Do you struggle with how to grow revenue or add value to your business? This can be a challenge for many MSPs, but it was one that was addressed at Navigate 2016’s highly-attended keynote by Paul Chisholm, retired CEO of mindSHIFT Technologies. In this first part, we’ll discuss how to maintain your existing revenue by becoming more attuned to your current clients' business needs, challenges and opportunities.
Your MSP business plan has to be disciplined, organized, well thought-out, and most importantly, it has to be realistic. It must fit naturally into your organization, so that as a whole you can understand it and live by it. What’s the best way to do so, you might ask? According to Paul, you have to go back to the fundamentals – the revenue fundamentals, that is.
First, you must defend, protect and grow your client base. Second, you have to add new clients to that base. Now, let’s take a deeper look into this first revenue building block.
Defending the Base
The key thing you have to remember is that this is a service business, which means that you have to always be "on" for your clients. Their demands and expectations are continually climbing, and they won’t accept “it can wait,” or “downtime is okay.” When clients outsource their IT needs to you, the standard becomes perfection. They’re paying you to deliver a service to them, and as their trusted MSP you can’t let them down.
But what if you do let them down? Most clients understand that there will be occasional issues in any business, but what they really care about is your reaction to an issue. Your reaction will determine if the outcome will be disastrous or successful. You need to keep thinking about continual improvement because as competitors get better, you have to get better too.
A fact about the environment you operate in is that threats are growing, and that means that disruptions will happen. But disruption in an IT business means impact – impact on revenue, impact on reputation and impact that can lead to ruin. In an always-on world, impact can be disastrous, and it’s your job to protect your clients from that disaster.
Protecting the Base
Here are some ways you can help protect your client base:
Document and analyze service metrics
As a business, you should track metrics at both a macro and micro level. This means evaluating your success as an organization and with each individual client. Note: this second set of metrics should be the foundation for your quarterly business reviews with clients. It’s also important to analyze these service metrics, recognize certain patterns and even set quarterly objectives to improve processes or eliminate certain faults to help move your business forward.
The culture of the organization has to be that you don't let your customers down. A commitment is not just scheduling an install date or answering a phone call. It’s how you respond to a client in general. You want them to know that they can always count on you and that you’re committed to them. So make the extra effort to call them back or get that proposal delivered on time, because a little extra attention goes a long way.
Understand market price trends and react proactively
If you wait to be pushed by a customer to change a price that may be outdated, it means trouble. It's a "pay me now" or "pay me later" type of scenario. Would you rather take a 1 percent change in pricing, or a 100 percent change because a client walked away? Unfortunately, the latter can happen if you don't adjust your pricing accordingly. That’s why it’s essential to be proactive so that you can avoid client churn. However, you don’t want to react to every price change – if you do, you’ll be nothing but a commodity supplier and you’ll drive your business into the ground. The key is to understand the differences in products and the differences in pricing, and then make the appropriate decisions with your clients in mind.
When you bundle your offerings, it has two key effects. First, it’s harder for competitors to figure out exactly what the price of the component is, which gives you added protection. Second, from a client's point of view, the more you bundle the harder the decision to leave becomes. Try to bundle as much as you can without making it so complex that your team can’t communicate what the offering is to the client.
Communicate and listen
You should be consistently communicating with your clients about your services and what you’re providing them. For example, we all know that remote monitoring and management (RMM) is a key service in our industry. But remote management can mean out of sight, and you don’t want to be out of mind to your clients. The key thing you have to do as a business is to make sure they understand what you’re doing from a level of service point of view, and what you have done to protect them.
Similarly, you need to listen to your clients. The more you listen, the more you can be proactive. If you’re waiting until something happens then you’re in reaction mode, and that causes your options to become limited and your client base inevitably suffers.
Growing the Base
Above we talked about protecting the client base that you have, but there’s another key revenue and profitability consideration – how you can grow the monthly recurring revenue for each client. We all want that hockey stick graph going up and to the right, and there are two key things you can do to get there.
This doesn’t happen by itself. It has to be a concentrated and continual effort within your organization. First, you have to look at your client base and determine what services they do and do not use. Then, you have to determine which of your offerings you think they can use and benefit from. It’s always easier to sell to an existing client than it is to obtain a brand new one. Why? Because they already know you, what you offer and how you deliver your services. Essentially, you’ve already built a reputation and trust with them, so they’re more willing to listen to you and consider your services.
Be a vCIO
As a trusted advisor and vCIO, your focus should be on helping your clients’ business grow. This gives you a great opportunity to set the technical stage for your company and lead an organization to a higher level of function.
Stay tuned for part 2 where we’ll talk about the second revenue fundamental: adding new clients to your base.