MRR is the lifeblood of a managed services business. A steady and growing monthly income fuels expansion, keeps costly borrowing to a minimum, and gives providers the freedom to experiment with new services and markets. A strong cash flow provides the working capital MSPs need to build successful practices that meet their clients ever-changing preferences, requirements, and demands.
While hardware sales and one-time projects add to the bottom line, today’s providers rely on those steady monthly checks so they can carry out expansion plans while keeping up with paying ongoing bills. That’s where so many small businesses run into problems ‒ juggling their payroll and daily office expenses while attempting to fund additional projects, new employee salaries, and other growth-related costs.
Some take out short-term loans or apply for additional credit lines when cash is tight. Unfortunately, the costs associated with using other peoples’ money fluctuate and availability is never guaranteed.
That’s the value of MRR. The more MSPs can grow that number each month, the more of their own money they have to invest in their strategic business plans.
The channel is full of new options for enterprising IT services professionals. Whether you want to take on a specific technology set for enterprise companies or follow the more traditional MSP path and support the SMB, the opportunities are virtually endless. Most begin by focusing their efforts (and portfolios) on the small businesses in their local communities.
Wallet-share is crucial. The more services your team can provide to existing and new clients in your area, the easier it will be to keep expenses low while generating additional income. It’s always easier to work with those with whom you’ve already established a relationship. That may sound like common sense, but many MSPs provide more incentives for selling new contracts rather than upselling existing clients.
Larger firms often assign account managers to help manage existing customers. Most MSPs hire “farmers” for those positions ‒ individuals with strong relationship skill who are expected to manage and upsell those businesses over time. This approach makes perfect sense and works extremely well if the management team provides the right incentives and oversight.
That latter point is crucial. Technology companies tend to put more emphasis on infrastructure and customer retention than on upselling new services, and without a properly skilled and motivated account manager, revenue growth can stagnate.
MSPs have to ensure their management team is providing the same high level of guidance and oversight to their farmers as they do with their outbound sales professionals. New business sales are crucial for revenue generation, especially in an industry where customer retention rates rarely hit the 100% mark, but MSPs have to be careful not to overlook opportunities with their existing clients. It’s often easier and more economical to grow revenue with companies in which you have an established relationship.
First off, you have their attention. MSPs SMB leaders listen to their IT support team. If you make a recommendation or bring up a potential problem, their decision makers are more likely to engage in a conversation and consider any proposals.
Second, your team should have a firm understanding of their technological and business needs. MSPs can quickly become insiders with the right approach, assessing current and future system requirements and gaining insight into their clients’ future goals. That gives you the ability to provide valuable advice and sell them on needed services that your team can successfully implement and manage.
Five Starting Options
What IT-related services are you not currently providing to your customers? Are they sourcing solutions or support from other providers or doing without the things that could strengthen or better protect their operations? Some of the best options for the SMB are also sure-fire ways for MSPs to boost their MRR, including:
1. Backup and DR services
No business should be without a business continuity plan, system and, most importantly, ongoing testing and support. Not just the hardware and solutions, but an ongoing program to monitor their data retention systems and ensure your clients are fully prepared should disaster strike.
2. Managed print
Despite predictions of the impending demise of paper, businesses still generate a tremendous amount of it each year and spend a fortune on toner. The question for MSPs is how many printers, scanners, and MFPs (multi-function printers) are being used by your clients and where do they get their supplies and support? If you’re not offering those services yourself or through partnerships with various copier companies, it leaves an opening for print professionals who just may happen to be adding IT services to their portfolios. Stake your claim and capture additional MRR.
The global cybersecurity market is expected to hit $180 billion by 2021 (that’s just two short years away), meaning there are plenty of opportunities for MSPs to generate additional MRR with their SMB clients. Data protection has been a top concern for business leaders for the past five years and the demand for qualified support professionals shows no signs of abating any time soon. Cybersecurity is that gift that keeps giving. Not only can this expertise help MSPs forge stronger bonds with their clients, but it typically leads to additional high profit opportunities, including penetration testing, consulting projects, and a host of ongoing services.
4. Hosted VoIP
Are your SMB clients still paying for costly and inflexible landlines, or scrambling to find capital to implement their own servers and software? Hosted VoIP eliminates those headaches, reducing their monthly bills for phone service without making any major investments ‒ and you gain a steady stream of new income. Help your clients make the transition today, it’s an easy way to grow your MSP’s MRR!
5. Compliance as a Service
Regulations and industry standards are usually quite confusing. Written by lawyers and politicians, with flowing introductions and lengthy explanations, the actual requirements that businesses have to follow are often deeply buried or hard to decipher. That presents a great consulting opportunity for MSPs who understand the system and process requirements of various compliance measures. As part of a client’s monthly managed services contract, you could charge an additional fee for developing and managing their compliance programs, including periodic assessments and monitoring.
Of course, MSPs are not limited to just these five options for increasing their MRR. With the rapid pace of technological innovation and a quickly expanding list of rules and regulations involving businesses’ IT ecosystems, creative and highly skilled providers have a virtually unlimited opportunity to grow their bottom line. Which would most benefit your clients today?
If you enjoyed this blog, you might also be interested in the blog: Making a Commitment to Channel Partners