Just One (More) Thing – Growing Your MSP Incrementally

SalesIt occurred to me this morning that there are many MSP’s still struggling to get into a managed services model.  There are a large number of you who are managing less than 250 devices and trying to reach the next level.  I know I have told my story before so I will not re-tell it here.  The important part is that I started from 1 client with 35 workstations and 1 server.  I also started using Hound Dog (GFI MAX > LogicNow) and a PSA within 6 months of starting that business.  I had the same challenges all of you do and here is my best advice…

Sell them one more thing.

Yes new customers are important but getting a customer who is on monitoring & AV only, to add backup or web protection makes a huge difference over time and it is so much easier.  If they won’t pony up for the whole enchilada up front, drip market until they do.  Over time they will trust you more and complete their portfolio of services with you.

Why this works:

  1. Recurring revenue is incremental, grows month over month and pays for years
  2. Existing customers already trust you (they already decided to buy from you at least once)
  3. The more aspects of their IT needs that fall under your umbrella, the less time you spend fixing their issues
  4. Costs are dependable, if you markup your AV by 3X you know how much money it is making you

Over time you will see profits from these seemingly small incremental additions start to cover your rent, office expenses and then one day…payroll.  Imagine how different your business would be if you knew on January 1st that your fixed expenses were already covered by your recurring revenue for the month.

There are a lot of MSP evangelists out there who profess that you should only take on FULLY managed clients.  They say this because technically it is true.  Practically though, there are still a large number of customers who simply will not buy into a fully managed contract.  These customers will rarely (if ever) be as profitable as fully managed clients but there is still profit to be made and it is a niche geared to the smaller MSP.  They still ALL need AV, backup and other services.  You just need to get them to use yours.

“OK, that’s all great but how do I do it?”

  1. Get as many customers as you can on simple monitoring.  Offer it free for 60 days, report to them all the issues found, bill them hourly to fix them and then it should be an easy sell to get them on basic monitoring at a 3X markup.  In some circumstances if the customer is already spending $300 – $400 a month with you on break/fix work it may be worth it to pay for it out of that revenue until you can get them to purchase it.  Trust me it will save you money and headaches.
  2. Use a gateway product.  Security is a hot topic, use the benefits of managed AV, web filtering or offsite backup to get them to adopt one or more of these recurring revenue sources.  Of the shelf products will NEVER compete with the personalized service of someone actively monitoring those services for them.
  3. Never stop marketing to your existing customers until they have adopted you full stable of products.  Use Mail Chimp, its free to a point and is very easy to use.
  4. Use quarterly and annual reviews as sales opportunities.  Customers view these in whole different way than sales calls especially when you provide them with reports and solutions to fill any gaps they might have.  At the very least they appreciate the personal touch of a face-to-face meeting.
  5. MAKE SURE YOU HAVE A RELIABLE WAY TO BILL RECURRING SERVICES.  None of the above will matter unless you actually invoice your customers.  This means an automated way to bill recurring services through your PSA or accounting software.

Questions or comments?  Please leave a comment and I will contact you.