The last 12 months were challenging for managed service providers. Unfortunately, many of the hurdles that characterized 2023 are unlikely to go away as businesses settle into the New Year.
Economic growth is forecast to decelerate in 2024. This means the global reseller market will be one of complexity and uncertainty, and MSP leaders will face pressure to service their customer bases with lower costs and fewer employees.
That said, resellers and IT services providers can stand out in the months ahead by being proactive. Every crisis allows businesses to reevaluate and improve their efforts. After a year fueled by crises, these companies are well-positioned to reject stagnation and explore new opportunities to differentiate themselves in a crowded marketplace.
Those that proactively anticipate their customers’ needs across the entire lifecycle will find success in 2024. Adopting this mentality positions MSPs as strategic partners and critical advisors to their customers’ technology investments and digital strategies, ensuring a healthy customer relationship poised for renewal.
Control Your Own Customer Data
If you haven’t done so already, now is the time to invest in technologies that allow your organization to control, access, and act on its own customer data.
Historically, MSPs relied on vendors and distributors to collect and share key data when selling to customers on their behalf. While this approach works fine in theory, with the growing emphasis on data-driven decision making, MSPs can no longer thrive without independent ownership over their customers’ data and ongoing point-of-sale information.
Rather than relying on your partner network to interface with your customers, which often leads to reduced profits and contested sales, managing your own enterprise data offers the ability to nurture your long-term customer relationships. You determine how much you earn from each customer, not your vendors, distributors, or suppliers — keeping your margins higher and significantly improving profitability.
Likewise, you can proactively add new services and offerings to existing customer relationships through upsells and cross sells, which is difficult to accomplish if you don’t own your customer relationships and the associated data.
Minimize Customer Churn
A big shift for MSPs this year will be focusing on net revenue retention. Minimizing customer churn now is a leading success predictor among analysts.
Of course, earning new business is a worthwhile goal, but identifying strategies to avoid losing existing customers is even better. Even if you haven’t lost an ongoing customer engagement entirely, are you losing a good deal of business from that customer?
Start renewal conversations early to allow your customers time to budget for your services, turning an often stressful, last-minute shopping exercise into a thoughtful procurement process with protected margins.
The ability to operate proactively on behalf of your customers hinges on the technology and data required to think ahead. Improved internal controls over your customer data — rather than waiting for upstream providers and distributors to start triggering renewal and upsell conversations — ensure that your organization can tackle these important outcomes in a timely manner.
Prioritizing Technology Upkeep
A surefire way to lose customers is allowing your technologies to become outdated. For MSPs, this involves a few factors:
- Pay closer attention to assets or devices approaching end of life or end of service. Leverage that as an opportunity to proactively engage your customers and pursue new SOWs.
- Scale your technologies in alignment with the biggest trends impacting your customers, such as cybersecurity preparedness, as well as supporting compliance and reporting for environmental, social, and governance (ESG) policies. Your technologies should make it easy to report on ESG initiatives and pass this benefit along to customers.
- Automate your technology — including AI innovations, allowing employees to spend more time on strategic business initiatives, and preserving and growing your customer relationships. Automate repetitive tasks, such as recurring transactions with resellers, which some MSPs currently handle manually on a daily basis.
Be a Good Partner to Vendors and Distributors
Your renewed focus on customer relationships among MSPs in 2024 shouldn’t come at the cost of being a helpful partner to the vendors and distributors you work with.
Vendors and distributors want to work with MSPs that reliably minimize customer churn. If your organization offers predictability in customer experience and retention, vendors will be more willing to connect you with new customers and distributors will point transactional business your way.
Being a good partner also includes having a proactive and strategic approach to cybersecurity. Vendors and distributors are keen to work with MSPs that already have defensive cybersecurity mechanisms in place, especially as the rise of AI solutions rapidly introduces new digital risks.
Differentiation Starts Today
In the year ahead, proactive improvements will separate MSPs that thrive from those that fall behind. Proactiveness can take many shapes and forms and in most cases should follow a multipronged effort. Inertia and reactivity are no longer options.
There are countless benefits to serving as a proactive partner. It starts with developing a strategy and pursuing the technology investments required by today’s MSP landscape.
Scott Frew is founder and CEO of iasset.com.