Some of today’s top MSPs got their start in the industry as VARs (Value Added Resellers), driving revenue one break-fix project at a time, with more peaks and valleys in their cash flow resembling the Rocky Mountains. Thanks to MRR, the staple for managed services businesses, their financial condition is much improved.
Steady cash flow fuels expansion and keeps borrowing to a minimum. The MSP business model gives providers the freedom to experiment and invest in new services and better weather the bad times (2020 is a great example). MRR is the key to a successful IT services practice in that it provides you the flexibility to adjust to changing client requirements and demands.
Virtually every business has strategic business plans. While MSPs may wish to invest in their future, many, unfortunately, run into problems juggling everyday expenses such as payroll, utilities, and rent, leaving little cash for business-enhancement projects. Ambition may require loans or additional lines of credit.
MSPs who continuously increase MRR each month will be better able to support unplanned expenses without using other people’s money. That not only creates a financial advantage for providers but frees their businesses from unneeded outside influence.
Upsell and Build Relationships
Enterprising IT professionals have plenty of new options available through their channel networks. The opportunities are practically endless, whether they choose to go the traditional MSP route and support the SMB or decide to scale larger to co-manage IT systems for enterprise organizations.
Regardless of the target audience, wallet share is essential. Keep your MSP’s expenses low while generating extra income by offering additional services to existing as well as new clients. It is usually much easier and less costly to gain traction with current customers.
Marketing and sales activities take time and money. MSPs often make the mistake of incentivizing new contracts and overlook the opportunities associated with upselling existing clients. Why not take the path of least resistance (and cost)? You already have your customers’ attention, and your team likely understands their business and IT needs better than anyone.
Successful IT professionals continue building relationships with their clients. With the right approach, MSPs can become insiders and gain additional insight into their customers’ dreams and objectives. When you provide useful advice and offer services that help tose clients realize their own goals, it creates a real differentiator for your business.
Not Just Tech
Pitching solutions can be challenging, and even more so when you put too much focus on technology. Most business owners are not IT proficient and will likely have a difficult time understanding what the solution speak means for their businesses.
Clients could care less about servers, networks, software, websites, and a myriad of tech options. What they want to know is how these investments can boost their business capabilities, improve efficiency, or eliminate headaches. Tell your clients how these solutions will impact their operations, increase productivity, reduce costs, or decrease downtime. MSPs who can speak that language are more likely to succeed.
IT expertise is the other thing your team can offer the SMB. Those organizations need advice on integrations and how to navigate new solutions and insight on future tech investments. The consulting approach adds value to your business but lets clients see your MSP as an integral part of their operations.
Satisfaction is Key
With a recurring revenue model, managed services businesses must focus more on customer satisfaction to influence retention and upsell opportunities. Without a substantial focus on user needs and support, MSPs will quickly chase away new clients.
What solutions would be beneficial to your customers in the coming years? How can you best support their needs today and in the future? The list of options is long, with cybersecurity and encryption at the top for many of today’s business owners.
When you can answer those questions and satisfy your clients’ needs, you become an integral part of their business success. That’s one of the best ways for MSPs to increase MRR, cash flow, and customer satisfaction and retention.