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From commodity to value-based MSP

The effects of commoditisation are felt by everyone in the channel; service providers, vendors and distributors. It’s a tough task to differentiate your service offerings from the competition, maintain profit margins and stand out from the crowd in a marketplace where there is a constant influx of new players.

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Demand for managed services is always growing, but when prospects are faced with several providers who seem to offer the same tools and technology, the determining factor in most cases becomes price. The instinctive reaction is to lower prices to keep up with the competition and remain appealing to prospects. This leads to low value, low margins, and overall a less than ideal situation for all involved. The provider struggles to run a profitable business, and the customer inevitably gets a bare-bones service.

How can this be avoided? The answer is by adding value to your service wrap and making sure customers see this. What exactly does this mean and how can you show the value and personality of your business to your customers?

As a managed service provider, you’d like to handle all IT needs of your customers, becoming a key part of their IT spend and decision-making. You’d ensure that infrastructure is working as it should be, network downtime is minimised, problems are proactively reacted to and security is at a maximum, whilst making sure that your customers feel informed and supported on their journey to a more digitally aligned business. In an age where technology is relatively inexpensive, the challenge is in organising your business and building relationships, rather than having to make big investments.

It’s that going above, and beyond which differentiates an average MSP from one that will thrive. Real business value lies in finding ways to deliver a bespoke service and expertise on a continual basis. The perception of this differs from person to person, but generally, every customer wants to see their service provider as a trusted advisor and partner which will offer support and guidance on several aspects of business planning.

It’s important to engage with your customers on a regular basis; talk to them about their concerns and discuss how you can help shape their future rather than just being the ‘IT person’ behind the screen that no one ever encounters. This can be the difference between having a secure customer vs. a customer who will write you off in no time.

Our next blog post will go into the specifics of the different ways in which you can provide value to your customers.