The MSP business landscape has always been cut-throat and competitive. And while the pandemic may have meant adoption of IT services like never before, it has also managed to make the competition more intense in the managed service provider (MSP) industry. Competition emerged as the top challenge of responding MSPs in the Datto’s Global State of the MSP Report 2021, followed by revenue growth, profitability and acquiring new customers.
MSPs are essential service providers for millions of small and medium businesses (SMBs). And even though small businesses are drastically increasing their digital footprint and spending, there is a fight for every IT dollar. “To scale up, MSPs will need to think about what they can offer to both existing and new customers. Diversification in offerings can be a great way to scale without even needing to bring on net-new customers,” says Geoffrey Willison, Chief Operating Officer, ConnectWise.
It’s likely that an MSP is handling the core services it offers well – software and hardware setup and maintenance. But the increasing competition could mean dipping revenue, so MSPs have to look for other options. Then there are some obvious choices to add to an MSP offering like cloud, cybersecurity, and remote IT infrastructure, as we discussed in our previous article. Further, there are some emerging cutting-edge tech like automation or internet of things (IoT) services. However, the new technologies will require heavy investment and a skilled resource pool.
Despite the obvious rise in MSP industry growth, many Managed Service Providers, especially those who have stuck to the traditional game of hardware and software sales, now see their clout shrinking. Ubiquitousness of the cloud means hardware sales and maintenance will decrease dramatically.
“The services related to managing that infrastructure are going to go away. It's a shrinking market, in a traditional sense of workstations, laptops, servers, installed software. It's not going to be something they fully control like they did in the old architecture,” explains Chris Fossenier, special projects advisor at Vendasta.
“MSPs need something to augment that. As more and more businesses take to digital, whether it's e-commerce or a website, that market is growing, while the traditional IT-type market is shrinking. And it makes sense to replace that,” he adds.
If you are an MSP and you aren’t looking to immediately make new investments to venture into cutting-edge tech, but at the same time looking to broaden your revenue base, these are some of the opportunities you need to consider.
This is one of the easiest areas that an MSP can jump into and doesn’t require proactive marketing or sales pitches. As the trusted local expert, MSPs are always approached by their small business clients to help with websites.
“When I was running my MSP business, we got asked every day if we could help with their website – be it setting up the website, or with speed or changing a theme or adding a feature,” says Andrew Down, director of sales (IT channel, MSP/VAR) at Vendasta.
“Traditionally, MSPs have stayed away from such services because that’s not their expertise. But they are so trusted and respected in their client community that they are constantly asked about these services. So they already have the end customer. If they consider this as an option, this can be a quick way to a new stream of monthly recurring revenue,” he adds.
One of the worst fears of a local business is that one-time freelance designer who would charge a few thousand dollars to build a website and then can never be heard from. Small business owners lack understanding of the digital world – they don’t always understand how a website works and need a lot of hand holding and assistance along the way. Further, a business’s goals and direction can change from year to year, and it can be extremely frustrating when the website they set up with so much investment no longer communicates their company’s message correctly because that one-time website contractor is not around to help.
A local business needs active solutions to their website problems. In her blog Top 10 Reasons Why Website Projects Fail, Kendra Bassi, chief operating officer at CommonPlaces, an agency offering website and other marketing services, notes one of the major reasons a contracted website venture fails is lack of regular maintenance and functionality testing. The completion of work on a website does not end with the first iteration of the site going live.
Fossenier, who had earlier worked in the MSP space, gives a similar example as Down. “There would be customers who would often complain to us that their domain had expired. So, we would help them with that. Along the way we would notice things like, say, they were missing an SSL certificate, or the website hadn't been updated or backed up for a while, or had broken links. And they would say they were meaning to re-do their website but were not getting the right person. It is this space that MSP can easily tap into,” he says.
In an earlier blog, we took stock of what a successful website needs in addition to design and theme:
- Hosting solution: Cost-effective hosting solution that is secure, fast, and allows for storage is key in the development of a successful website.
- Maintenance packages and design upgrades: This can come in the form of maintenance packages, or yearly design upgrades.
- Management and design tools: You can offer your clients the tools to manage and build their own website with your help along the way.
- Website add-ons: You may also add on additional products such as website live chat, appointment scheduling widget, ecommerce, or options to add reviews.
One can find website creation, hosting, and add-ons like live chat, appointment scheduling, and more in the Vendasta's Marketplace. Further, Vendasta’s Website Builder also gives you the power to create a website with simple drag-and-drop tools which need no web development experience, design background, or backend technical experience.
Search Engine Optimization (SEO) comes hand in hand with a website. With an average of 53% of website traffic coming from organic search, it’s imperative for a small business to focus on SEO once they have set up their website. In many cases, they know this and often approach their trusted MSP for help.
It’s unlikely an MSP will have any expertise in SEO. In addition, search engine algorithms and best practices change several times a year and keeping up requires constant research and education. As Nicolas Padilla, senior partner growth manager at Boostability, says “SEO is the work that goes into your website to build relevance and trust, so that it ranks on the first page of Google. That work is huge and continuous, to stay there and maintain your rank.”
“It’s tricky because you are trying to figure out where and whom to sell what – in multiple locations, competitive geographies, and competitive industries,” adds Vrajesh (Raj) Madhvani, Co-Founder of Alpha SEO.
However, Down, who has years of experience running his own MSP business before he joined Vendasta, is of the opinion that instead of turning those customers away, an MSP could look for ways to support them. “To an SMB, when they think of anything on the Internet, they think IT. They are asking you for SEO services because they trust you as their technical expert.”
As we highlighted in one of our earlier blogs, building a collaborative model is key to success for an MSP business. This means building an MSP business model around reliable partners that provide the expertise, tools or resources to increase your potential revenue streams.
There are many SEO experts in the market whom this work can be outsourced to. An MSP can also seek the help of white label SEO experts like Alpha SEO or Boostability.
White label SEO entails providing SEO software and services to agencies, companies or individual consultants without putting their own label, so that their clients can use the services as their own brand.
“We also understand how to speak in a simple way about SEO to make sure you or your customers aren't confused,” says Padilla. His company serves a range of clients – from accounts as small as $250 to over $30,000 a month.
A major reason why selling SEO services can be a low-hanging fruit is its retention rate and greater ROI than paid online ads in the long term. Creating relevant content that ranks on Google and drives traffic to a website is ultimately a long-term strategy. And unlike PPC (paid per click) ads, one doesn’t have to keep spending to make the target audience see it.
“Our average customer lifetime is about 2.5 years, so it’s a long-term recurring revenue for resellers. The average SMB spends nearly $500 a month on local SEO, so that’s good money,” says Madhvani.
So if you are into MSP business and your clients are asking you to help with SEO, don’t let limitations like expertise, time or staff hold you back from offering the service. A simple way to sidestep these limitations is to become an SEO reseller. Check out Vendasta’s suite of white label SEO solutions to know how you can help your clients’ websites rank higher on search, improve customer acquisition, local visibility, and brand credibility.
Dashboard reporting came up second in the Channel Future’s list of 5 Simple Actions that Make an MSP Invaluable. In it, Jason Beal, senior VP, global channel & partner ecosystems at AvePoint, argues that MSPs provide data rich dashboards to explain to their clients the work they are doing.
“Many vendors can now produce visually appealing and data-rich ‘executive dashboard reports’ with customized insights based on the work an MSP is providing for a client,” he says. Such dashboards give quick insights into what’s working and what isn’t in a particular ecosystem — as well as to position new solutions based on a customer’s growth, collaboration needs or data-security risks.
MSPs can go a step ahead and provide dashboard-as-a-service to their small business clients too. If they can get vendor services to create the dashboard for themselves, they can give clients access to their versions as well.
A simple way to do it is through Vendasta’s Business App. The white label tool allows all Vendasta partners and their SMB clients manage their digital strategy and grow their business.
The app generates a dynamic Executive Report, an automated assessment that gives small businesses direct access to proof-of-performance reporting and data-informed product and service recommendations. By opening and engaging with the Executive Report, an MSP can bring their SMB clients into their Business App where they can review their online weak points, areas where they are winning, which of their efforts have been paying off, and where they can improve.
“Imagine you sell internet services. When your competitors are all doing the same thing, all your clients look for who is cheaper and faster. But even then, there are other ways you can stand out. Now what if you gave your clients a free Executive Report that they could run on their business and find the weak spots? Or a Snapshot Report that could identify ways for them to find new clients? That way you are differentiating from your competition and going up the value chain. You also build trust with your client. So, in the end it’s about thinking a little different and open to being creative,” says Down.
The Snapshot report from Vendasta is again a white label sales intelligence tool that scans the web for a business’s digital marketing. The insights provide a place to start the conversation with business owners by highlighting gaps in their marketing and proposing the optimal solutions to address their needs.
White-label marketing fulfillment services
You would think we are contradicting ourselves. A couple of weeks back we wrote that despite the market growth, MSPs are still facing an enormous challenge with their own marketing efforts. And here we are talking about why MSPs need to start offering marketing services.
Both are true. MSPs are indeed struggling with creating a proper marketing strategy for themselves, and that has consistently emerged as one of the top challenges they face, and despite that, they spend very little (less than 2 percent) of their revenue on marketing activities.
However, it is also true there are some simple services that they can provide to their SMB clients to move up the value chain.
Of course, marketing service is content and not even remotely connected to IT. “The core strength of MSPs is IT, so when it comes to things like security, cybersecurity, or patches and updates to websites, they are going to understand the value of secure websites and data hosting. They may rely on an SEO service provider to help them with the value of SEO. But marketing services is a different ball game. This is something brand new to them, and they don't have even the understanding, let alone expertise,” says Down.
However, he argues that while they are not an agency, they have every other box checked. “They have customers, they are being asked to do it. They get the value of it because they see it in their business. Why not begin to offer it?”
Fossenier too sees a connection. “If you're selling Microsoft 365 as a box, you may have knowledge of how to migrate data or set up new emails or domains. The relationship begins there. For the rest, they can again partner with a digital marketing agency,” he says.
A huge mistake people make is when they think of marketing services, they think long-form content like blogs or white papers. But that’s just one small part. Marketing services encompass digital advertising, email services, social media management, reputation management, listings management, and content creation among others, and these require a lot of digital skills.
“Suppose I am an MSP and a client asked me to help me migrate their email. While I do that, I also would love to find an agency to help me help my client with running newsletters or digital ads campaigns. That’s not there yet. But it can happen easily,” says Fossenier.
He elaborates: “Within digital marketing agencies, there are some companies who only do websites while there are some doing only SEO. They don't have the expertise in the other areas. And yet a lot of times, they partner with someone else to provide them with the other services their clients are asking for. It's no different from an MSP who just sells laptops. They don't do servers or security or web hosting. But they could, and if their clients could want it, right? It can be the same for marketing services.”
For such a cohesion to happen, the Vendasta Marketplace can act as a networking group, where you can find top local partners who can help with the services you want. The platform gives access to more than 250 products and services that your local business clients are searching for. You can also launch your own store, integrate your own products and services, and deliver them all from one place. It’s completely white labelled, with no contracts, no technical integrations, and you only pay for what you sell.
“This kind of partnership can easily happen through the Vendasta platform. It would be ideal, because in the end, the local SMB out there needs a one-step solution. They don’t have the bandwidth or the understanding to deal with too many people and too many contractors,” says Down.
Another easy way is to use Vendasta’s white label Marketing Services. Because it is white label, it means you can resell all the marketing services you are seeking for your clients under your brand, as your own.
“This marketing services department acts as your agency in a box. There are over 150 professionals helping you with the services you need and the data that help you drive revenue for both your MSP business and your SMB clients,” says Down.
Both Down and Fossenier see these as the beginning of a new conversation in the MSP business. They also think many of these services have the potential to turn into a typical MSP contract. Because in the end the more you engage with your client, the more value you bring them, the higher their trust grows. There is always room to offer more. “So, in addition to adding value to their existing customers, they can use it as a new lead generation mechanism to attract new customers,” says Fossenier.
For small local businesses, MSPs are their most trusted local partners. They have the access to client systems, servers and networks and are often given the passwords and access to client data. MSPs now have the opportunity to mine that value within their existing customer base. They do have some of those expertise, and the rest, they can always learn or outsource.
The biggest challenge here is the confidence in doing something different. “One of the pushbacks we get is that “this isn't our core offering; this isn't our primary focus. And we don't want to lose a customer based on a new service. So, the challenge initially is building trust,” says Down.
He explains it helps when the MSPs themselves use and experience some of these tools and services. “So, we run a Snapshot Report on their businesses, and we help them with their own online reputation management or social media to build trust and value. If they are satisfied, they could be convinced to help them with their customers in some of these areas,” he says.
Down adds some MSP partners who have already seen success. “One of them purchased a six-month SEO package for themselves to drive more traffic to their website. Within the first month, they were on page one of Google for their primary targets. It worked exceptionally well and really fast. That’s how you build trust,” he says.
As an industry, MSPs may have come out of the pandemic unscathed compared to many other businesses. But the IT landscape is evolving fast and getting extremely competitive. Like all other sectors, traditional business models within the MSP industry too are evolving. This isn’t about just the pandemic. To be successful in the long run, all businesses must be ready for disruptions and need to always look around the corner. The key for here is to understand the demands of their customers and pulse of the market, and then navigate for themselves and their customers the complexities of a fast-transforming MSP business landscape.