Groundhog Day is this Sunday. Hopefully you’ve seen the classic movie “Groundhog Day”, starring Bill Murray (if you haven’t, make sure you watch it over the weekend). In honor of Groundhog Day this weekend, we thought we’d reference the famous movie and focus on ways to break out of seemingly never ending cycles. As technology changes, so too must the businesses of Managed Services Providers (MSPs). Yet, many MSPs are stuck using outdated habits, which prohibit them from adding new clients and growing their business.
Don’t fall into the same routine! Here are 5 common mistakes many MSPs are still stuck using:
This is definitely a routine that is worth breaking (pun intended). Rather than being reactive to problems and needing to fix them when they arise, MSPs can now become proactive and prevent issue before they happen. By utilizing tools like Remote Monitoring and Management (RMM) software, MSPs can manage more devices and benefit from receiving advanced notifications of potential problems. By getting out of the reactive model, MSP’s have the opportunity to provide additional services to their customer base and more easily grow their revenues.
Being a ‘break-fix shop’ is seen as an outdated business model. Companies don’t just want someone there to fix their problems, they want a trusted technology consultant who can prevent problems. Even if you do provide top quality services, simply reacting to client issues will make you look like a low-quality service provider. Additionally, break-fix is expensive to maintain because you can’t predict when something will go wrong. Labor and time can be hard to estimate, and in most cases, break-fix can be a drain on the more profitable parts of your business. In short, don’t be afraid to fire current clients if they are keeping you from becoming proactive.
Fix your break-fix mentality.
Selling new tech with no expertise
MSPs are often guilty of selling ahead of their capabilities. It’s a common trap that can be triggered by the desire to look cutting-edge by selling the latest and greatest technology, yet they don’t fully understand how to best use them. A good example of this is a MSP selling Cloud services simply because everyone is talking about the Cloud.
If you don’t understand it, don’t try to sell it!
Interestingly enough, most clients are much less interested in the newest technologies as they are in solid advice and strong consulting. They’d prefer to see results from your work rather than simply adopt new technologies that aren’t yet proven. Many companies are interested in the next generation, but they also realize that they are better served mastering the present rather dreaming of the future. Stay within your strengths and your sweet spots. You may be pleasantly surprised at just how interested your customers are in solid advice versus tales of tomorrow.
In any form of communication, being unclear and not setting the proper expectations oftentimes leads to disaster. One of the biggest problems for MSPs is that SLA’s (service level agreements) are too loosely defined and don’t set reasonable expectations for the client or the MSP. The result? Scope creep, disappointed customers and unprofitable engagements.
SLAs define the exact procedures and response times the MSP and client should expect at different issue priority levels. If these instructions are ambiguous, there will most likely be disagreements between MSP and client on who should be doing what and expected time to resolution. MSPs should incorporate structured limits to the amount of support they provide on a weekly or monthly basis, or make sure they are compensated accordingly if they go over this allotment. Otherwise, MSPs are at risk of providing additional hours of service, without earning additional revenue.
This is why crafting a strong SLA is so crucial.
Without clear boundaries (and sticking to those boundaries), service providers will be engaged in the endless and ultimately profit-draining game of “I don’t want to say no to the customer for fear of upsetting them.” This routine is almost always guaranteed to lose you money, and should be avoided at all costs.
Unsure of how to write solid SLA’s? Here are some useful tips.
Outdated Comp structure
This is something that many providers don’t realize is even an issue. It’s important to pay your employees in a format that is aligned with your business goals. MSPs typically promote the delivery of fast and efficient services, yet they compensate their staff on an hourly basis. This is an issue because technicians are incentivized to take longer and potentially shoot for overtime hours, rather than repair the systems as fast as possible. A better compensation model would be to award technicians on metrics like “time to recovery” or “average tickets resolved per hour.” Ideally employees should be incentivized in a way that promotes behaviors aligned with your business vision and mission.
This also applies to the sales team. If you are trying to generate monthly recurring revenue engagements, make sure that your sales team has the right motivation (in other words they get paid the most) to sell those services that generate recurring monthly payments for longer-term engagements.
If you haven’t changed your compensation structure in a while, it’s probably worth re-visiting. Don’t get stuck paying your employees using outdated compensation strategies.
Becoming Too Remote
As the adoption of RMM software continues to grow, MSPs risk becoming too remote. Monitoring systems remotely has many benefits, particularly that you can manage more devices through one portal, enabling you to onboard more clients, without more technicians. However, clients like to see the work that you are doing for them. This can be very hard if you do all of your work remotely. Do whatever it might take (quarterly business reviews, scheduled or unplanned phone calls to ‘check in’ etc.) to have conversations with the customer and work to understand their needs.
Once you sign up a new client, it’s not as simple as installing their device agents and letting them be. You have to re-visit your clients, speak with them and make sure that they understand the value you’re delivering to them. This will help you build trust among your clients and provide you with valuable feedback on your services. You’d be surprised with how much you can learn and funnel back into your own business.
Don’t get stuck being too remote; reach out to your current customers and talk to them about their business needs.
We all make mistakes, both as individuals and as business owners. But its important to recognize these mistakes and break out of them. Take the time to truly examine your current routines and be honest. If there is something that looks too much like it is on cruise control, then there is a very real possibility that it could be harming your business. Getting too comfortable in your routines can drive a business to ruin much more quickly than many of us realize. As we wait to find out if the Groundhog sees his shadow, take a look back on your business.
Can you afford another 6 weeks of bad routines?
What bad habits have you had to break as a MSP? Will we have 6 more weeks of Winter? Let us know your predictions in the comments.
By Gretchen Hoffman
By Meaghan Moraes