Early MSPs were faced with a high degree of mistrust from the market. First of all, the failure of the application service provider market around the turn of the century made buyers wary of purchasing services that could disappear overnight. The lack of adequate security around many early providers also put many potential users off.

Next, many of the services being offered in the early days were of a very targeted nature. For example, email services that did not easily integrate with a customer’s existing systems; or, contact management systems that tried to be completely self-contained and failed. The absence of standardisation, combined with poor quality connectivity and a lack of high availability meant that early MSP pioneers struggled to create and grow a viable market. MSPs seemed stuck in targeting the SMB space — a market hard to crack and one where return on investment could be low to non-existent when trying to introduce such a new concept.

Further, the need for an early MSP to create and maintain its own platform made economies of scale difficult — should the MSP design right from the beginning for a large number of customers and hope to get there? Or, should they design for a small number and use the revenues to grow in line with customer growth?

Finally, ASPs had also tried to play the cheap customer acquisition card — the idea being that costs could be slashed by not having a sales force, and by disenfranchising the channel and getting customers via click-throughs. This did not work, and modern MSPs now understands that they must still have good relationships with prospects and customers and that, in many cases, this still needs the presence of domain expertise in the form of a channel partner.

Standardisation, cost-efficiencies, and scalability improve

Over time, this has all begun to change. To begin with, the maturity of the internet has meant that connectivity is (generally) much better. The growth in colocation facilities and public cloud platforms means that MSPs have access to cheaper environments that more easily scale as customer needs evolve. Standards are more widely available, meaning that services and functions can now better integrate with existing systems.

Along with this, early issues around pricing have now been resolved. The previously complex models built around transaction pricing confused the market and sometimes led to massive unexpected bills. Now, per user/per device subscription models are the norm and users can better understand these and expect more of a predictable billing experience.

Growing popularity of cloud services builds trust

The rise of public cloud has also helped establish greater trust in MSPs. The growing popularity of AWS, Microsoft Azure and Google Cloud Platform means that large organizations now trust the external service provider model. In addition to leveraging these clouds as Platform-as-a-Service (PaaS) environments, large organisations have also begun to embrace the idea of fast time-to-capability software as a service (SaaS) from SAP, Microsoft and others. This leads to a trickle-down of trust to the mid-market and SMB that correctly perceive that if it is good enough for blue-chip companies to use, it should be good enough for them.

Good customer service is key to maintaining trust

However, it is also easy for a service provider to lose the trust that has been built up with a customer — and this can lead to a complete failure of trust across the market.

For instance, there have been cases where MSPs have suddenly upped their general usage fees without warning; ones who have decided to charge exorbitant fees for customers wanting to take their own data to a different provider, and so on. News of such poor customer management travels fast these days. And, unless the MSP can demonstrate and provide solid reasons for why such steps were taken, they can expect the market to respond negatively.

Similarly, poor service records with repeat failures, lack of adequate customer communication, too many changes to how a service is provided, and a host of other areas can be seen negatively by customers and prospects alike. MSPs should put solid customer support desks in place that provide honest and real feedback when problems do occur. It is important to eliminate the blame culture and work with customers to identify the root cause and give realistic timelines for remediation.

Be seen as a trusted advisor, not as the low-price leader

In an earlier post, I covered many customer needs that an MSP should pay attention to — looking specifically at the higher-level needs that turn an MSP from being a pure transactional provider into a trusted partner. This is key: if you are simply viewed as the low-price leader for a set of functions, there is little room for trust to be developed and leveraged. If you are perceived as an entity that provides valuable advice to your customer and are seen as doing good things outside of your core business, then trust can be built up — and additional revenues leveraged from that relationship.

Overall, MSPs are now in the position where the trust relationship can be created and built upon. Underlying technical issues have, to all intents and purposes, been minimised. Gaining trust with the customer can be done — and if done right, will result in sustainable revenue growth — provided that you work on the relationship and show that the customer has not misplaced their trust in you.

Photo: Jacob Lund / Shutterstock

Clive Longbottom

Posted by Clive Longbottom

Clive Longbottom is a UK-based independent commentator on the impact of technology on organizations and was a co-founder and service director at Quocirca. He has also been an ITC industry analyst for more than 20 years.

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