In the pursuit of new clients, it’s easy for IT Solution Providers and Managed Service Providers to forget that business growth is not just about winning new business - it’s also about servicing existing contracts profitably.
One of the tenets of IT Managed Services is scalability, managing large numbers of end-users through systems, processes and automation - reducing the amount of support requests you receive and efficiently dealing with those you do have to deal with.
But when it comes to lowering the cost of your support, many MSP’s are missing a trick or two.
I’m the first to point out that far too many IT businesses give away valuable services and solutions when they really should be charging for them. They often make assumptions that the client would “never agree to pay for that” and so don’t even try up selling some of their services into client sites.
The simple fact is that in my experience - in 9/10 cases, if the client sees value in a service or solution you’re selling, then they’ll be prepared to buy it from you.
Two obvious examples of services that clients see value in include:-
In these examples, by selling your clients a service you are increasing your recurring revenue *and* lowering your cost of support. Email filtering stops your clients picking up viruses that will generate support tickets you need to deal with. Email continuity mitigates your client panicking and asking you for help when they lose access to their email during any downtime.
But then there are other services that the client might not immediately understand the value of, but rather see the service or solution as an unnecessary cost. Two examples might be:-
Ideally, you’d up sell these type of services to your clients - and indeed, I’d encourage you to work on educating your clients to the value of these services so you can increase profit and lower your cost of support through selling them.
With that said, sometimes the client just can’t or won’t see the value of services or solutions that experience tells you they will need. The challenge in this scenario is that while the client isn’t prepared to pay for the solution, when things go wrong (and they will!) the client will look to you to fix things for them - all under contract and at no extra charge. Before you know it, the profitability of your contract is blown as you clean up a mess that your client refuses to take responsibility for.
In these scenarios, it’s worth considering giving the solutions away as part of your Managed Service offering.
I work with MSP’s who give away Business Grade Broadband as part of their MSP offering. Their rationale here is that by giving away such service - at little additional cost to themselves - they are reducing the amount of time they spend dealing with terrible Broadband providers selected by the clients themselves, freeing up hours of time spent troubleshooting issues on the telephone to awful “Helpdesks” provided by these cheap ISP’s.
Other MSP’s I know give away services such as Content Filtering. They figure that by controlling the websites client employees access - and saving the clients from themselves - that they’ll significantly reduce the amount of support hours they spend cleaning up problems caused by clients visiting all manner of websites they shouldn’t.
In both scenarios, while the MSP does incur additional cost - they see the long term benefits from reducing their ongoing cost of support. These MSP’s would also argue that by bundling these additional services “at no extra cost” to the client, they gain a competitive advantage.
While I’d encourage all MSP’s to educate their clients to the need for all their services, and sell those services to increase their recurring revenue - the reality is that in some situations, you may consider “bundling” or giving away these services.
Doing so can often significantly reduce the number of support tickets you receive from clients, reduce your cost of support and increase the profitability of your managed service contracts.
I’m eager to hear your thoughts. Do you think clients should pay for all services or solutions you provide them, or is giving away bundled services that lower the cost of you support the right way forwards?
Richard Tubb works with MSP's to help them focus on what is important, free up their time and make more money. You don't have to do it alone any more!
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