Ask an MSP Expert

Q: We are looking to grow our MSP business and expand our customer base. What are some ways we can drive additional business growth without hiring more staff?

That’s a great question. Often businesses that want to grow believe the only way to make that happen is to hire more employees. However, that’s not the only way to achieve business growth. There are other techniques you can use to achieve the same results—without creating additional overhead for your MSP.

In fact, driving growth for your IT service practice might be easier than you think. The State of North America Managed Services report conducted by The 2112 Group and Barracuda MSP highlights four areas IT service providers can focus on to grow their business and ultimately achieve managed services success.

Four easy ways to grow your IT service business

Every business owner wants to acquire more customers, increase their revenue, and build their brand. But, how you achieve this can vary from one IT provider to the next. To help you determine which route is best for your IT service business, here are four channel trends to consider.

1. Recurring revenue

Recurring revenue is driving significant growth in the IT channel. In fact, according to 2112 report, 64 percent of respondents said that the services sold on a recurring revenue basis are their best growth drivers. Whether you currently offer one managed service or many, there are a variety of opportunities to add new services for SMB customers. If you’re new to the MSP game, you have a wide range of offerings to consider adding, such as managed antivirus, managed backups, help desk, and more. If you already offer managed services to your customers, think about where your next step should be. Can you offer security solutions, training programs, or cloud support?

The same report found that the average channel partner earns up to 30 percent of its income from recurring revenue services, and respondents who identified themselves as a managed service provider earn between 51 percent and 60 percent of their gross revenue from these services. Adding more managed services to your offering is a great way to increase your monthly recurring revenue, client base, and business value. Plus, managed services take a proactive approach, fixing issues before they lead to downtime and the need to go onsite, which ultimately helps makes your team more efficient.

2. Security services

Security services are another growing opportunity in the channel—especially with the recent Equifax breach dominating headlines. Only 15 percent of the channel providers surveyed in the 2112 report offer some type of security service today, but 62 percent are planning on adding security services in the next 12 months. Cyber-attacks show no sign of slowing down, so protecting your SMBs’ -critical data is crucial to their business success. 

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In light of this trend, selling security might be the next logical step to grow your business and expand your portfolio of offerings. While you may already offer your SMB customers basic security such as firewalls, spam and content filtering, antivirus services, and intrusion detection, some customers are looking for more robust solutions to defend their businesses against today’s sophisticated threats. To learn more about how to start adding robust security solutions to your managed services offering, check out this recent e-book from Barracuda MSP: Mastering the Art of Selling Security-as-a-Service.

3. Backup and recovery

While backup and recovery services might seem like a managed services staple, the results of the 2112 survey indicated that this was an area that had plenty of room for growth. Only 29 percent of the channel companies surveyed offer backup, and just 30 percent offer data recovery services.

In conjunction with security services, backup and data recovery is a key component of protecting a business. Security solutions help prevent an attack from happening in the first place, but like an insurance policy, backup and recovery services ensure that SMBs still have their data if they do end up falling victim to an attack. Selling these two solutions together can set you and your SMB customers up for success.

4. Customer retention

For the recurring revenue model to be successful, an IT provider needs to focus on both adding new customers and retaining existing accounts. According to the 2112 study, the average channel provider loses about two accounts per month. To sustain and grow your IT channel business, reducing churn can help you achieve the additional growth you are looking for because new customers won’t just be replacing customers you lost.

Do you know how satisfied your current customers are? Think about checking in with customers you haven’t talked to in a while, send a follow-up survey to clients after you close a service ticket, and listen to customer complaints. Is there any area that you can improve on? It’s more expensive to acquire new customers than to keep the ones you already have. By listening to what your customers say — both positive and negative— can help you fix problem areas and build a better customer experience, which will in turn reduce your customer-turnover rate.

While there isn’t a one-size-fits-all solution to growing your managed service business, using these channel trends as a guide can help you figure out which tactics are right for your business. To learn more about the findings from the report, download your free copy here.


Photo:  Sergey Nivens / Shutterstock.

Lauren Beliveau

Posted by Lauren Beliveau

Lauren is an Senior Content Marketing Specialist at Barracuda MSP. In this position, she creates and develops content that helps managed service providers grow their business. She also regularly writes The MSP’s Bookshelf and our Ask an MSP Expert column.

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