Amy Luby, Founder of Modern MSP

AUTHOR: Amy Luby, Founder of Modern MSP

The managed services industry is a strong and growing force in the SMB, and more competitive than ever, with an estimated 4,000 MSPs in the United States. Roughly 40% of channel organizations now claim to offer managed services as part of their portfolios. Thanks to the ease of entry and an endless number of tools, virtually anyone with some level of tech know-how can set up shop as an MSP. Many provide businesses with quality solutions and good support; some are not quite as capable or efficient. The age-old question persists: what can MSPs do to move the needle? How can you turn a good IT services business into a great MSP?

Six key business areas vital to MSP success

High-quality managed service providers have predictable business models with top-level systems, policies and procedures, and a basic set of services. Those tools and practices are the foundation of any MSP business. However, moving up to become a great MSP, you need to dig a lot deeper and transform the entire organization way beyond the fundamentals.

When you run a managed services business, it’s critical to focus on six key areas which are vital to success:

1.  Customer satisfaction

2.  Differentiators

3.  Technology

4.  Talent

5.  Pricing

6.  Education

1. Customer satisfaction

Knowing your client’s expectations and having a keen understanding of what they want is essential. A great managed service provider focuses on service and delivering a complete experience, including having a more personal touch. Although automation is vital to profitability and productivity, being more hands-on with clients makes your business more human. Great MSPs build relationships with their clients, which fosters trust and a strong partnership. A great service provider also understands their client’s business values and goals and aligns with them.

2. Differentiators

To stand out from the competition, you must clearly define competitive differentiators, which tell customers what makes your business better. These should include the characteristics that your competitors lack. For example, demonstrate how you deliver value through ease of use, efficiency, responsive support, and comprehensive cost structure. In addition, make sure you offer detailed reporting and metrics. Finally, consolidating platforms limits the number of moving parts team members and clients have to manage.

Demonstrate how you deliver value through ease of use, efficiency, responsive support, and comprehensive cost structure.

3. Technology

Being a great MSP can be challenging, especially in today’s competitive landscape. Offering the best of the best is the difference between a good MSP and a great one. Many IT service providers offer premium services, which boost their profit margins and provide customers with new ways to interact with their systems. Most of these premium services include business applications-as-a-service, data analytics, cloud-based services, and consulting-level work around compliance and security.

4. Talent

The operative word in “managed service provider” is service. Service businesses are people businesses, and to best serve your customers, you need a solid talent pipeline. This is key to ensuring you are setting your business up for growth and optimal customer satisfaction and retention. Even though there is a shortage of highly qualified IT talent, great MSPs build a team they nurture and develop over time while investing in the education and development of their staff that they value and incentivize.

Great MSPs build a team they nurture and develop over time

5. Pricing

One of the most important aspects of being a great MSP is knowing how to price your services. A great MSP understands the value of leverage, which is the relationship between the hourly rate and the dollar bill. Whether you have one employee or a hundred, you want to maximize your service revenue with as few employees as possible. Pricing based on leverage is the key to increasing profit margins.

A great MSP understands the value of leverage, which is the relationship between the hourly rate and the dollar bill.

An effective pricing strategy looks at the specific areas where MSPs deliver their services and converts labor and tools costs into an average per seat. Then, using this cost, you can set a target margin. Before pricing IT services, providers must account for every cost associated with supporting their clients. You must take the guesswork out of the equation by documenting the expenses of managing infrastructure, applications, and other systems. Consider analyzing your margins and implementing a pricing strategy that accounts for all expenses and a fair margin.

6. Education

As technology evolves and the threat landscape shifts, it’s crucial to remain ahead of the curve regarding trends and to understand the latest technology and innovations. It also includes an understanding of policies, regulations, and compliance requirements. A great MSP continually educates themselves on these items to best serve their clients and ensure they meet the necessary compliance requirements for their specific industry.

It’s crucial to remain ahead of the curve regarding trends and to understand the latest technology and innovations.

A great IT service provider also trains on the latest technology to ensure clients have the most up-to-date systems in place. Protecting customers from all the threats is the end-game, as is certifying that all parties involved, from the C Suite down, are familiar with the risks and how to minimize potential attacks.

The path to greatness for an MSP may be a bumpy one, but if you want to ensure your success, it is one worth traveling. By taking a customer-centric approach, offering the right technology, providing tremendous value, and positioning yourself as an expert, you are on the right path to moving from good to great.


About the author

Amy Luby is the Founder of Modern MSP. A proven entrepreneur and pioneer in the IT services industry, Amy founded and built one of the first Managed Services Providers in America. Next, she expanded that business into one of the first Master MSPs, defining both business models in the process. You can connect with her on FacebookTwitter, and LinkedIn.