Why Does Trust Improve the Total Value of MSP IT Services in the Face of Commoditisation?

Written by Richard Thomas

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    The massive and exponential growth in the Managed Service Providers (MSPs) market has resulted in near-complete market commoditisation, and a standardisation regarding what customers expect from their service providers. Fundamentally, if you don’t provide a solution, customers believe that another provider will. 

    At the same time, the market has become hugely lucrative, with the global MSP market size valued at more than US$200 billion with a Compound Annual Growth Rate (CARG) of 12.2% up to 2023.1

    This has created a situation in which significant value is on the line. However, commoditisation means that MSPs still find it difficult to differentiate themselves from their competitors and grow margin.

    In this highly competitive market, prioritising trusting relationships is vital to delivering value above competitors and we’re here to show you why… 

    What are the features of commoditised IT services?

    Commoditisation of IT services is usually the result of a product or service transitioning from being valuable and unique, to being valuable but ubiquitous. 

    The MSP market for IT services bears some resemblance to the mobile telecoms market insomuch as technological advances have made the service on offer invaluable, but the number of companies offering similar services has skyrocketed.

    This has resulted in the IT services market suffering some of the same drop-backs normally associated with commoditisation…  

    • Incessant price pressure
    • Constant customer churn
    • Reduced profit margin 
    • Primary purchasing drivers based on price and availability 
    • Differentiation barriers 
    • Reduced perceived value 

    This trading environment has been made worse by MSPs continuing to take a modular and “box of bits” approach to sales. Services are not trying to be holistic, but rather sell what they can where they can. This is what the commoditisation of IT service is doing to MSPs — reducing profit margins and minimising value. 

    But there is another way.

    What features of MSPs differentiate them from others?

    Restoring customer trust differentiates your IT service offering and transitions your reputation from just another MSP to a total-value MSP that holds delivering value to the customer as their primary driver. 

    Trust is, of course, all about transparency and communication, and there are some simple steps you can take to build a reputation as an MSP that is unique in its focus on providing customer value.

    Continuity of promise 

    Nothing builds trust like a promise kept. MSPs who want to set themselves apart on the quality of their offerings should regard their Service Level Agreements (SLAs) as ironclad. Following up on promises and contracts is foundational to building customer trust in your organisation. 

    SLAs should not just be a method for MSPs to hit minimum service standards in order minimise costs in the interest of short-term profit. The setting, adherence to and hygiene of SLAs should be seen as an opportunity to demonstrate your company’s dedication to providing a unique level of value. Committing to promises such as these demonstrates an unwavering promise of exceptional customer experience, which in the long-term, maximises profit for the MSP. 

    Pro tip: Don’t fall into SLA hell! There are top tips and strategies in this blog that’ll protect you from overcommitting and underperforming. 

    Transparency

    In order for your services to be perceived as unique, they have to be seen to be uniquely valuable by the customer in practice, not just in theory. Providing your customers holistic, unrestricted access into their network dashboards — to the same degree that your Service Managers have access to — is uniquely valuable. Transparency leads the way to building trust and demonstrating your individual value.

    If you are doing something different to provide value to customers, it should be visible in your business practices and service offerings. MSPs who take this approach will have customers lining up at their door for a chance to work with them.

    It’s also worth remembering that it’s not only the wins that should be advertised. Nothing builds trust like admitting you’ve made a mistake or that there is a fault in your system. If you can go to a customer with an admission that there has been an issue, but you have a proactive solution that mitigates or minimises their downtime, then that can be seen as a net win when it comes to building a trusting relationship.

    While we’ve already highlighted how important keeping promises is, complete trust comes from actively demonstrating that you’ve delivered on your promises. This can be as simple as asking customers if they’re happy with the work you’ve done, but it goes a long way to building total trust.

    However, for full transparency, offering transparent access to performance reports and demonstrating that you have no hesitation when it comes to sharing any data or insights is an excellent start. It shows that you care about your customer’s opinions and will go out of your way to ensure their needs are met.

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    Communication

    While the two points above are effective MSP differentiators, they hinge on open and honest communication. This is especially important when it comes to building trust, as communication establishes an emotional connection between you and your client. Excellent communication shows that you are invested in making sure your customers are kept in the loop and that you value their input. Instead of building yet another generic customer/MSP relationship, your business differentiates itself by treating its clients as valued partners. Specifically, you can provide… 

    • Automated alerts: For example, if client usage surges randomly or unexpectedly then let them know. It shows you care without demanding a whole lot of time or effort. 
    • Network evolution: If a Service Manager spots a gap in client networks, or ways to improve their offering — tell the client and show them what you see. 
    • Status reports: Offer proactive and extensive status reports to your clients — from speed performance updates, to capacity predictions. 

    Another important aspect of communication is that it helps you to be proactive in your client’s IT needs. Talking about their business problems and how technology can help them solve those challenges not only builds trust but also shows just how invested you are in helping clients grow and succeed! This will give your customer a reason to choose you over the many other companies offering a more generic and untrustworthy option.

    Highlight promises transparent communication

    What is Highlight? Well, for companies looking to build trust with their customers, Highlight is a game-changing partnership opportunity. We provide a platform that gives your team and your customers unparalleled insight into their network service performance — helping MSPs to differentiate themselves and deliver value above all else.  

    While Highlight offers a huge range of insight-based services, some of the most valuable to MSPs are the ones built specifically to transform their commercial strategies, including:

    • Centralised, mutual, holistic access reporting dashboards: Easy to access and easy to understand, these dashboards are a foundation for apartment communication between MSPs and customers.
    • Automated alerts: Alerting customers to usage surges prevents bill shock and let the customer know you have their best interests at heart.
    • Customisable heat tiles to help service managers resolve issues before they arise: Provide critical support with dedicated views that allow service managers to focus on what’s important and proactively provide better customer outcomes. Informed staff are able to head off problems before they result in downtime and impact your reputation.
    • Commercial data visualisation and insights analysis: Highlight helps you turn your deep understanding of your customer’s networks into potential new revenue streams, such as consulting services.
    • Whitespace analysis to identify opportunities for network evolution: Upselling is recast as network evolution, making the benefits for the customer stand out and building trust.

    Highlight allows MSPs to quickly and easily identify total value opportunities, build the uniquely trusting relationships required to increase total profitability and stand out in an increasingly commodified market. But, don’t just take our word for it, talk to an expert today to find out for yourself just how trusted and valued our services are.

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    1MSP Resources – How many MSPs are there in the US and Worldwide?

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