MSPs Mull Agency, White-Label Models for Product Expansion
Many MSPs want to deepen their line cards into technologies such as connectivity, CCaaS and cybersecurity, but they must choose their delivery model and branding strategy for new vendors.
![White-label model White-label model](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt6a8401aa9ed9f197/65e8f02d4487b3040a012108/Operating_Model.jpg?width=700&auto=webp&quality=80&disable=upscale)
JJAVA DESIGNS/SHUTTERSTOCK
The entire debate carries a single premise: Many MSPs want to provide more technologies to their customers to increase wallet share.
On one hand, the need to increase profit motivates MSPs to cross-sell. But looming larger is the fear of losing customers to someone who can offer more lines of technology.
Many MSPs in Viirtue's ecosystem once called themselves telcos (ITSPs) that focused only on voice. That changed when MSPs got into VoIP and UCaaS and started encroaching on the ITSPs' turf. The white-label voice providers needed to do more.
“The more slices of that pizza or pie that you that you can acquire from them, it entrenches you with them," Networking Solutions president Bill McClain told Channel Futures. "We don't want churn; we don't want people leaving. If I now provide four solutions for this customer, that means when they leave me, they have to find four solutions. And it makes it a little more difficult for the client to leave. The ultimate goal is to is to reduce churn to zero, even if you have slow growth, because over time growth is growth."
McClain said it's much less expensive to retain a customer than to add one, and many in the channel echo his observation.
For Zac King, vice president at GreenBean IT, adding connectivity to the MSP's portfolio "came down to trust."
“Our clients already trusted us with the rest of their technology; why wouldn’t they trust us with their connectivity? The connectivity salesperson is gone after the sale is made, and their goals don’t truly align with the client’s needs, because they are in it for a short-term gain," King told Channel Futures. "We exist to establish long-term relationships, which means that every consultation and solution we advise to our clients has the potential either to continue building trust with them, or losing trust if it’s not the right solution. Therefore, our goals and the client’s needs are aligned perfectly, and we have skin in the game along with them, which enhances our credibility.”
GreenBean has turned to TSDs for contracts with internet service providers to meet their clients' connectivity needs.
By calling Viirtue a next generation of TSD, Rosenrauch said he's referring to younger business owners who are starting MSPs and looking for "frictionless" experiences with their distributors and vendors. For Rosenrauch and Viirtue, partners need automation to help them needed bypass multiple touch points at the distributor and vendor level.
“If you're an agent and your customer wants Zoom, it takes you three to four weeks to get a quote for Zoom to your customer, but your same customer can themselves log onto Zoom's website and have themselves set up in Zoom in maybe a day or two. What is your customer going to choose?" he told Channel Futures. "That's where we see the value in the frictionless piece, the transactional layer of provisioning directly to the supplier, so services can be activated and deactivated at the click of a button."
It's worth noting that Zoom falls into the categories of UCaaS and CCaaS. Technology advisors and TSDs have noted that connectivity – especially multisite connectivity – invariably involves human touch points. And TSDs have partnered with serviceability locators such as CableFinder and Connectbase to leverage automation.
Alaine Fulton, owner of agency-turned-MSP Safe Haven Solutions, noted that more TSDs have been moving toward the idea of marketplaces.
“Not only does it save time and overhead of resources to discover, quote and sell transactional and commoditized products and services, it also addresses the differences of the next generation of buyers," Fulton told Channel Futures. "Millennials will spend time online doing research, then determine different channels for purchasing. Gen Z'ers have their mobile devices attached to their hands given the simplicity of ordering products online. They expect fast results."
That doesn't necessarily mean self-research and self-service cure all, Fulton said.
"The landscape of technology has also gotten increasingly more challenging to stay up to date on trends, products, increased cyber threats, AI and the like. Products like CCaaS and cybersecurity are never a one-size-fits-all and a seasoned technology advisor and buyer truly understands that. It will still be critical for technology advisors, TSDs and MSPs to educate customers, provide additional technical resources and maintain a solid portfolio of best-of-breed suppliers," Fulton said.
"I don’t see this as an either/or scenario, as the value in human interaction and trust that buyers will always crave is unparalleled, but I also see a value of a complementary quote-to-cash tool to at least attract and start conversations with those younger buyers," she said.
Value-added resellers have often shied away from the agent model because they want to bill the technology in their own name. The thinking goes that the partner could lose influence with the customer if the vendor handles the paper.
Value-added resellers who are also MSPs take that concern to another level. Leveraging the agent model would mean handing off not just the billing of the tech, but the actual management. Do you want to put the customer experience seemingly outside of your control? And while agents have shown the temperament required to deal with the often erratic behavior of vendor sales reps at renewal time, many MSPs don't want to worry about channel conflict.
But on the other hand, MSPs need to consider how much in-house talent they possess. If they want to enter cybersecurity, do they possess their own people who can credibly consult on, implement and manage the technology?
Bridgepointe Technologies chief operating officer Michael Sterl said some MSPs use the agent/TSD model to enter a new market and eventually build up enough expertise to resell, deploy and potentially the solution themselves.
Jim Glackin, executive vice president of channel sales at managed network services provider Nitel, said his company is focused on "delivering a better partner experience and embracing the VAR's/MSP’s selling motion."
"Too many vendors try to force their sales methods and processes on the MSP/VAR, and it creates friction. The TSDs play an important role in helping us deliver the experience that the MSP/VAR wants and needs," Glackin told Channel Futures. "Some MSPs/VARs are looking to bundle our solutions with theirs and provide one bill and one seamless experience to their customer, while others do not want to do the billing and tier-one customer support. They prefer to provide solutions in an agent model. We collaborate with our TSDs to develop a model that works best for either scenario."
TSD leaders spoke about choice and flexibility as well in comments to Channel Futures.
Telarus chief revenue officer Dan Foster said many of his company's technology advisor partners maintain "multiple paths to market." Plenty of them are balancing a white-label resale model with an agent motion, Foster said.
![Telarus' Dan Foster Telarus' Dan Foster](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt5398a8e178975342/652424432014a2b7dd07de65/Foster-Dan_Ericsson-2021.jpg?width=700&auto=webp&quality=80&disable=upscale)
Telarus' Dan Foster
"The latter [agent model] provides an opportunity to present a broader product portfolio to their end users based on our significant [portfolio] and the ever-expanding portfolio of suppliers in the security space. We act as a line-card extension for the partners as they build out their offerings, often complementing their in-house white-labeled solutions," Foster said. "In the cybersecurity space in particular the landscape is shifting so quickly that it's best to rely on our broader ecosystem and multiple routes to market. Telarus is supportive of growing our advisors' businesses regardless of their go-to-market preferences.”
For Michael Sterl, chief operations officer at Bridgepointe Technologies, companies like Bridgepointe and Viirtue can carry on mutually beneficial relationships.
"Viirtue's approach to the market complements our partner ecosystem and fills a gap for many of their partners. By offering agency-style support and professional services expertise, we can provide complementary strengths and ensure success for our shared partners," Sterl said.
Rosenrauch said he doesn't view Viirtue as competing with TSDs. He said Viirtue is still figuring out the nature of their relationship.
"What we're trying to work out with TSDs is an agreement where we say to them, 'Hey, we're going get some partners that don't love our self-service and want more of a concierge-level service with touch points, and we'll send that stuff to you. And vice versa – you send the self-service stuff to us and we can figure out a way to make it work for us,'” Rosenrauch said.
Referral partnerships between agents/TAs and MSPs/VARs are very common in the industry. Verizon channel leader Mark Tina said he's working to facilitate more of them. And at the distributor level, many leaders at the broadline distributors are on friendly terms with TSD leaders. Sandler Partners has teamed up with the ASCII MSP group and Pax8.
Will the channel see more visible alliances between agent and MSP/VAR groups in the future?
"Formalizing partnerships would be beneficial, but the key is fostering an open environment for collaboration," Sterl said. "Our ecosystem often sees multiple partners collaborating on single solutions for customers, offering broader expertise and reaching wider customer segments. By leveraging complementary strengths, we can all drive greater revenue together."
Rosenrauch said he doesn't view Viirtue as competing with TSDs. He said Viirtue is still figuring out the nature of their relationship.
"What we're trying to work out with TSDs is an agreement where we say to them, 'Hey, we're going get some partners that don't love our self-service and want more of a concierge-level service with touch points, and we'll send that stuff to you. And vice versa – you send the self-service stuff to us and we can figure out a way to make it work for us,'” Rosenrauch said.
Referral partnerships between agents/TAs and MSPs/VARs are very common in the industry. Verizon channel leader Mark Tina said he's working to facilitate more of them. And at the distributor level, many leaders at the broadline distributors are on friendly terms with TSD leaders. Sandler Partners has teamed up with the ASCII MSP group and Pax8.
Will the channel see more visible alliances between agent and MSP/VAR groups in the future?
"Formalizing partnerships would be beneficial, but the key is fostering an open environment for collaboration," Sterl said. "Our ecosystem often sees multiple partners collaborating on single solutions for customers, offering broader expertise and reaching wider customer segments. By leveraging complementary strengths, we can all drive greater revenue together."
As managed IT service providers (MSPs) dive into new technologies that their customers demand from them, the question of vendor and distributor alignment looms large.
Executives at Viirtue, the UCaaS provider-turned quote-to-cash platform provider, say they've cracked the code to helping suppliers sell their wares through MSPs and internet telephony services providers (ITSPs) in a white-label model.
Viirtue CEO Dan Rosenrauch told Channel Futures that many of the partners in Viirtue's have evolved from only selling and serving white-label voice to delivering recurring MSP services.
Viirtue functions as both a quote-to-cash marketplace to connect vendors to resellers and a wholesaler that uses its sales volume to get better rates for resellers. Its line card of suppliers has expanded to include contact center as a service (CCaaS), UCaaS-oriented AI and cybersecurity. It may also include providers in the connectivity space, Rosenrauch said.
An Anti-TSD?
The mention of connectivity draws questions about how Viirtue's platform relates to the technology services distributor (TSD) community. TSDs, formerly known as master agents, connect partners to hundreds of as-a-service vendors. While most of Viirtue's vendors actually sell their offerings to partners, who then resell them under their own brand, solutions in the TSD portfolio keep their vendor name and are managed and billed by the vendor. This is also known as the agent or broker model partner.
![Rosenrauch-Daniel.jpg Rosenrauch-Daniel.jpg](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt5f24dcd500542eac/6525cce8911d6e1205e4cfc4/Rosenrauch-Daniel.jpg?width=700&auto=webp&quality=80&disable=upscale)
Viirtue's Dan Rosenrauch
Viirtue in its capacity as a UCaaS provider has been a supplier in TSD portfolios and sold through the agent model. But Rosenrauch said Viirtue intends to create the "next generation of TSD," which will cater better to MSPs that suppliers want to reach.
Courting MSPs
Vendors, distributors and marketplaces across the tech landscape have been competing to earn traction with MSPs and their sticky customers. The marketplace from cloud distributor Pax8 caught the attention of the channel last year, but plenty of other players have sought to make their platforms more business-friendly. Broadline distributor Ingram Micro hired a former MSP owner to build new services, and technology services brokerage Telarus is recruiting MSPs to sell connectivity, UCaaS, CCaaS and cybersecurity in an agent model.
Will we see MSPs choosing a single distributor or marketplace to house all of is vendors and technology solutions? And will they settle on one model – whether white-label, agent or something else – for selling all types of technology?
Channel Futures spoke to Rosenrauch, members of the TSD community and partners that sell in both agent and MSP models.
Read their commentary in the six images above.
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