Have any of these thoughts about your MSP business recently crossed your mind?

“I’m not able to charge a rate that serves my business well.”

“I’m absorbing all the security risks for my client without increasing the cost.”

“I’m unable to differentiate my business among my competitors.”

If so, your value proposition and your customers’ expectations are likely out of whack. Many customers approach an MSP for a solution to a data problem, but they’re uneducated on what an effective solution looks like in action. In many cases, an MSP takes the position as a specialized helper, doing the job at the customer’s discretion.

This way of conducting managed services steers many businesses in the wrong direction, setting them up for an agreement that is technology-centric rather than data-centric. It must be up to the MSP to educate clients and manage expectations clearly and fairly, rather than following suit.

A new way to approach managed services is to focus on communicating shared goals, setting clear expectations, and agreeing on the right steps to move forward with existing and prospective customers from the beginning. It prioritizes getting on the same page on how a customer’s information is managed and taking on the role of teacher at the same time.

Lop-sided expectations

It’s not uncommon for MSPs and customers to feel like two ships passing in the night. On one hand, MSPs can easily get focused on the technology and services end of things. They narrow in on trying to get people to buy, rather than getting up close and personal with what they are actually selling. They are sometimes clueless about what their value proposition is because they’re too focused on the technology.

But people don’t buy the drill, they buy the hole. The two must be able to see eye to eye, which prompts MSPs to start thinking deeper about what it is they’re selling and how to communicate what they bring to the customer beyond the technology and service.

Framing a value proposition

When a company’s value proposition is misaligned, it affects pricing and potentially leads to an MSP absorbing unnecessary risk on behalf of its clients. A new approach reverses the customer-directed selling model. It prevents overpromising to prospective or existing customers. Instead, MSPs know exactly what, when, why, and how much to deliver to each of their customers in order to achieve the best outcome for both parties. This approach helps service providers develop a more profitable and sensible business, while matching customers with the most clear-sighted vendor.

A good value proposition puts customer data on center stage. It is upfront about how the MSP will manage data and doesn’t lead the customer to believe they’re getting more than they’re willing to pay for. Being honest and open about this “data puzzle” with customers is the best way to make sure the relationship moves forward tactfully.

The data puzzle

In almost any line of business, customers need to be educated. A client may very well understand their needs, yet they do not know how to get there.

Most customers don’t come from a technical background, so that brings about a natural learning curve. MSPs must be willing and able to have conversations with customers about goals, resources, and expectations.

Whether they realize it or not, partners have three basic needs for their data. Their data needs to be secure, accessible, and recoverable.

It is essential to communicate the importance of balancing these three needs and the obligation to always maintain them. In a utopian relationship, customers would understand that when they tell MSPs they need to increase accessibility of their data, it impacts the security and recoverability of that data. But we all know that’s hardly ever the case.

An MSP must be able to communicate that when one factor of the three changes, the other two pieces of the puzzle need to change to account for it. MSPs can spend an infinite amount of money on all three of these elements around data, but it’s their job to help customers understand the law of diminishing return. Meaning after a certain point of financial investment, you aren’t seeing much return as a business.

We hear from customers that they’re struggling to charge what they need to, that they’re taking on security risk for clients without extra pay, and that they’re struggling to differentiate themselves from the competition. For MSPs to set themselves up for success, they must know their value proposition and communicate that to customers from the very first sales pitch.

Photo: ImageFlow / Shutterstock

Brad Schow

Posted by Brad Schow

Brad Schow is the VP of Consulting Services for ConnectWise. Prior to joining the ConnectWise staff, Schow has served as a peer coach and business consultant at HTG after 20 years growing a solutions and managed service provider business. His path of technician, service leader, operations leader, president and partner has given him a unique perspective that allows him to relate to a broad spectrum of business challenges. He credits much of the success to the peer group experience and the relationships that grew out of HTG. He loves investing in people, thinking ahead, building teams and helping others find success.

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