Scaling an MSP the traditional way is far from easy. For 10 years I followed all the industry mantras, bought all the automation tools and hired, lost and trained techs over and over again.
But in 2012 at the peak of my frustration I had the opportunity to travel overseas and learn how companies were truly built to scale. It was an eye-opening experience and broke away from all the IT industry Kool-Aid I’d consumed in the preceding 10 years. Today we are a totally scaled up MSP and we’re working with other MSPs and ITSPs right around the world to help them reach their goals faster.
It’s a funny thing when you’re on the ground in your business, you can’t always see the problems for what they are. After spending time off the tools and away from my traditional MSP business I started to recognise the reasons I’d struggled for so long.
Here’s what I learnt:
You can automate all you like, IT is still a labour business
I bought all the tools, wrote complicated scripts to save time on support and invested heavily in PSA (helpdesk) software. There was just one problem.. We still needed people to drive the tools and handle the helpdesk calls. Unfortunately, the more I looked at scaling up these roles the less profitable we became. The model just didn’t add up.
Many MSPs fail to hit scale almost entirely because of HR problems and labour costs. Recruiting, training, losing people and re-hiring is a constant battle for most IT providers around the world.
Heading offshore gave us a competitive advantage in hiring resources with redundant capacity in every single role, and through Benchmark 365 our partners are able to tap in to that capacity every day and night on demand whilst saving at least 50% on labour cost.
Sales is what drives an MSP to scale
We benchmarked the industry on revenue and profit and discovered that there are two types of MSPs: Those that focus almost entirely on sales and those who don’t. Guess which ones have bigger companies and bigger profits?
10 years in the trenches doing tech support and managing people resulted in me having very little experience in sales. I was too busy running a tech business to truly master the art of selling and as a result our revenue had stalled.
Fortunately after shifting offshore in 2012 I had a lot more free time so I turned my energy away from monitoring incoming tickets and fighting fires to listening to sales podcasts (the Advanced Selling Podcast is a really good one btw) and reading books from expert sales mentors like Jack Daly.
Putting sales first led to 100% year on year growth and our Australian MSP is still growing today.
Our partners report similar results. After 90 days of working with Benchmark 365 and spending time with our sales experts coaching and training them on sales performance they report considerable financial growth and profitability.
Customers want results, not personal relationships with your helpdesk guy
Back to HR. The most common issue I had with staff was the fear of losing a poor performing employee because a customer really liked her. This is nonsense. Scaled up businesses operate on well defined processes backed up by great people not the other way around. Customers don’t keep coming back because Sarah’s nice to them on the phone, they keep coming back because you deliver exceptional results day in day out.
And what result are MSP customers looking for? Speed, competency and consistency. I learnt that by having a scaled up, highly trained team we could deliver exceptional results 24 hours a day no matter who sat on the helpdesk.
So that’s the helpdesk. But there’s one relationship you should never take for granted and that is the one between YOU and your customer. Spending time with your clients in the board room or catching up for coffee is what continues to solidify your relationships now and into the future.
Don’t let personalities and emotion drive your business. It just doesn’t scale.
The MSP game has changed forever
In 2012 the writing was on the wall for me. Either radically change my business or face diminishing returns. The threat of cloud and Saas was imminent and the commoditisation of technology was just taking shape. 6 years on and the threat is real. SaaS providers are eroding the traditional MSP business model like swiss cheese and far from the good old days of annual price increases, MSPs are facing relentless pricing competition from an onslaught of new competitors.
In order to survive and make a healthy profit you cannot keep running an MSP following the traditional model. You don’t have 10 or 20 years to build up a team to wow your customers anymore. You have today. And today it’s about speed, access to a much wider range of skills and access to lower cost people solutions.
Benchmark 365 partners are thriving. With helpdesk humming and labour costs under control our partners are jumping ahead of industry trends, generating new revenue streams, beating out competitors on price and activating new solutions that puts them ahead of the competition not behind the 8 ball.
You CAN scale an MSP
The global IT services market is valued at a staggering USD$985bn. Let that sink in.
Whether it’s getting customers to cloud, helping businesses with cyber-security or positioning your vCIO services it’s all there for the taking.
The only thing getting in the way of scaling your MSP is hanging on to old ideas about how you to deliver great support to your clients, how you resource that delivery and what it should cost. And, most importantly, realizing your business will only grow if you focus 90% of your time on sales and building relationships.
Today with Benchmark 365 you can instantly engage a team of service delivery management experts, experienced MSP sales directors, dispatch, L1/2/3 and customer support on demand.
In support of our growing partners we’ve made it easy by offering a simple month to month service with no contracts so you can scale with confidence.
It is our vision to help every single MSP reach scale and be profitable. We’d love to help you as well. Drop us a note or ask us about pricing.
To your success,
James and the Benchmark 365 Team