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For the more than half of managed service providers who experienced monthly revenue decreases through 2020, growth seemed further out of reach than ever. Increasing pressure from IT commoditisation trends have only added to the challenge. But with more diligent planning for long-term remote-working underway, 2021 presents a great opportunity to rethink service provider relationships with customers and grow more effectively into the future.
By embracing the changing market and slotting themselves into the gaps created by the pandemic and remote working, service providers actually stand to prove their value and cement themselves into company workings like never before. To make sure you can enjoy those opportunities, we’ve taken a look at major MSP industry trends and put together a service provider growth strategy guide that tells you everything you need to know. Let’s get started.
Additional reading: For more details on how to improve commercial outcomes, check out our free ebook — Transforming the Value of Networks.
Growth strategy 1: Focus on outcomes over commodities
Commoditisation is nothing new, nor is it unique to the service provider market. You can see examples as far afield as mobile phone providers through to healthcare services. Still, the fact remains that for service providers, as in those other industries (think Apple over Huawei) market leaders manage to pull significantly higher profits. The average profit margin for an MSP is 8%, while market leaders average 18%. While you can’t fully overcome commoditisation, this proves that you can differentiate a commoditised product, and the ability to do so lies within the outcomes you offer.
Service providers looking to grow with margin rich services need to step away from modular and interchangeable “box-of-bits” approaches to sales. Rather than stressing the value of features or components, offer holistic experiences with tangible, interconnected outcomes. This makes it possible to prove value at the forefront like never before, cementing your place in business hierarchies, and ensuring that you grow in ways that would’ve been out of reach even pre-2020.
How to get started
Your ability to sell outcomes requires reimagining the managed services sales process. Realistically, that rests on your ability to demonstrate outcomes and their value at the sales stage, remembering that, during sales and beyond, customers rely on relevance, clarity, and context.
At its heart, success here comes down to quoting with real numbers that ensure you can give projections and provide value-led context. This step away from ‘estimates’ is invaluable from a growth perspective, especially if you can easily share your findings. But it requires the ability to perform network audits and deploy platforms able to focus you on valuable insights quickly. By using customer-facing tools and data visualisations throughout your sales approaches, you ensure that clients can see the value of the outcomes you offer at the click of a button. Where commoditisation is concerned, this transparency also allows you to either price lower than your competitors or prove first-hand why your services are worth more.
Even once you’ve onboarded an account, your ability to continue adding these easy-to-access value-led outcomes seamlessly within existing services ensures that you secure your place at the front of business operations.
Growth strategy 2: Become part of the team
While service providers have traditionally worked in the background, lines between in-house teams and their service providers are blurring. This has long been the case, but remote working and IT skills shortages have made it even harder for in-house IT to function as a silo. Rather, in-house teams are now being held to account against SLAs, while service providers are expected to act as cohesive members of the organisation.
By leaning into this opportunity, service providers looking to grow through 2021 and beyond can thrive even in the face of commoditisation and cement their places within in-house teams to provide the cohesive and cost-effective services that businesses need right now. Certainly, service providers who can focus on outcomes will find themselves in the best possible position, not only to ‘sell a service,’ but also to upsell in the long-term.
How to get started
In large part, success here is a two-fold process that involves:
- Understanding how your customers engage with their networks
- Understanding how you can change those processes internally
This level of understanding is only possible with platforms, software and tools that embed you within client operations. Most notably, you need the capability to make it easier than ever for clients to engage with their networks, as well as providing the service that allows them to manage and optimise those networks.
A large part of this comes down to your ability to communicate value-driven insights in real-time, keeping you all on the same page and ensuring that you work with, rather than apart from, in-house IT capabilities. Collaborative, customer-facing platforms are especially a must in enabling you to:
- Monitor, alert, and report
- Provide transparent and accurate information
- Share displays
- Deliver non-technical insights about technical data
- Prove your value as a crucial member of the team
Growth strategy 3: Retention, upselling and cross-selling
Often, growth comes down to maximising the relationships that you already have. As well as being 5 to 25 times less expensive to pursue, a focus on upselling and cross-selling makes sales 60-70% more likely. Keeping your services forever relevant keeps you central to company processes, thus ensuring the retention that is really what service success is all about, especially in the current landscape.
The product differentiation we touched on earlier will certainly never be possible if you leave accounts to stagnate and let competitors swoop in. Rather, you need to make sure that your sales teams remain integrated, acting in real-time to meet pain points as they arise, and forever keeping your services not only relevant but fundamental.
How to get started
Putting yourself at the heart of a company’s inner workings is a large part of finding success here. That said, even knowledge isn’t going to help if you don’t have the tools to turn it into action, which brings us back to the importance of utilising the right platforms. Remember, the more you understand your customers, the better chance you have of continuing to provide value with services they didn’t even know they needed. This is what ongoing differentiation looks like, and to achieve it, you need tools and services that make operational openings plain to see.
Particularly, platforms that simplify white space analysis can help you offer valuable services to your existing clients without adding to your workloads. This, alongside a consultative communications approach that’s backed by real numbers and proven value, is ultimately what’s going to take you forward throughout 2021 and beyond.
Additional reading: For more information about the types of technology and services that will help you succeed, check out our blog — Monitoring Tools Aren’t Enough!
Commercial insights require the right technology and people
As has always been the case, growth right now is about driving outcomes, but the ways in which service providers can achieve this goal has shifted exponentially. With business landscapes that continue to change at the fastest rates we’ve seen this generation, service providers need to position themselves at the forefront by turning data influxes into easy-to-understand insights at every turn.
Here at Highlight, we’ve been pursuing this goal for two decades, meaning that we’re uniquely poised to offer the provable value that you need right now. With our insight-driven, customer-facing platform, we ensure that highly skilled commercial teams can provide relevant, integrated services without needing a technical degree (or an IT expert) to help them do it.
As well as ensuring the right people for the right job, this real-time, value-led approach is, ultimately, what will separate your services from the rest, making growth possible both now and into the future. Get in touch if you want to learn more.
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