3 Reasons MSPs Should Focus on Recurring Revenue in 2019

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Thanks to the rapidly changing technology landscape and the continuously rising importance of data to all businesses, the role of managed service providers, or MSPs, continues to evolve in every single way. Today’s MSPs are reinventing their business models, customer relationships, operational efficiency, and partnering practices. Data’s skyrocketing importance to the small and medium sized businesses, or SMBs, that MSPs serve, brings more opportunity for profitability than ever before. So, why is that?

Author: Datto’s Eric Torres
Author: Eric Torres

Data is not just important to businesses today, it’s critical. This is why today’s leading MSPs have made total data protection the cornerstone of their evolving business model. In this piece, we’ll take a look at the growth of the monthly recurring revenue (MRR) model and the benefits of providing total data protection solutions in the age of total data dependency.

1. Data Protection is the MSP Cornerstone

Before an MSP can begin to pitch a monthly pricing model to customers, they need to pitch the value of data protection in the first place. MSPs say an inability to protect a customer’s data means they cannot fully service that customer, and it’s crucial that clients understand this. A rock-solid total data protection solution must be an integral part of your offering – even if it still takes extra work for certain customers to “get it.” Our MSP partners agree that while more businesses grasp data’s value than ever before, there still are holdouts. Every MSP tells a story about at least one client who refused a total data protection solution, had data loss and demanded, “Why didn’t you sell me harder?”

Rather than falling on your sword with disappointed customers, think about different ways to approach the conversation about data protection the first time around. Many MSPs have found success making the pitch personal. In other words, speak to your clients about losing personal data like family photos or videos, or relate protecting data to home and car insurance. Sometimes, it’s just a matter of framing data protection in a way that speaks to your client.

2. SMBs are Receptive to Recurring Revenue MSP Models

MSPs are pushing the edge of the envelope to develop monthly recurring revenue models, and customers are embracing them with little or no hesitation. Why? It’s because many SMBs are more attracted to this model as there isn’t a huge upfront capital buy-in. As more and more of today’s technology offerings are built to be “as-a-service” models, this conversation will only get easier to have with clients. It also makes for a fast-changing market.

3. Streamlined Vendor Partnerships Make it Easy

For today’s MSPs, implementing a monthly recurring revenue model is much easier with streamlined vendor partnerships in place. For that, and many other reasons, MSPs want fewer channel vendor relationships. They want transparency from their channel partners and they want simplicity from the structure of a vendor’s partner program and pricing model. What MSPs ask of their vendors is a clear reflection of their need for operational simplicity and clear-eyed confidence in selling and supporting their own customers.

To learn more about how MSPs can drive profit through monthly recurring revenue models in 2019, check out our eBook: Recurring Revenue Made MSPeasy. In this eBook, we provide tips on how to sell the MRR pricing model to customers/prospects, how to be more profitable, the best modern pricing models for MSPs and more.

Eric Torres is channel development manager at Datto Inc. Read more Datto blogs here.