MSP TITANS CONT ...
"... The Real Money And Opportunities Are All With High- Value Managed Clients Who Are Not Looking For The Cheapest MSP But For An MSP They Can Trust To Keep Them Secure And That Offers Compliance As A Service ."
However , it ’ s critical that you follow the advice outlined in “ Secret # 1 ” in order to maximize EBITDA , which not only gives you fuel to grow but also makes your valuation much , much higher .
SECRET # 5 : They Are Focused On Attracting High-Quality MSP Clients
All Titans agreed on this point : “ Regular ” MSP services have become a commodity , and the real money and opportunities are all with high-value managed clients who are not looking for the cheapest MSP but for an MSP they can trust to keep them secure and that offers compliance as a service .
Further , CACs ( customer acquisition costs ) for MSPs are rising rapidly . Therefore , you need to make sure the clients you aim your marketing “ bullets ” at make the juice worth the squeeze .
For example , best-in-class MSPs are now spending $ 29,000 on average , all in ( sales and marketing combined ), to acquire a client . 2 The smaller MSPs in TMT ’ s peer groups are routinely spending over $ 4,000 in marketing costs alone to get a new logo , even without paying a commission to a sales rep . Therefore , the client acquired must represent sufficient long-term profits in order for the MSP to be able to recoup their costs in acquiring them . A client who spends only $ 1,000 a month with you , constantly complains , refuses to upgrade their environment so they create a ton of tickets ( and represent a security risk to you as an MSP ), and refuses to take your advice on security and compliance is not the type of client the Titans can afford to accept .
The Lloyd Group ’ s Adam Eiseman made the decision to move up into the mid-market space and target clients with 100 employees to a few thousand , with a particular focus on PE-backed firms due to their anticipated fast growth . “ We have minimums now that discourage smaller clients ,” he said . “ Do we have some ? Yes , but they ’ re paying a very high per-user cost to get the level of service we provide .”
He did this strategically because the smaller clients who wouldn ’ t pay for advanced security and compliance services didn ’ t represent enough long-term value for his firm . Now he sees mid-market companies where he can sell security , compliance as a service , and co-managed IT as his new blue ocean . “ We found that growth in the legacy MSP space was challenging because those smaller clients did not allow us to grow at the rate we wanted ,” he said .
Integris ’ s Rashaad Bajwa said it best : “ If you are positioned as a generalist , you ’ re a commodity and will have a hard time selling managed services for more than $ 125 per seat , much less $ 150 or more .” Rashaad Bajwa made it clear early on in his interview that his organization is looking to serve companies with complex security , compliance , and IT needs and that are willing to pay for a professional , highly competent organization like Integris to handle it . Those clients aren ’ t looking for the cheapest price but for someone they can trust .
“ Selling high-level managed services is a trust sale ,” said Rashaad Bajwa . “ All of our marketing efforts are focused on connecting with trusted associations and organizations where our clients are using reputation marketing in the form of testimonials and reviews to sell ourselves .”
When a buyer is evaluating a commodity purchase , like a gallon of gas or a can of soup , price and convenience are the primary drivers of the buying decision . But when a buyer is evaluating a company whose incompetence and poor choices can have a serious and lasting negative impact on them , the buyer is going to be far more selective and discerning about who they select . Price is not going to be their # 1 criterion ; in fact , being priced too low is a red flag .
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