This year's data from the annual MSP 501 survey reveal some interesting gaps between managed service providers who nabbed a place in the rankings and those that were edged out.

Kris Blackmon, Head of Channel Communities

August 15, 2018

6 Min Read
Sales-gap

This year’s MSP 501 survey has a lot to say about the state of digital marketing in the channel. According to Deloitte, tech companies that deal in software spend about 15 percent of their annual budget on marketing activities, and service consultants around 12 percent. Data from the MSP 501, in contrast, tells a different story about the indirect sales channel.

Among 501 winners, only 5 percent spend more than 10 percent of their annual revenue on marketing. In fact, eight in 10 put less than 5 percent of their revenue toward marketing activities. This begs the question: Are partners dedicating enough resources to gaining new customers?

While the dynamic of the channel has changed a lot in the last few years, partners’ preferred marketing channels are largely the same as they were 20 years ago. Ninety-four percent of the 501 report relying on networking to acquire new recurring revenue clients, which should be no surprise. Selling on reputation or building on in-person conversations at an event or trade show is a tactic that MSPs, who revel in their role as their clients’ trusted advisers, are comfortable with. 

Michael Greer, a digital marketing consultant based in Dallas,says networking is essential to B2B sales and marketing. He advises his B2B clients to think of a long sales process as part of their marketing budget.

michael-greer-2018-1.jpg

Michael Greer

Michael Greer

“Spend the dollars for someone to go to events, start relationships and then have year-long conversations with potential prospects,” said Greer. “So much of those conversations is comprised of exactly what digital marketers promise to accomplish with an online strategy: building awareness and establishing a reputation within an industry for the purposes of generating qualified leads.”

Perhaps the most interesting revelations from the 501 data come from comparing investment in specific marketing activities between those MSPs that placed on the 501 and those that did not. Might those discrepancies reveal a secret to cracking the channel marketing code?

For example, while almost an equal number of 501ers and this year’s applicants that didn’t place report leveraging networking, a significantly higher number of those ranked (72 percent to 65 percent) utilize formal referral programs. While good user reviews are always helpful in the sales process, in many cases incentivizing buyers can reap big benefits, especially first-time customers. These buyers have no experience with the MSP’s brand, and while a good conversation and clear value prop can go a long way toward ushering prospective clients through the digital buyer’s journey, a small incentive like a referral bonus is often all the push they need to convert into an actual sale.

Reputation in a digital age is also about far more than word-of-mouth referrals and positive customer reviews. We live in a content-rich age where a big chunk of consumers, particularly millennials or younger, do their own preliminary research before engaging with a sales process. That means the companies that are top-of-mind for them are those that provide the resources they need to feel informed.

In these situations, informative, thoughtful content that demonstrates thought leadership can really help grow an MSP into that trusted adviser role and sell buyers on the value of recurring services. In fact, 57 percent of this year’s 501 leverage original webinars and seminars to drive qualified leads. When looking at applicants that were edged out of this year’s list, that number drops to 43 percent.

simon-anderson-reliam-2018-1.jpg

Simon Anderson

Simon Anderson

“[Customers] are often looking for verification that you’re the right company to work with. That definitely starts with even very basic things like case studies,” said Simon Anderson, CEO of managed service provider Reliam. “Have you done this kind of work before? Do you have the expertise they’re looking for?”

It’s worth noting that MSPs with the resources to devote to creative content have probably done their due diligence when it comes to optimizing their online presence, either hiring an agency or having an in-house associate dedicated to improving search engine optimization (SEO).

“We have a whole search engine optimization strategy to ensure that we are getting search results, and search engine marketing to induce leads to come into the funnel,” said Anderson. “When you have more scale, you can afford more. I can afford to have one full-time person fully dedicated to SEM and SEO whereas a smaller company may only be able to spare half a person to spend their time on that kind of thing.” 

SEO is big business — really, really big. In the U.S. alone, the SEO market is projected to grow to nearly an $80 million industry by 2020 as people accept that the algorithms and data science that goes into it are far too complex for most business owners to learn, deploy and manage on their own. An effective SEO strategy requires an intensive amount of research into target buyers and competitors, followed by constant reevaluation to ensure only the highest-volume, lowest-cost keywords are used.

Taking into account that many burgeoning partners struggle to carve resources out for SEO/SEM, the discrepancies we see in pay-per-click (PPC) spend — an advertising avenue completely depending on SEO keywords — between MSPs that placed on this year’s 501 and those that did not isn’t surprising. Nearly half of the 501 winners report investing in a PPC or online advertising campaign; that number drops to 39 percent for aspiring applicants.

There are more advanced digital marketing strategies that this year’s survey didn’t ask about such as retargeting, email campaigns and conversion rate optimization. While these strategies are heavily employed by consumer-focused companies, B2B organizations have been slower to adopt them. If the data from this year’s 501 is any indication, the channel is probably just now beginning to dip its toes into these sophisticated digital waters. But MSPs’ slowness to leverage these approaches may not be the worst thing in the world.

Far and away the most valuable thing developing an SEO strategy accomplishes is forcing companies to define their target customer, honestly evaluate the competitive landscape and build tight, focused messaging in order to home in on those elusive keywords. Once a company has gone through those exercises, keywords will naturally find their way into a brand’s persona and presence. 

“Google’s algorithms show a definite trend away from prioritizing ‘SEO hacks’ and instead placing value on relevant expert content that truly reflects a company’s value proposition,” said Greer. “At the end of the day, small businesses without a lot of resources should focus on just building a solid brand that clearly reflects who they are and what they offer, and make sure every customer touchpoint reflects that messaging.” 

About the Author(s)

Kris Blackmon

Head of Channel Communities, Zift Solutions

Kris Blackmon is head of channel communities at Zift Solutions. She previously worked as chief channel officer at JS Group, and as senior content director at Informa Tech and project director of the MSP 501er Community. Blackmon is chair of CompTIA's Channel Development Advisory Council and operates KB Consulting. You may follow her on LinkedIn and @zift on X.

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like