Posted 21 August, 2015 • by Mary McCoy
A rather large "pond" separates United Kingdom MSPs from those in the United States. Despite this distance, the superstars from each region closely resemble one another. They understand their respective markets and know how to take full advantage of the managed IT services business model to achieve longterm growth.
While the verticals they pursue may differ or the challenges they meet may be unique to their locations, the core characteristics of successful MSPs remain the same in both the U.K. and the U.S.
This seems like a no-brainer, but in both markets there exists the misconception that if you touch information technology, you're an MSP. In both the United States and the United Kingdom, many break-fix providers and system integrators believe they're offering managed IT, but they don't understand what makes the business model so unique.
MSPs who excel do so because they understand that business longevity derives from having regular and predictable cash flow. As an MSP, you can count on a steady stream of monthly recurring revenue (MRR) for ongoing service rather than billing clients for the time it takes to complete unpredictable, "fire alarm" issues.
In addition to knowing that their balance sheets are fully managed, high-caliber MSPs understand that clients want the peace of mind that all of their IT-related concerns are fully managed as well. Simplicity is key. You have to make it easier for the client to work for you. Successful MSPs in both the U.S. and U.K. leverage intelligent remote monitoring and management (RMM) technology to proactively manage their clients' endpoints. Their clients, in turn, are not burdened with the expectation that it's only a matter of time before their system goes offline. They know their data protection is continuous, and they have you to thank!
Skills don't develop overnight. It takes time to hone your craft, and running a managed IT services operation is no exception. How do U.S. MSPs compare to their U.K. counterparts in this regard? According to CompTIA's U.K. State of the Channel report, [c]hannel firms in the U.K. tend to be on the older side in terms of years in business." In fact, almost "two thirds of [the 400] companies in CompTIA’s study report being in business for ten years or more, compared with 16% that have been in the market for four years or less."
For MSPs that have been around the block for a few years, they've been successful because they've been able to refine their operations to be process-driven. They have established workflows and have fine-tuned their Service Level Agreements (SLAs) to maximize service delivery and client satisfaction, creating a stickier customer base.
After already establishing a stable MRR with RMM, the more successful MSPs in the U.S. and U.K. expand into offering other services to cross-sell existing clients. While it differs for each MSP, it's bundling these additional services that tends to take U.K. and U.S. MSPs to the next level. Popular cross-sells for both U.S. and U.K. MSPs include backup and disaster recovery (BDR) - offered by 72% of U.S. MSPs according to CompTIA's 4th Annual Trends in Managed Services Study - email security, and voiceover IP (VOIP) services. The top MSPs are immensely profitable, and a big part of their success comes from understanding the need for multiple revenue streams per client. Additionally, they capitalize on upsell opportunities like adding RMM agents on additional end points. In both the U.S. and U.K. markets, the most successful MSPs manage the entirety of a client's network, including firewalls, routers, and switchers. They've moved beyond solely serving servers and desktops.
Note: Clients don't just volunteer when they're ready to spend more money with you. If you want to double your revenue year-over-year, you have to be dialed in to your clients' needs. The top MSPs are more than just service providers. They're true technology partners. They perform network assessments to assess the health of users' IT infrastructure and know which questions to ask to determine whether there is an upsell or cross-sell opportunity. What if you think they need additional services, but they aren't initially sold? Stay on top of them! MSPs in the U.S. and U.K. act as virtual CIOs (vCIOs) and perform Quarterly Business Reviews (QBRs) to reaffirm the value they bring clients as IT consultants. In fact, consulting services for IT was the number one business activity that CompTIA's UK respondents claimed generated the most revenue for them last year. Meetings like QBRs are a great channel to re-open upsell and cross-sell conversations.
The verticals within the U.S. and U.K. managed IT services markets are largely the same with one notable distinction. Education, government, and finance are three universally lucrative funnels in need of the data regulation MSPs can provide. As we discuss in our MSPedia article, HIPAA and the Healthcare Vertical Opportunity, the healthcare industry offers enormous opportunity to grow for MSPs in the United States due to HIPAA compliance standards for covered entities and business associates.
By 2020, IDC Health Insights projects that 42% of all healthcare data created in the Digital Universe will be unprotected but needs to be protected, as use of data and analytics continues to proliferate and more stakeholders are involved in delivery of care. U.K. residents are not subject to this data privacy law. Thus, healthcare IT isn't one of the main verticals that U.K. MSPs target. Nevertheless, managed IT services providers in both territories know where their services are in the greatest demand and craft a plan for how to strategically penetrate these markets and secure accounts.
In the U.S., the main challenge MSPs are faced with is hiring and retaining talent. Unfortunately, high employee turnover results when technicians leave. The main reasons for departure are that the employee wishes to increase their knowledge and certifications, feels overworked and/or undervalued, or thinks they can start their own MSP.
This disruption to the staff also disrupts the workflows that these MSPs have established and those who aren't leveraging a 24x7 network operations center (NOC) or help desk flounder to meet customer demands efficiently and scalably. Then, there's the issue of acquiring new talent when faced with a non-existant budget for new hires. It's difficult to grow your business and take on new clients when your existing personnel can barely manage the volume of demands they're currently receiving.
In the U.K., the problem is a matter of geography. The territory is relatively small, and U.K. MSPs would like to branch out into more of Europe. Between France, Germany, Spain, Italy, etc., however, the region surrounding these practices has business-stalling language fragmentation. Both U.S. and U.K. MSPs are better able to support clients whose first language is English, but the pool of potential candidates is much smaller in the U.K.
When asked how they'd rate their sales and marketing effectiveness, 37% of smaller UK firms that participated in CompTIA's study reported "hit or miss" and "ineffective." Even some of the most successful MSPs continue to need sales and marketing guidance. They possess the technical skillset needed to do their job, but are still learning how to run a business. It may be that they don't know how to recruit a sales team that will take their operation to the next level. Many of these MSPs fail to align their sales and marketing efforts. They shy away from marketing because they don't think they have the time or resources to develop a program with real ROI. As any MSP that works with Navigate 2015 keynote Robin Robins will tell you, investing in a scalable, sustainable marketing strategy pays off for years to come.
You have to do it right though! You can't expect the leads to flood in and close on their own. You have to stay on top of them with relevant, non-salesy content. A popular channel that successful MSPs in both the US and UK utilize is email marketing. They send educational newsletters and/or webinar invites to stay top-of-mind with prospective clients. When a lead is captured, the sales team is automatically notified so that a sales person can follow up immediately and move these leads down the funnel.
To make sure sales and marketing are supporting one another, you have to have consistent messaging, an established workflow, and continual dialogue. How is Sales notified when a contact fills out a form? You should have this process nailed down. How does Marketing know which content will resonate with its audience? Sales should provide feedback from their conversations. Although successful U.K. and U.S. MSPs have made tremendous strides in the sales and marketing arenas, it continues to be a learning curve for many.
That's why we wrote the following eBook!
Meet Mary! Mary McCoy is a Demand Generation Programs Manager at Continuum, where she's worked for over two years. Mary primarily manages the MSP Blog and has consulted with hundreds of partners, lending website, blog and social media support. Before that, she graduated from the University of Virginia (Wahoowa!) with a BA in Economics and served as digital marketing intern for Citi Performing Arts Center (Citi Center), spearheading the nonprofit’s #GivingTuesday social media campaign. Like her school’s founder, Thomas Jefferson, Mary believes learning never ends. She considers herself a passionate, lifelong student of content creation and inbound marketing.