their marketing while they ‘wait out’ the sales cycle. Of course, time is money and the lost opportunities in the two month gap in spending means that their sales pipeline goes bone dry.
Now with that in mind let’s consider how you can successfully build your pipeline to riches. First, make sure you have realistic expectation… when you’re building reoccurring revenue you don’t need to get all your marketing investment back in the first month plus profit, but rather you can wait to become profitable as you continue to receive payments from that sale into the future. In other words, you must have a long term view! Therefore, the $1,500.00 ROI per month from your IT services marketing campaign is the perfect target.
Here is where we start to add up the numbers to get to your treasure at the end of the marketing rainbow. If you sell one managed services contract for $1,500 dollars a month, then that will translate into $82,500.00 dollars over a five year period. Now here is the key to reaching your goal, instead of pulling back on spending while waiting on your sales cycle, you need to plow ahead. This is because in your third month you typically will net your first sale. However, if you had continued your marketing effort in the two fallow months, then in the fourth month you would net your second sale from the IT lead generation campaign you faithfully conducted in the second month. Essentially this can go on forever as you add a new managed services customer every month from there on out.
Finally, if you extrapolate the numbers out from making a $1,500.00 dollar sale every month, that reoccurs, then you get to the magic number of $945,000.00! The cool thing is that if you look at this progression on a scale it’s a very a steep slope over the five year period, however when you pass the five year mark the number more than doubles!!!! This is because you didn’t have all your customers in the prior five year period, because you added them steadily over time; but passed the five year mark you start with all those customers in place.
About The Author:
John Black is the Marketing Director at MSP Telemarketing and has over 10 years’ experience in IT marketing for computer consultants and VARs to help them get more IT leads that turn into IT sales!