MSP Business
Larry Walsh of Channelnomics opens GFI MAX US conference
24 September, 2013
Larry Walsh President & founder of The 2112 Group and Editor-at-Large of Channelnomics opened the GFI MAX US user conference in front of over 250 MSPs from across the US and Canada – and told them that the managed services market continues to expand and show growth with:
- 70% of the channel offering some form of managed services
- 1/3 of average solution providers’ revenue and profit coming from managed services.
- Managed services delivering the largest profit generator in the channel
Walsh also explained the attractions of the MSP business model which he defined as recurring & predictable revenues, higher & predictable profits, scalability & flexibility and deeper customer entanglement than other models.
“And the good news is Managed Services continues to be good for your customers too” explained Walsh” because it allows them the access the need to technology, expertise and a reduction in their IT expenses. It also allows them to focus on their core business competencies – and more importantly it lets them sleep at night!!”
However he also stressed that it’s not just about delivering technology as a service but increasingly it is about talking to your customers about their specific business needs, consulting with them and giving them the solutions that specifically meets their needs.
He also took a closer look at the implications of adopting the MSP business model from a sales, marketing and operational perspective but zeroed in closely on the importance of customer satisfaction as a tool to drive and build your MSP business. “Retention is not solely a product of entanglement – because partnering with your customers is better than selling to them. Your customers are a highly valuable business resource and it is much easier to upsell and expand existing customers than find new customers” explained Walsh. “In actual fact – your satisfied customers are content; but your ecstatic customers are highly effective marketers for your business”.
Walsh then went on to explain the central importance of the Net Promoter Score - a simple method for measuring customer satisfaction and intention which uses one question: “Would you recommend this product/company to a friend?” It measures this on a scale of 1 to 10, with 1 being extremely unlikely and 10 being extremely likely. The key here is that you can use this to identify the “promoters” in your customer base who are actively working to promote your business – and vice versa.
And the future for the MSP? Walsh sees an increasing move to a services-supported infrastructure where automation plays an increasing role. There will be a shift in infrastructure ownership & management – in a world that will be more application-centric where recurring revenue and limited licensing will characterize the market.
A parting thought? There is significant opportunity for MSPs in a growing market – but growth is not an option. To quote Walsh in his closing thought “Everyday in Africa, a gazelle wakes up knowing it must outrun the fastest lion. And everyday in Africa, a lion wakes up knowing it must outrun the slowest gazelle. In either case, everyone knows they must start the day running”.
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