This is a common question among MSPs who want to optimize their performance and grow their business.
I’m a big fan of setting measurements and goals because if you don’t know where you’re going, you can’t get there. There are many sources for sets of standard KPIs that you could measure but like you say, you can hit them and still have a poorly run business. It’s not that they aren’t good to measure; they just may not address the pain points in your business. You have to figure out what is important to you and let the goals you have for your business determine which metrics you want to track.
7 Metrics to Help Your MSP
There are many existing metrics, so here are a few of my favorites:
- Revenue per technician: I set a goal of $300,000 and then track monthly progress toward that goal. Whatever number you set should be at least three times the total cost of the employee.
- Percentage of revenue hitting the bottom line: Many businesses don’t pay enough attention to the expenses of running a business or owners take out too much revenue from the company. The bottom line should be at 12-20% of total gross revenue. This leaves a healthy amount for reinvestment into growing the company.
- Excess capacity: Can your business grow? Is there room to provide additional services or take on new clients without taking away from existing clients or over taxing your staff? These are critical questions.
- Cash flow: Is the flow of cash working for you? Are there any risk points or thin times? Knowing the amount of cash that your business requires every month to pay its bills is critical but knowing the rate of flow is even more important. There can be enough money coming in and you can still have difficulty paying bills because it doesn’t come in at the right time. Adjustments in policy can make these corrections.
- Staff retention: It’s a poorly kept secret that employees don’t stay with a job for the money — they stay for the culture and the benefits. In an MSP, technical staff should stay for about four years with some staying longer. If you’re not hitting this metric your business likely has a culture or benefits problem.
- Generating new business: Customers will leave for no fault of your own. But even if you aren’t looking to grow, you still need a steady stream of new clients. What’s the plan and are you hitting those goals?
Amy Babinchak
- Keeping existing clients happy: It’s not whether your clients smile back at you, it’s if they show up for you. When you hold an event, do they attend? When you deliver a gift, are they delighted? Do they send you unsolicited compliments? Do they make referrals?
- Pathway to goals: I like to track progress toward a goal. For example, when we decided to focus on Microsoft 365 technology, I tracked the percentage of clients migrated. Similarly, any time we made a change in technology we were using, like adding DMARC records, we also tracked that progress to the completion of that goal.
Tracking these things lets you know how well your staff can stay on task and complete projects. The important thing is to align your metrics with your goals, track them regularly, and use them to improve your services and outcomes.
Final Thoughts
Don’t measure just to measure. Only track the things that are important to you.
A key phrase that helps me every day is this: “Do I really need to know that?” With all the tools we have available to us and the information that flows at us from every direction, deciding what to stop measuring can be just as important as measuring the important stuff.
Amy Babinchak is president of the National Society of IT Service Providers. She’s a seasoned consultant dedicated to helping IT service providers enhance their business operations and technological strategies. Get to know more about Babinchak at channelWise.
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