How Don Joos and His Team Are Capturing the Large and Growing Market for Managed Services Providers
Our team of experts from the Revenue Enablement Institute studies how leading organizations are transforming their commercial models to accelerate revenue growth. We profile growth leaders – CXOs – who are at the forefront of defining, enabling, and leading the execution of the 21st Century Commercial Model.
Don Joos is CEO at TPx, a privately held managed services provider that offers unified communications, managed IT services, continuity, and connectivity solutions to both large and small businesses.
TPx is poised for exponential growth in the fast-growing market for managed services providers. The unified communications and collaboration market is expected to triple in size over the next several years (from $47B to $140B).
The firm was acquired by Siris Capital 18 months ago with the goal of building on its industry-leading, portfolio of award-winning products, and large installed customer base to capture market share in the fast-growing market for delivering managed services built upon communications, connectivity, and security solutions.
Don Joos was brought in as CEO 12 months ago to lead a journey to transform TPx into a hyper-growth cloud business with the potential to realize increased market share within the large and rapidly expanding managed services market. “Our broader IT services portfolio is probably growing in the mid to upper single digits in aggregate,” according to Joos. “Newer segments like managed cybersecurity and communications are growing in the double digits. But, when you put it all together our recurring revenue from managed services, security, firewall, and backup services are growing 30% year over year. Part of the transformation is to accelerate these annual recurring revenues to offset the secular decline in the legacy businesses. We are not too far away from reaching that inflection point where the rapid growth in our cloud offerings will see us in a position of exceptional growth.”
To realize the full revenue potential of the market for cloud-based unified communications and collaboration, Joos is leading the transformation of the commercial model at TPx to build a modern selling system. He is focusing his efforts on three foundational capabilities that are essential to accelerating cloud revenues: a channel strategy that covers the segments where demand is greatest, defining a scalable and repeatable process for acquiring and upselling their 25,000 customers, and building a demand generation engine to fuel them with opportunities.
“Revenue growth is a huge priority overall given the large and growing total addressable market we have before us,” according to Joos. “But revenue growth itself is the output of building a foundation of capabilities and a ruthless focus on doing the things necessary to build a scalable and sustainable foundation to drive that growth. Do we have the right roadmap? Is my go-to-market model optimized? Am I retaining our existing customers? Are we expanding services to the base? And am I modernizing our systems and processes? Those things became the basis for our focus and revenue with speed and precision.”
Transforming the business model into a high growth cloud business requires a lot of change and complexity according to Joos, who is a three time CEO with industry, channel, and transformation experience. In parallel, the commercial model at TPx has become more complex with a lot of moving parts – a broader product portfolio, more complex channels, and more go-to-market motions. Joos believes that as CEO he is best positioned to see all those moving parts and affect the changes required to succeed. He views himself as the quarterback who pushes the Chief Revenue Officer, Chief Marketing Officer, and the Enterprise Program Management Office to transform the commercial model at TPx. The heads of sales, marketing report directly to me and we all work as a team to drive growth,” according to Joos.
“. No one is motivated to operate on their own because we have the same short term and long term goals and alignment. We’re all incented on the same objectives and tied to the same set of metrics, and we are all compensated the same way.”
“This works for me because while marketing and sales are working closely on maximizing any demand generation investments, the CMO has a whole separate workstream establishing the TPx brand and positioning ourselves as an MSP in the marketplace, which is part of our transformation as the TPx brand was historically known as an access provider, not as a company focused on delivering managed services,” he continues. “It also applies to change management. Another direct report, leads our Enterprise Project Management Office (EPMO) who is driving a lot of these programs and alignment across the business with my team.”
Joos sees defining, building, and scaling a measurable and repeatable process for acquiring and upselling 25,000 customers as a fundamental building block to his commercial model. He is big on accountability and wants to better understand marketing’s contributions to bookings and Monthly Recurring Revenues before he scales his demand generation efforts.” We haven’t turned the full spigot on our demand generation investments yet because I want to make sure it’s all working properly before I start feeding more into it,” says Joos. To get it all working properly, he and his team are measuring and refining the relationship between marketing campaigns, SEO, the quality of leads and specifically where they are coming from, to ensure TPx sees the best conversion rates, opportunities, and deals. “I’m looking at pipeline metrics,” he continues. “But I’m also looking just at the operational processes and systems that help Sales Development Reps (SDR’s) and Account Managers (AM’s) to convert that demand as it comes in to make sure the process is working. I want to iron out the details, such as making sure they are getting the right notifications, they understand the internal SLA’s and have the right operating cadence in place so that when I start to make larger investments in demand generation, they can handle it.”
Being measured and careful does not mean moving slowly to Joos. The TPx CEO captures the urgency to change as fast as the market with tremendous focus on the key drivers of growth by advocating both speed and purpose to his team. “To scale we need velocity. I use that word specifically because velocity is the combination of speed and purpose,” according to Joos. “I don’t want to just have speed because we may waste money. I’m a huge believer in smaller pilots to prove out a thesis. But if you are going to fail, do it quickly, make the tough decisions, course correct where needed, and get back in motion, but keep moving.”
Achieving sustainable and scalable growth is going to require combination of cross selling the legacy base and adding net new customers in both the enterprise and small business segments. “The installed base is a ripe opportunity for us,” according to Joos. “I could likely get to my short-term revenue goals for the next four quarters solely off of our installed base. But that’s not a long-term strategy. We have to constantly add new logos to expand our customer base. That’s why we’re looking at new routes to market to get the customer wins, whether that is through direct sales or via our channel partners. We are working to expand into new channels such as hybrid VARs who are making that transition to the SaaS business models and can expand our reach to the SMB market, which represents about 85% of the companies in the U S. When you get above the SMB market, you need high-touch channels that can sell more customized proprietary solutions that have a repeatable type of business that can scale. We are building on all aspects of our channel model.
TPx must simultaneously enable its community of channel partners, who drive more than half of all sales, while building out new channel capabilities to fuel the business development, service excellence, and cross sell needed to acquire and convert existing customers to new managed IT services. “Our channel program had worked well up to a point but wasn’t going to get us to where we need to be without a significant investment. This was an early realization when I started,” says Joos. “We had strong account management and good partner relationships at a rep level, but the overall direction needed to be reset. To correct this, we recently implemented changes and will measure our progress through a variety of forums, not least of which is the reestablishment of a channel advisory council. I want to hear personally what our partners have to say.”
Finding the optimal design for the sales team is an important issue as Joos pivots TPx to selling more specialized UCaaS, Managed IT and Security cloud services. TPx leadership is actively rethinking their sales force design to balance sales generalists who represent the full product portfolio to customer, with more specialists who fill key gaps in the commercial process, capability, and product knowledge. “Right now we are very horizontal in terms of covering the portfolio and the market segments we target,” according to Joos. “We’ve discussed how that model can be optimized by having a generalist who carries the entire product portfolio but occasionally needs a specialist. As we move to a hybrid model with generalists and overlays, the cost to sell becomes an issue. We have to measure and manage our customer acquisition costs and balance the knowledge required to deliver on an experience with the profitability and growth of our company.”
Sales readiness and development is another major focus because TPx is aggressively acquiring and ramping sales employees to add the new skills and capacity to pursue the large market opportunity ahead of them. “I have a lot of hiring going on right now,” shares Joos. “We are scaling the business and have some voluntary and involuntary attrition which happens when you change the business model and compensation plans. Right now, I probably have 40 open recs for quota carrying reps. Our expectation for ramping those reps is that it’s about a six-month process before they are fully functioning and mature from a sales productivity perspective.”
To manage both new and existing reps, the revenue operations teams are using customer engagement and seller activity data to create better visibility into rep, account, and funnel performance. “When I first started at TPx, we had no centralized visibility into the funnel,” he recalls. “Now we measure all our reps, by looking at the state of their funnel, how well it’s moving, how effectively they are selling the breadth of the product portfolio. We’re now starting to get the weekly measurements coming to sales managers. We’re also using this data to feed the sales organization relevant information to help them sell better, understand how to identify opportunity, and where our customers have exposure that we can assist with. When I look at security as an example, 60% of SMB’s go out of business within six months of a data breach. It’s not just about selling; it’s also about making sure our customers are aware of the risks they and their businesses are exposed to.”
A big aspect of the transformation Don is leading is aligning the revenue team around a common purpose. He has the entire revenue team – from management to front line sellers – focused on a few core KPIs and objectives. What he calls his five, five and ten. “We’ve got five focus areas – delivering the roadmap, optimizing the go-to-market, growing retention, expanding the base and modernizing systems and processes,” according to Joos. “That’s our focus areas. Then I have five KPIs which are largely focused on maximizing Monthly Recurring Revenues (MRR) to understand how much we are adding, how much are we losing through customer churn, whether it is coming from new logos or base conversions, and what is the net number. And we’ve got 10 core initiatives to improve execution and enablement and ensure we are looking at the right initiatives companywide to achieve our goals. We refer to this as our five, five, ten.”
“This idea of the ‘five, five and ten’ is what we use to drive everything,” shares Joos. “So I take every employee through the concept and expectations. Another area where we differ from many other company cultures is that I don’t believe in the need for mission statements and vision statements. I’ve never met anyone that can remember them. I do believe in a simple mantra that everyone can remember. For the team at TPx, we talk about ‘connect and protect’ as what we do. The 5,5,10 explains how we are going to do that, it’s our strategy map to delivering on a simple concept of connecting and protecting our customers. Through managed IT, security, communications, and connectivity, we connect and protect our customer base. It informs, simply and clearly, why we exist. Another important aspect of the culture at TPx is that I continually ask a simple question of every employee – how did I show up today? How did I show up in every call? Every meeting, every email? Was I hungry for the business? Was I empathetic to the customer? Was I accountable? All of that builds culture and ultimately impacts our results. It’s a simple, but powerful way, to challenge ourselves to be better every day.”
Don understands from experience that commercial transformation is fundamentally an exercise in change management and that transformation requires leadership from the top. Like many CXOs, he emphasizes the importance of communication as a key management tool to affect change. “I have found though that the biggest thing in business transformation is the change management process. People state that human beings generally don’t like change, but I don’t agree. Most people are comfortable with change if they feel like they are in control,” according to Joos. “For example, think about how you feel when an airline changes your flight, versus when you changed your flight. Those are two very different emotional reactions. So, for me it’s about letting people engage, understand, and contribute so they understand why, and they are in control of their particular aspect of this transformation. As long as we stay aligned and in control, you can get a lot more done than when the change is dictated to you. That’s when irrecoverable problems happen, it’s a fast way to have the company fight any needed changes, and we’ve seen it many times across many different industries.“
“I am fortunate to work in an organization that knows that it needs to change,” he continues. ”So half of my change management battle is already won. I’ve done other transformations where the organization didn’t want to change. You have to sell the concept and need for change throughout the entire organization before you can even start the work. So I feel like I’m ahead of the game in some respects. At TPx, I’m in a different stage of the change management process, where the team needs guidance and alignment. And in my experience that is about metrics and communications. It requires a very candid, open, and transparent organization.
To facilitate the level of communication required to bring the entire organization on board, Joos holds an all hands meetings with the entire company every other week, where anyone can ask any question they like. On a monthly basis the entire management team meets for a monthly business review (MBR), again the same level of candor is asked and expected. “Once a month I conduct a business review with directors and above – which is about 10% of the organization. This helps me build evangelists to carry the message of change because I can only go so far, and they are in a better position to communicate to their people and translate it into a language and context of their roles. What the support team needs to hear versus what the finance team needs to hear needs to be translated to be relevant to them. It is about the consistency of message in communications. Whether it is the all-hands weekly meetings, the MBR’s with the company leadership, the small group sessions I personally do with employees, the direct connection with our channels – consistency in our purpose is what drives change.”
The emphasis on transparency to direct communications is a consistent theme for Joos. “I encourage anyone to reach out to me directly with any question. Employees, channel partners and customers can ask me a question through email – no one else is manning my inbox. I want the unfiltered sentiment of employees, channel partners, and customers, and I reply to every one of them,” shares Joos. “The team thought I was crazy when I set up the “Ask Don” email because they thought I was going to get all these emails from the customers. But that is exactly my point. They’re going to talk to us. If it’s bad news why suffer in silence? It could be good news. What’s important is they’re telling us something and they’re still engaged with us. I want the open and honest dialogue. Many find that difficult to accept in today’s hyper-connected world, but I’ve found it’s critical to driving any successful transformation. It’s what makes us different. We ask the hard questions and do the difficult things well.”
Don Joos is the CEO at TPx
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