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August 5, 2021
By Jason Beal
Intuition, intelligence and a healthy dose of paranoia have always been part of a good managed service provider’s DNA. In fact, three in four MSPs have seen an increase in business opportunities during COVID-19 — and that’s because many organizations scrambled to add new collaboration and hybrid work solutions, to deploy new devices and connectivity and to protect against cybercrime.
Credit goes out to thousands of MSPs around the globe who worked urgently and tirelessly to help governments, schools and private enterprises remain productive and adapt to all the “new normals” which quickly arose during the pandemic.
Despite these significant successes and opportunities, MSPs can’t afford to rest on their laurels.
Between growing competition in the broader channel ecosystem and ever-evolving customer technology consumption preferences, it’s more important than ever for MSPs to have targeted solutions and strategies at the ready — as well as expanded service credentials and data-driven recommendations to champion your value to stakeholders.
I recommend MSPs begin with big-picture adjustments to better position offerings and increase earnings. By following these five tips, you’ll be considered far more than someone who “keeps the lights on” for basic IT. You will be an indispensable business partner. Here’s how:
1. Don’t neglect your longtime customers. Somebody else is always knocking on your clients’ door, which means that even the most rock-solid relationships can be jeopardized if an MSP doesn’t always deliver high-quality service and support. In an annuity business, a company or its salespeople can get too focused on adding new customers — and they may take for granted the quiet and reliable customers who have been with them for years.
Like any strong relationship, periodic maintenance and care are required. Avoid the tendency to overlook existing and seemingly satisfied customers. And never make assumptions about the long term: Competing MSPs view your existing clients as potential new customers and may give those clients the special treatment used to acquire a prospect. Keep the people you serve engaged, informed and satisfied.
2. Show your worth with dashboard reporting. Knowledge is power (and money, of course). But there will always be decision makers unfamiliar with the important work that MSPs do. Therefore, it’s critical to have relevant data and contextual storytelling to clearly explain what’s working and what isn’t in a particular ecosystem — as well as to position new solutions based on a customer’s growth, collaboration needs or data-security risks.
With a little help, this task can be easy. Many vendors can now produce visually appealing and data-rich “executive dashboard reports” with customized insights based on the work an MSP is providing for a client. Use this information to your advantage and make sure that any relevant employees, managers or executives get these reports as a reminder of your value as a key partner. Go beyond traditional quarterly business reviews or …
… canned monthly reports that accompany your invoice.
3. Gain (and deliver) industry-specific specialization. MSPs might boast that they can do it all, but there are limitations — particularly when serving industries with complex rules for data storage, governance, risk and compliance. My advice: Gain and deliver specialized knowledge to serve a few fields or vertical markets. This goes beyond expertise in specific or proprietary software applications; MSPs must understand unique industry regulations and compliance requirements, too.
This strategy has both short- and long-term payoffs: The more the MSP knows about an industry, the better it can help current customers, and the more easily it can win more customers in that same industry. That’s because it will be able to demonstrate its level of experience, deliver essential competencies, and provide strong references. It’s a win for everyone.
4. Boost revenue and cut operating costs. Identify and promote the critical services that your customers lack. After all, increasing average revenue per user (ARPU) per customer is critical in an MSP business, particularly to maximize a customer’s lifetime value. Focus on the other golden rule in a monthly annuity business: the Rule of 78, a quick way to estimate a full year’s worth of revenue for businesses that deal with monthly recurring fees.
At the same time, always look to reduce your cost-to-serve by finding new ways to automate your business, to drive more efficiencies and to scale. This requires a constant balancing act: MSPs must focus simultaneously on their top line (how much monthly recurring revenue is being generated) and their operating costs to improve their bottom line and, as a result, their valuation. Vendor consolidation for MSPs is a best practice and a trend in the industry these days. Point products are costly to manage and maintain. Instead, look for “platform providers” whose broad and integrated technology can replace a handful of disparate tools.
5. Elevate your cybersecurity solutions and certifications. Twenty percent of companies have faced a security breach as a result of a remote employee’s actions, and nearly half didn’t conduct security assessments before going remote, a recent Malwarebytes survey found. Providing strong defensive offerings does more than protect your customers — it makes you valuable to clients in need. Another way I’ve communicated this recommendation for years is, “cybersecurity equals job security” for MSPs and VARs.
Cyberthreats are becoming increasingly more complex and, as a result, more businesses are outsourcing protective duties and solutions to MSSPs (managed security service providers). Upgrading a network operations center (NOC) to a security operations center (SOC), for starters, will help the MSP become more valuable. And making investments to add staffers with more technical certifications in cybersecurity can help an MSP increase billable rates and drive revenue.
By keeping an eye on your competitors and maintaining a constant connection with customers, these five strategies offer effective ways for MSPs to grow and thrive. There’s major value in being proactive. Make the coming months busy and robust by planting the seeds for success — no matter what happens next.
Jason Beal is senior vice president, Global Channels & Partner Ecosystem, at AvePoint. He is committed to building relationships with MSPs, solution providers and systems integrators, as well as expanding AvePoint’s global distribution networks and cloud market presence. He spent eight years working in Europe with Palo Alto Networks and Ingram Micro, leading global distribution and commercial channels, advanced technologies division and EMEA public cloud go-to-market. You may follow him on LinkedIn or @avepoint on Twitter.
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