Tag Archives: managed services

Managed Services Marketing Mix – The 4Ps May Change, Goals Don’t

Unlike marketing mix terminology, swimming has undergone REAL change
Unlike marketing mix terminology, swimming has undergone REAL change since the 1960s

In a recent MSP Mentor blog, I discussed the relevance of the 4Ps as a construct for a cloud and managed services marketing mix.   First articulated by marketer E. Jerome McCarthy in 1960, the 4Ps (product, place, price, and promotion) are considered outdated by some when it comes to B2B marketing in today’s cloud era.  Harvard Business Review conducted a study of over 500 companies around the world, and has suggested that the SAVE model (solution, access, value, and education) better represents the current realities of B2B marketing.

Half a century after the 4Ps were first rolled out, so much has changed in how businesses buy products and services.  We don’t head down to the local department store to make our purchases any  more, we find what we need on-line.   Neighborhood retailers aren’t battling one another for local customers, they sell to a world-wide market.  We gather the information we need to make a purchase ourselves, through social media and web, rather than relying on the local shop owner to educate us on the benefits of her service.

But no matter what terms you use, the goal of the managed services marketing mix remains the same – to effectively position services relative to the customer’s problem, and against alternative solutions.   Does using the word “solution” automatically provide marketers with a better orientation toward solving customer problems than does “product?” Is it necessary to use the term “access” to represent the fact that we no longer go to a physical “place” to make our purchases?

The fundamental aspects of the marketing mix are the same, whether your preferred abbreviation is the classic 4Ps or the modern SAVE.

An Example of a REAL change since 1960:  The Pull Phase in Freestyle

When I started swimming competitively, Indiana University was the dominant force.  The Hoosiers won six consecutive NCAA Men’s Swimming and Diving Championships between 1968 and 1973, a streak unmatched before or after.   Although Mark Spitz was the star, James “Doc” Counsilman coached the team from 1957 to 1990 and wrote “The Science of Swimming,” the definitive guide.  Published in 1968, the book provides scientific explanations for the techniques used to swim the major strokes.

Just like the four components of marketing mix, the five phases of a swimmer’s arm movement are tightly coupled.  The reach, catch, pull, push, and recovery all work together to propel the swimmer through the water.  But unlike the debate about the relevance of McCarthy’s 1960s era marketing mix terminology, there has been real, significant change in how we swim freestyle since that time.

In freestyle, the pull phase starts once the swimmer’s hand enters the water and begins to move backward.  Analyzing the strokes of champions, Councilman advocated forming an “S” pull by bending the elbow between 90 and 100 degrees and moving the hand across the mid-line of the body, while pulling backward.  This sculling approach would provide some lift to the swimmer’s body in order to reduce drag.

Once considered a best practice, the “S” pull is no longer in favor.   Now swimmers are taught to move the hand along the side of the body in a deep-catch stroke during the pull phase, in order to focus the propulsion backward most effectively.   Research by scientists at Johns Hopkins University has shown the advantages of throwing out the old “S” pull guidance in favor of a deep-catch pull.

The Implications for Managed Services Marketing Mix

The four other components of the freestyle stroke are generally taught the same now as they were then.  The terminology for all phases of the stroke is the same now as it was then.   The lesson is that terminology matters less than actual practice.  When considering your managed services marketing mix, call it 4Ps or SAVE.  What counts is what you do.

What do you think?  4Ps or SAVE?  Do you still swim freestyle like we did last century, or have you entered the modern era?  Tell me what you think!


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Managed Services Pricing – Put Your Customer on the Winner’s Podium

Determining the ideal managed services pricing model can be complex.  MSP University summarizes the advantages and disadvantages of six popular pricing schemes, including per-device, per-user, à la carte, and “pick 5.”   MSP Mentor points out that service providers should consider break-even cost, staff expertise, competition, and regulatory issues, along with value to the customer, when determining managed services pricing.

Multiple models and a broad range of factors can be overwhelming, but establishing pricing and packaging is a lot easier when you crisply focus on your customer and the problem they are trying to solve.  For marketers at B2B companies, whose products are the basis of managed services offers, this means thinking along two dimensions.   First, you must help your immediate buyer – the executive or product manager at the MSP responsible for launching the managed service and driving a profitable revenue stream.  Second, you must help the customers of this buyer understand the benefits of the managed service based on your solution.

Marketing to the first buyer goes without saying, but some may question whether it is in their charter to help their service providers market to their customers.  Surely that is the job of the marketing team within the service provider itself, as they are the ones who best understand their own organization’s differentiators, competition, and customer base.  Besides, B2B marketers need to move on to the next campaign, product launch, or demand generation activity.

Put Your Customer on the Winner’s Podium

Age Group Winner, 2013 Ashland Olympic Triathlon
Age Group Winner, 2013 Ashland Olympic Triathlon

Rather than take this narrow view, marketers should put their customer on the winner’s podium.   To win, the service provider must ace the marketing mix as they target their customers.   The 4Ps – product, place, price, and promotion – are tightly coupled for a managed service, and as the vendor, you are in the best position to help the service provider articulate the value proposition and competitive advantages of the technology underlying their managed service.

The podium also reinforces the benefits of a tiered managed services pricing scheme like “Gold/Silver/Bronze.”  Large service providers, such as CSC and Sprint, and smaller providers like Technology’sEdge™ and Beringer Associates use a tiered approach.  Doing so helps in several aspects of the marketing mix:

  1. Resists commoditization:   Unlike per device or per user pricing schemes, which reduce the value proposition of a managed service to a simple cost comparison, a tiered managed service pricing model helps justify premium prices for the extra value of higher tiers.  This helps reduce customer churn and enables more effective up-selling and cross-selling.
  2. Differentiation vs. the Competition:  The product is a combination of the service provider’s staff expertise, SLAs, brand, and the technology on which the service is based.   But every MSP touts its highly trained staff, secure data centers, and redundant power supplies.   It is the software behind the back-up and recovery, monitoring, or security service that can differentiate among providers.   While the lowest tier may provide the base level of service that is common across service providers, the higher tiers can leverage more advanced software capabilities.  For example, in managed network services, “bronze” may provide customer notification of outages, whereas higher tiers can provide proactive notification of degradation, the impending approach of a network capacity constraint, or the ability for the customer to run their own reports.
  3. Differentiation vs. In-house IT:  A prospect’s IT staff is often an MSP’s key competitor.  Although a managed service may free up IT staff to work on more strategic projects, IT leaders often resist giving up control.   Service providers can align their lower tiers of service to the capabilities of their prospects’ in-house IT staff, and use the higher tiers to demonstrate the extra value of more advanced functionality not available with current staff.
  4. Enables freemium business models:   In today’s market, customers expect to be able to try a service before they commit to buying it.  A tiered structure can provide basic functionality for free, as part of the lower tier of service, and time-bound access to higher value, higher tiers of service to entice customers to upgrade.

Although there are many approaches to managed services pricing, the benefits of a podium approach are clear.  What do you think?  If you are a service provider, are you getting the support you expect from the IT vendors on whose solutions your managed service is based?  If you are a vendor, are you helping your service providers find a place on the podium?  I’m interested in your feedback.

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