7 Ways to Profit from MSP Market Growth Amid Disruption

I spend my life on the road, talking to the people who run managed service providers. They say they've never experienced this much disruption in so many places all at once.

Nevertheless, today's path to profit is the same as it ever was: Buyers pick partners that offer the best chance to eliminate problems. You want to become the most helpful guide on your buyers' journey to discovery.

7 Steps to Success

Here are seven things MSP operators can do right now to transform themselves for success.

1. Embrace changes from which you'll profit. Exploit change to your advantage. The largest marketplace challenge is the evolution from an easily road-mapped buyers' journey to a challengingly random buyers' journey of discovery.

It used to be: awareness, evaluation, considering, purchasing, boom! Now, managed services buyers shop for MSPs the way they shop for smartphones or vehicles. We can't create demand anymore. We've got to sense demand, capture it, serve it differently.

Gartner says only 17% of a buyer's research time is devoted to vendors. Buyers spend the remaining 83% doing other forms of research. So MSPs must prove to buyers that they are their "best guide" in other ways.

2. Burnish your brand — decide who you are, what you do, what you stand for. One sure way to stand out to buyers, your employees and to the talent you'd like to recruit is to develop a clear, unmistakable brand. Ask yourself:

A brand vision makes all sorts of things fall into place: Here's what I'm going to sell, here are the customers or the industries I want to serve, here are the people I need to make it all happen.

A strong brand vision creates an immensely valuable community that establishes your company as a trusted guide for buyers seeking direction and creates better relationships with customers and buyers.

3. Create the ideal customer profile (ICP). Defining the ideal customer enables MSPs to tailor their services and market strategies to improve business performance.

Organize your customer base to offer value-added services for greater profit. For example, an MSP's base may be law firms, accounting firms and school districts that usually standardize Microsoft technology. Generate an attractive all-in-one MSFT licensing schema for customers and develop value-added services alongside the Microsoft solutions.

A focused customer base builds — here's that word again — a community that enables reference selling and cross-upselling and establishes the MSP as the trusted guide to buyers in their vertical niches.

4. Build a modern GTM playbook. Canalys analyst Jay McBain has ruled the GTM roost for the last few years with his "28 moments" of the sequential customer journey. But today the "customer journey" has evolved to the buyers' journey of discovery, and McBain's sequential moments happen randomly.

The traditional step-by-step funnel has been obliterated. MSPs must position "gift of knowledge" content anywhere and everywhere buyers go, because you'll never know when they'll show up.

Pro tip: Put a big, pulsing "BUY!" button everywhere so they can hit it wherever and whenever.

5. Continuously reframe your partnership ecosystem. MSP value differentiation is in the partner/services mix. Partner Theory 101 says choose success-based partners who provide easy-to-sell services that solve customers' problems and then sell them.

In practice, MSPs must continuously re-evaluate their partnership ecosystem, selecting partners who are disrupting the market with powerful, problem-solving technology that's easy for customers to use and easy for you to sell. MSPs should slipstream market-leading partners and rideshare their momentum to slingshot ahead.

This doesn't mean MSPs should always partner with the biggest names or the loudest brands. Stacking up costly "name" partners might make selling easier, but it makes profiting harder. The ideal partner ecosystem best serves the needs and preferences of your ideal customer profile (ICP) customer base — even if these partners aren't ones with the largest marketing budgets — and is consistent with your brand.

6. Clarify revenue generation and flow. Many traditional value-added resellers (VARs) haven't developed the right sales model to deliver recurring revenue. MSPs should refer to No. 5 — the partner ecosystem. Choose partners that enable your customers to push the "BUY" button wherever they are in their journey of discovery.

Continuous delivery of value ensures recurring revenue. Build a partner ecosystem that cocoons customers 24/7 and enables constant education, co-selling, upselling and other strategies to induce customers to renew every 30 days, forever.

7. Supercharge revenue with managed security upgrades. Increasing concern about cybersecurity is a top reason (registration required) clients look for an MSP, and managed security is often cited as MSPs' No. 1 new-business driver. Surveys show more than 90 percent of MSPs now offer managed security services.

Security offerings give MSPs a competitive advantage — at times when competition is cited as the top business challenge — providing new revenue streams, cross-selling opportunities and the scalability to transform themselves into all-inclusive providers of IT services.

Choosing the best security partner is a bedrock necessity. Customers must feel comfortable knowing their endpoints, networks, servers and cloud environments are protected.

The right security partner can reduce costs while boosting MSP profitability. Good partners will enable MSPs to sell security as a golden prefix — secure data center, secure IT environment, secure contact center, secure voice, secure consulting.

Advice Tuned to MSP Operators

The overwhelming majority of MSPs are small businesses. The average MSP, globally, serves a client base of 122 customers, 60% of whom employ fewer than 150 people, according to Mordor Intelligence (registration required). Only 5% of MSPs serve clients with more than 500 employees.

The advice here is offered to help the hard-working people in the MSP industry adapt to fast-changing times, serve their customers better and make more money.