Building a strong revenue stream is a primary goal for MSPs, but it can be hard to break out of the daily grind to get to the next level. MSPs can find themselves stuck in a loop of addressing current projects without enough time to build a process to get them ahead.
The good news is that MSPs have found a solution for building a sustainable revenue stream and growth plan, long-term strategic planning with clients. By going beyond the standard services and becoming a trusted partner to clients, MSPs forge stronger ties to their clients and increase the likelihood of contract renewals.
Renewed contracts mean sustainable operations while also creating opportunities for increased revenue.
With automated services becoming more prevalent throughout the industry in almost every aspect of operations, MSPs now have the tools to break free from break-fix service or only focusing on current projects.
People working in the MSP industry often have stories of getting blindsided with new problems or emergencies from their clients, and massive responses are needed with little to no warning, putting the rest of the MSP service at risk in order to address the problem.
Darrin LeBlanc, client engagement manager at PEI, strongly values preemptive communication with clients to help them plan their IT service projects in advance and prepare them for the unexpected. By taking initiative with clients to help them address outstanding issues and plan for the future, PEI has found success in the MSP space helping their clients break down what they need to take care of, while planning out a timeline for them to accomplish those goals.
He is so adamant in this approach because he has seen the consequences to clients when they don’t take proactive actions.
When a client ignored recommendations to protect the health of a domain controller, despite warnings from LeBlanc and the team, a lightning storm rolled through and took the whole server down.
While the team was able to provide critical support, the client was down for about a week, LeBlanc said.
“It could be a $500 piece of hardware with maybe an $800 solution, and yet they undoubtedly lost more like $24,000 over a week. If that’s even in the realm of the number. It’s probably higher than that,” he said. “‘Help me help you,’ It rings true over and over again in this business for us.”
David Mercer, CEO of David Mercer Consulting, said a client once called him to ask about why their printers weren’t working in their new office. That client neglected to mention that the entire business had moved into their new space that day.
“They failed to let us know. When they called us “By the way, we’ve shut down the old place. We’re in the new place now and the printers don’t work.’ Why didn’t you tell us about this? You didn’t think to tell us the day you were moving?” he said.
With experiences like that, Mercer has dedicated much of his time in the MSP space to communication with clients to be proactive and stay ahead of any new issues that might arise.
To preempt similar situations from happening, Mercer has embraced longer term strategic planning with his clients. Communication around warranty renewals is an important part of revenue generation for the MSP. Creating a plan got clients to see the bigger picture and how they could benefit by incorporating future IT decisions into their budgets.
“We were able to take that information and say ‘Here’s a predictable replacement schedule, here’s when we think you should do that, and here’s what you can expect to spend,’” Mercer said. “But also we had a couple machines that were only a year old, but were out of warranty… I was able to say ‘Let’s bring all these up to a five year warranty and this is what it’s going to cost.’ They loved that.”
When the ad hoc requests start piling up, an unprepared MSP can get weighed down by the need to address new tasks on the fly. Additional pressure can lead to lower quality service for the client and delays in other ongoing projects.
Becoming a trusted advisor for clients goes beyond mapping out projects for the next 12 months. When a client communicates their business plan, MSPs can respond by demonstrating how integrating IT services into that plan can make it even better, either through optimizing time spent, creating more efficient workflow, and more.
Bryan Dux, Contract Management at PEI, said many clients working with MSPs do not put much thought into their IT planning until budget season, which may not leave enough time to create the best plan.
“Some of these smaller organizations don’t have the forethought or the planning. We’ve been trying to push them a little bit to avoid the circus when something does break. But typically the only time we see this kind of forethought or planning from customers is during budget season,” he said. “They just don’t have any thought about age or machine or when they wanna renew something… So sometimes it’s just getting it on their mind to start thinking ‘What’s your plan?’”
MSPs involved with long-term planning can also show their clients how IT projects will impact budgets, and can create recommendations such as timing on hardware replacement or warranty renewals. Depending on budget constraints, MSPs and clients can then work out a schedule for project timing that best works for their budget, like separating hardware replacements quarterly across 12 months.
When a client can see the deeper value an MSP brings not just to the IT service, but to their business goals and the plans to get there, they trust their MSP to make that a reality. Building trust is the number one way that MSPs can ensure service contract renewals. You aren’t just the contracted IT team, you are a partner to their business.
Improved business relationships can also lead into more opportunities for increased revenue through new projects and high tiers of service.
Putting a strategic planning plan into practice can be a hurdle for MSPs that needs to be tackled over time through client review meetings such as quarterly business reviews. That’s why more MSPs are using Lifecycle Manager to renew their QBR process and develop long term strategic plans with clients.
Lifecycle Manager’s Roadmaps feature allows MSPs to map out recommended projects, such as server replacements and warranty renewals, across quarters up to five years in advance. With an accessible visual design and easy sharing functionality, MSPs can bring roadmaps to their clients to gauge reactions, make changes and settle on a preferred approach to their IT support. Get Lifecycle Manager’s Free Edition today to go hands-on with the best asset monitoring, reporting, and planning tools for MSPs.