Growing Microsoft 365 Backup Margins with an MSA Bundle Strategy
There are a couple different ways Managed Service Providers (MSPs) can sell Microsoft 365 backup. First, as a separate line item ‘a la carte’ style, second, as part of your data protection stack, or third, bundled into a managed services agreement (MSA). While all of these methods are better than not selling Microsoft 365 backup, bundling data protection into your MSA does more than just yield the highest margins. See why MSPs are prioritizing business continuity and disaster recovery (BCDR) as part of a layered security approach to keep businesses running.
Why backup Microsoft 365 in the first place?
The short answer is because nobody else is. According to the Microsoft Service Agreement, “Microsoft is not liable for any disruption or loss you may suffer,” and they “recommend that you regularly backup Your Content and Data that you store on the Services or store using Third-Party Apps and Services.” Microsoft’s limited 30-day data retention period means that without backup and recovery, the data could be lost forever. Even if it is recoverable, downtime can be significant – anywhere from days to weeks.
Additionally, as you know, ransomware continues to rise in frequency, sophistication, cost, and consequences. And as much as businesses invest in security training, faux attack drills, and policy implementation and oversight, human error remains the leading cause of data loss. Add all of these vulnerabilities up and you’ve got a recipe for disaster. Luckily, it’s these real-world situations that make it easy, valuable, and necessary for you to bundle Microsoft 365 backup into each license.
Add value, increase profits, protect clients – all in one bundle.
Microsoft 365 is incredibly popular, but MSPs struggle to make it profitable. You can’t not offer it because it’s essential to your clients, especially small-to-medium sized businesses (SMBs). With a profit margin around just 15% it can be hard to see the business value, but it’s there. Matt Dugan, Senior Group Product Manager at Axcient says, “Most MSPs actually regard selling Microsoft 365 as a lost lead. They’re selling the license because everyone uses it, everybody needs it, but it gets them the relationship and that’s the important thing. With that relationship MSPs can start slotting in their managed services and provide high value solutions that drive high margin recurring revenue.”
That’s why bundling your Microsoft 365 licenses with backup and disaster recovery is essential for business growth. Conceptually, you can add all sorts of services on top – monitoring and holistic coverage, support, third-party spam filtering, deployments, migration from on-prem to the cloud, and so on, but security is the priority and provides the most value for both clients and your MSP. Matt explains, “None of the stuff that you’re providing to your clients matters if there are security vulnerabilities because those will inevitably be exploited at some point and you will have zero productivity. Your goal as an MSP it to provide software and services to keep your clients productive.”
Overcome bundle fears by educating clients.
MSPs can apprehensive to require backup with Microsoft 365 because they think it could turn business away. With tight budgets, some clients may not see the value of backing up, thinking ‘it won’t happen to me,’ and focus on cost cutting. The problem with that is you know better. Matt says, “Allowing a non-subject matter expert to make decisions that require subject matter expertise is where you get into non-compliance states and big vulnerabilities.” Yes, including backup in your bundle can increase costs, but more importantly it protects your client and your own MSP.
Data breach regulations are expanding across the country, shifting the responsibility for data loss from businesses, to the business responsible for protecting data – that means MSPs. When you allow clients to opt-out of backup and disaster recovery, you’re risking your own business. Now, when a data breach occurs, it’s your name that goes on these public ‘walls of shame.’ The repercussions of losing your competitive advantage in the channel can be fatal. So while the risk of requiring Microsoft 365 backup may turn some clients off, it’s your job to help them understand exactly why it’s so critical to their business.
Earn up to 38% gross margins with comprehensive BCDR
Axcient x360Cloud for Microsoft 365 and Google Workspace backup is delivering 35-38% gross margins for our MSP partners when they bundle services in their MSA. Effortlessly backup and restore Exchange Online, OneDrive, SharePoint, and Teams – including all files, folders, and document libraries – plus Google Workspace and shared drive backup. With unlimited storage and retention and SmartSearch, you can search more than 100 million objects in less than 5 seconds, and restore data in a single click.
Trial x360Cloud for Free to see the value you can bring to your Microsoft 365 clients.