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Solution providers need to understand what customers think

With so much uncertainty during the pandemic, solution providers need to spend time learning about the current behavior of their clients' customers to better plan for the future.

Dave Sobel is the host of the podcast “The Business of Tech” and co-host of the podcast “Killing IT.” In addition, he wrote Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business.

For the latest MSP Radio video, Sobel explains how solution providers should look beyond their channel partners and learn what their clients' customers think as we continue to work during the COVID-19 pandemic and beyond it.

Transcript follows below

There is a ton of polling starting to come out about what channel leaders think, particularly vendors. I've even cited some of this on the show, because you are looking for directional guidance.

Here's a data point that should tell you something: From the 2112 Group, 30% of channel professionals were surprised upon learning how little cash their partners have in reserve for emergencies.

Also from that survey, 51% of channel professionals were surprised by the increase in webinar attendance and 34% by the ease of replacing live events.

So, what you're telling me is that vendors don't understand their solution provider customers -- the sky is also blue and water is wet.

If you're a vendor leader listening to this, you should know that the people who work for you don't understand your own channel customers.

If you are a solution provider listening to this, you should forward this to your vendors, because they do not understand you.

The topic of this video is not, however, the disconnect between vendors and providers. Frankly, that's too easy and not useful.

As my focus is on technology services providers, what I worry about is that same disconnect between those companies, and their customers. That's why we started with a very well-known (to solution providers, anyway!) disconnect.

I've seen some similar polling data for MSPs and service providers that is pretty optimistic about the recovery, with a majority expecting the recovery this year, or projecting doing better than they expected this year.

Let me start this by saying I really, really, really hope they are right.

In the end, though, all of that doesn't mean anything if the customer doesn't think the same way.

I'm really think the customer doesn't think the same way, and because my goal is to plan to the worst while hoping for the best, let's discuss why I think that.

Let's do that with some data, because that helps set the context.

The Hustle polled their readership, and nearly 2,000 people responded. The highlights:

  • 37% said they would feel comfortable returning to the workplace now
  • 33% said the same about restaurants
  • But big events -- 40% said they would not feel good about that until 2021

Let's say some of that data the other way, however:

  • 63% aren't ready to go back to work because of being uncomfortable
  • 67% aren't going back to restaurants now
  • 72% aren't ready to send kids back to school now

There's similar data from a Washington Post/University of Maryland survey, so I won't say it twice, but know it's not just one data set that looks this way.

There is going to be a hesitancy of consumers and individuals across society. That will impact behavior and spending -- and the ecosystem around those. You may not serve entertainment customers, but do your customers? That manufacturer might make boxes that are used to sell popcorn in stadiums, which are certainly in less demand. And that's just a crazy example, as we know there are so many more.

Calculating whether or not people want to leave their houses to do things is simply not part of our usual planning.

And it's not as simple as thinking things will start gearing up. Things are not going to just jump back to the previous state, and we can't even say they are going to come back slowly.

The situation right now is that you don't have good data to tell you where things are. Thinking you understand your customers impact right now is dangerous, for a number of reasons.

  • First, customers with PPP infusions have not made changes to payroll yet
  • Second, customers may be making moves now that you're not aware of
  • Customers themselves may not be sure of the full impact yet and not made enough changes

There's data from the Becker Friedman Institute predicting that 42% of recent layoffs will be permanent job losses -- businesses going away or due to the hesitancy I just cited. If you're working at a lesser capacity, you don't need as many workers.

The point is that there is impact that is very much hidden. The interdependency of the economy is hard to track for an individual business owner.

We do not know the impact. The danger is that we think we do.

Now, wallowing in bad news isn't helpful. I set the stage here for context, not as the end message.

Companies and businesses are built on people. PEOPLE do business. And while we don't know how people will behave, the one thing we can safely say is that they likely aren't going to behave the way we have expected them to in the past.

Be pessimistic about immediate economic recovery

Let's start there. Assuming people are not going to behave the same, what does it look like if they behave in a way we're not used to.

Let's first look broadly. Leveraging the work from Service Leadership's work in their Rapid Recovery Planning Guide, we can get a generalized take on the results of pessimism. My stance continues to be plan for the worst and hope for the best -- if we outperform, that's great!

The more you sell product, the more impacted you are -- and let's observe that isn't coming back. Most importantly, from a revenue and from an EBITDA perspective, the recovery doesn't look like a V, W or U. I'm thinking L. That's the working plan, because remember, what we're planning isn't the same as what we're hoping for.

And since these are the average, there are 50% of companies doing worse.

Our baseline is to assume this hit, and now, we want to make it specific for our own businesses. Let's add one more dimension to set ourselves up for analysis.

Vertical markets matter. Again, I've seen a lot of commentary recently that focuses on industries and recommendations that you look at the impact by industry.

They're right -- but only half right.

For example, we know some industries are really hit hard, such as oil & gas, travel, hospitality and government. And, we can make some statements that there is moderate impact to others.

But if you want to try and define some of that impact, go one more level. Think of your customers' customers. Now is the time to really understand you customers, and who they serve to project out.

Take legal. The legal field is moderately hit, sure -- but it is the inconsistency that is the confusion. Lawyers serving hospitality? Greater hit than lawyers serving healthcare or financial services.

Now, this may seem obvious. Usually the simplest ideas are.

Instead of looking at your customers and guessing the impact based on vertical, add a second level to your analysis by adding your customer's customers. Any further makes this too hard.

The good news here is that you should be very used to this way of thinking. The reason I started with criticism of software vendors is that solution providers are so very familiar with the problem… the idea of not understanding your customer well enough. Take that insight from looking backwards and turn forwards and think “through” your customer. Your customer, just like you, is a conduit to more customers. You understand the impact of that misunderstanding, but unlike them, you're small, agile and already in the services business.

Who are they? What are they thinking? And how will the humans who work there and consume from them behave now?

The data tells us they are going to be a lot slower than you will want from a business perspective. Rather than rail against that, embrace it. It is what it is, and you plan for that. That extra dimension of analysis will be what differentiates those who move beyond just survival.

Let's recap

  • Humans are uncomfortable with the current situation, and probably more than you think, even for basic services
  • This is going to take longer than you think
  • Pessimistic planning is safe
  • Understanding your customers' customer gives better insight and is a skill you already have
  • Oh, and vendors don't get solution providers. But that one you knew.

Go deeper with your customers and you'll be more relevant, and you can plan better.

About the author
Dave Sobel is the host of the podcast "The Business of Tech," co-host of the podcast "Killing IT" and authored the book Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business. He owned and operated an IT solution provider and MSP for more than a decade, and has worked for vendors such as Level Platforms, GFI, LOGICnow and SolarWinds, leading community, event, marketing, and product strategies, as well as M&A activities. Sobel has received multiple industry recognitions, including CRN Channel Chief, CRN UK A-List, Channel Futures Circle of Excellence winner, Channel Pro's 20/20 Visionaries and MSPmentor 250.

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