February 18, 2019
By David Kaszowicz
If your managed services provider (MSP) business is only selling products and servicing your customer’s technology, you could be limiting your potential for growth.
The managed services market is expected to grow from $180 billion in 2018 to $282 billion by 2023. With the demand for managed services increasing as more companies move to the cloud and continue to adopt new technologies, including IT security solutions, this estimate is no surprise.
This shift represents a great opportunity for MSPs and VARs, but it also represents an increase in competition. The businesses that plan to grow need to deliver customer service at the true partner level to retain current customers and add new ones. Building such partnerships with clients allows you to better understand their business so that you can make the right recommendations and provide unique, within-budget solutions that can help them succeed.
Increased Demand for Customer Service
With many solutions providers offering their own support and easier buying options, companies don’t need an MSP to help them with technology purchases. Companies, however, are looking for a service partner rather than just a solutions provider.
One of the biggest reasons for the rise in service needs are the types of businesses currently seeking out MSPs. Large companies and early adopters already have their IT growth strategy mapped out. But smaller businesses that were hesitant to invest in cloud services, IT security and disaster recovery, or that were waiting for legacy technology to run its course, are now seeing a greater need. This is the market that needs a true services partner to help it through the entire process.
Tactics for Delivering Customer Service
It’s clear that there is a demand for a better customer service experience and meeting this demand is one of the best ways to build your MSP business. A recent MSP survey found that companies with a dedicated customer success function for their managed services saw a 4.3 percent increase in revenue retention rates and a 10.3 percent increase in contract renewal rates.
Here are a few ways you can deliver customer service at the partner level:
Bundle Vendor Services: Companies hate having to talk to dozens of different vendors for support. Bundling these services so all support goes through their MSP increases your value and gives you more opportunities to deepen the partner relationship.
Imagine that one of your clients is experiencing an issue with a printer that could indicate a data breach. Would they need to contact their IT security provider, printer provider, cloud backup service and a number of other vendors? Or would they simply contact you?
Being the go-to contact for any IT issues makes you indispensable to your customer. Additionally, every incident or service issue you manage helps you to …
… learn more about their IT needs and possibly also upsell them additional solutions or technology.
Improve Pricing Through Partnerships: Recommending hardware and solutions is another opportunity to improve the service partnership and provide your client value. Develop channel partners to be able to offer any recommended hardware or services at a discounted price.
Most MSPs quote their price and then include separate hardware and solution recommendations that cost the client thousands of dollars more. Including hardware costs in MSP partner fees increases the value add and decreases the number of vendors customers need to work with. This is why more than two-thirds of MSPs use cost and value-based pricing.
Consolidation: Many of the tools that MSPs use are consolidating as some of the big players absorb smaller tools and build them into their existing products. This is a great way for solutions providers to fill gaps in current product offerings and better meet customer needs. Small businesses in particular can benefit from consolidation through better pricing and bundled services.
As the market continues to grow, MSPs are also increasingly merging as a way to rapidly scale up their size and offerings. For those MSPs that lack the resources to become a true service partner, consolidation is one route to take.
Unfortunately, most MSPs are also decreasing prices to differentiate themselves in an increasingly crowded market. The percent that are able to increase their prices are finding ways to increase the value of their service offerings through improved customer service.
The bottom line is to set yourself apart from the rest of the industry not by price but by becoming a true, trusted service partner to your clients. By doing this, you’re primed to take advantage of the massive growth the MSP industry is seeing.
David Kaszowicz is a member of the executive team at Aventis Systems, where he serves as vice president of managed services. David was the founder of NSourceIT, a technology management and support company that offered IT support, service and products to small and medium-sized businesses, and previously was director of IT at CropLife America, where he implemented SharePoint-based global knowledge management systems that were used by dozens of organizations. He has a strong managed services background and the ability to develop policies and procedures necessary to grow a managed services organization. Follow him on LinkedIn or @AventisSystems.
You May Also Like
AWS re:Invent Partner, Vendor News: Cisco, Salesforce, MoreDec 01, 2023
People on the Move: Comcast, Cisco, NICE, TPx, Barracuda, MoreNov 29, 2023
AWS re:Invent 2023 Partner News: Marketplace, Salesforce, Certs, MoreNov 29, 2023
AWS re:Invent Expo: VMware, Snyk, HPE, More Showcase Cloud, Security, AINov 28, 2023