Moving to managed services is a great play for a number of reasons. Managed service providers (MSPs) build steadier recurring revenue from clients than traditional project-centric/break-fix models or value added resellers (VARs). Over the long term, this ongoing engagement also makes MSPs better candidates for mergers and acquisitions. So, if you don’t want to work forever, it’s smart to build a big base of happy managed services clients.
But MSP success is about much more than just renting technology instead of selling it. Competition in the managed services market is intense. If you don’t aggressively differentiate your value, you’ll wind up in a low-margin race to the bottom.
To optimize margins and achieve high retention, MSPs must re-think client engagement entirely. Here are a few tips for doing so:
1. Beans over bits: MSPs don’t sell technology. They deliver digital business capabilities via an economically optimized model. Dollar-quantified business cases are thus central to MSP engagement. And those business cases must include top-line impacts—not just savings. This can be a challenge for channel pros accustomed to “better, cheaper” sales narratives. Anyone, though, can promise better and cheaper. The best MSPs win clients for life by being the partner those clients need to execute continuous digital transformation that pays off quantifiably, quarter after quarter. Shaving points off an IT budget won’t win that game.
2. Climb vertically: Technologists are often dismissive about vertical markets. After all, backup is backup—whether a client serves burgers or subpoenas. But backup requirements—as well as those for computing, mobility, apps, and analytics—vary significantly between verticals. More importantly, clients think about their digital requirements in vertical terms. So you can’t tell a realtor their needs are just like those of a trucker. And you can’t intelligently guide a client’s digital transformation if you don’t know their industry. That’s why market-leading MSPs pick markets in which to lead—and are highly intentional about leading them.
3. Pick the right partner: Choosing the correct partner will have a large effect on your business. You must choose someone who offers the proper technology solutions and will help you drive revenue. Partner with a vendor who can offer services and technology that would otherwise be impossible for an MSP to provide on their own.
Bonus: If you find these tips helpful, check out the rest In our new eBook, 5 Tips for Break-fix to MSP Success. This eBook provides information to help you make the transition from break-fix and how you can gain the competitive edge. Head over to the Datto resources section and download it today!