5 Keys to Building a Profitable, Scalable MSP Stack
Every managed services provider knows that your solution stack is the beating heart that delivers your MRR. Your stack is what you bring to the table when you’re negotiating a contract. It’s the technical expression of the results that you intend to provide and the pain points that you’re trying to alleviate.
In short, your stack can make or break your MSP.
Even so, it’s not unusual to find MSPs with “thrown together” stacks, overly complex intertwining solutions, or too many vendors to keep track of (remember: it should be a stack, not a pile).
So the question is, how does an MSP build their stack out for maximum effectiveness? More specifically, how do you get the most utility out of your stack while keeping it scalable and profitable over time?
This challenge is exactly what we addressed in our recent MSP Live Chat featuring Chris Wiser of Seven-Figure MSP. As usual, the turnout to this discussion was fantastic and we were thrilled to see some of our dedicated fans in attendance along with lots of new faces!
You can watch the full recording of that Live Chat here.
As a former MSP owner who sold my business in 2015, this is a topic that I have a lot to say about. So let’s get into it!
How to Build the Perfect* MSP Stack
* Okay, of course there’s no such thing as “perfect,” but the following can help you establish the best fit possible now and put yourself in a great position to adapt as needs evolve in the future.
Key #1: Start with who you want to sell to and who you want to be for them
Managed services is a crowded and complex space. You’ll never win by trying to be everything to everyone. Different circumstances and different clients require a different approach.
You may remember from a previous NinjaRMM MSP Live Chat that we discussed product stacks with Ken Patterson from Pax8. In that video, Ken made a good point about building your stack around your ideal audience and where you want your business to fit in the market. Specifically, he recommended that early MSP owners ask themselves two critical questions:
- Who are you selling to?
- What do you want your company to look like?
These are the kinds of questions that often come up in a marketing discussion, but they’re extremely important throughout your business.
When you begin by identifying the type of client you want to work with and to what extent you want your business to serve that client, you can better define what your stack needs to look like.
Key #2: Don’t give clients and prospects the chance to dictate or pick apart your stack
Do your clients need to know what’s in your stack? There are a couple of different camps on this topic, but the growing consensus is that it’s often easier to sell managed services when you don’t bog down your prospects with the details of the stack. For one thing, all the details and technical specifications can be confusing. For another, it gives them the chance to say, “Oh, we don’t need that,” or, “Look, we found a cheaper solution that does ___.” In either case, it can make your job harder when it comes time to close the deal.
That’s why I like to say, don’t sell the stack, sell the solution!
For the most part, clients and prospects don’t really care what products you’re using to get the job done. They’re paying for results. Focus on the solution that you’re providing them, not the products you’re using to deliver those results.
Key #3: Have strong security baked in from the get-go
One major emerging trend that has been building for years, and that we predict will hit full steam in 2021, is the bundling of more-than-basic cybersecurity solutions into managed services contracts. No more asking a client if they want additional cybersecurity — it’s now a requirement.
This makes tons of sense across the board. First and foremost, your client often can’t be expected to make logical decisions about technology (through no fault of their own). As mentioned, if you show them an itemized list, many SMB clients will try to pick things off of that list to save a few bucks. This has always been the struggle when it comes to selling managed services, and more and more MSPs are realizing that the solution is simply not to give them the option.
You can probably guess the other reason why this is a brilliant approach. Actual security. MSPs and their clients have become increasingly popular targets for cyber attacks. If your client gets breached, they’re going to look at you for answers (and maybe even toss a lawsuit your way). When the crap hits the fan, you can’t fall back on, “Well, I tried to offer you security but you didn’t want it.” Even if you’re right, it won’t save your business or your reputation.
Bundling is the answer, and it’s an easy one to stomach. You are an IT professional. You know what’s best for your clients. By compelling them to bend to your cyber recommendations by simply packaging them as part of your core offering, you’re not strong-arming them — you’re being a responsible IT provider who is looking out for everyone’s best interests.
Key #4: Keep your stack as lean and uniform as possible
So, how many products should be in your stack? Depends, right? Every MSP is different. The best high-level answer is probably going to be, “as few as possible to get the job done.” Although tools and products can be very shiny and attractive, simplicity is a major factor when it comes to scalability.
Above all else, you need to make sure you’re striving for consistency across your client base. It puts you at an advantage when you can run your proposals almost like a template system. A certain type of client will always get a certain solution stack that you’ve already built out and deployed across other, similar clients.
This makes it easier to sell, easier to maintain profitability, and easier to scale your business.
Again, the best way to maintain focus and discipline is to clearly identify what your ideal client looks like and what you’re trying to accomplish as a business.
Key #5: Seek out tools that integrate and play well with others
I recommend getting as many tools as possible from the fewest number of vendors. In addition to cutting down on screens to manage and context-switching, this also makes it easier for you to manage your accounts, handle your vendor relationships, and can often give you the benefit of bulk pricing discounts by giving more of your business to a select few providers.
Think twice about chasing down the “best of breed” solutions across the board. It’s actually far more important that your tools integrate well and speak to each other when necessary than it is for them to be wearing a gold medal. This is another reason why sticking to vendors who can provide a variety of solid solutions, tools, and integrations rather than a single solution is often the best way to go.
Your solution stack is the heart of your managed services business. The tips outlined above — along with our recent MSP Live Chat videos — can help you get the most out of your solutions and make you a more competitive and profitable MSP.
Looking for more “Getting Started” resources for MSPs?
See the “Managed Services 101” section of our Resources Center for helpful advice and tools like:
- Our free Managed Services Pricing Calculator
- Free Managed Services Agreement (MSA) Template
- And more