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3 Things MSPs Do Poorly Despite Skyrocketing Demand

Three fingers

… its customers.

Service Leadership's Steve Lewis

Service Leadership’s Steve Lewis

“You initially build an immature business, and when you run a relatively immature business, all customers are good customers,” he said.

Lewis said his company progressed from serving customers of 10 or more seats, to customers of 15 or more, and so on until the size requirement for customers was vastly larger than when All Covered began.

Lewis, who is now a senior client adviser for Service Leadership, described a pyramid of potential MSP customers. The top third, which contains the smallest pool of companies, includes verticals like financial services and architects. These customers work in an office and are looking to gain a competitive advantage by improving their IT processes.

“Their revenue is really driven off the white-collar workforce, as opposed to selling a tangible thing like a phone.”

As the pyramid descends, more and more companies view IT as a “necessary evil” and often use price as their main criteria.

Marketing

Most experts agree that channel partners – MSPs in particular – do not market their services well. Lewis noted that many channel sales forces are providing their own leads. Day agreed that marketing should be providing sales forces with more leads than they currently have.

He noted that many industries share this problem, while other industries, especially consumer goods, are top-heavy on marketing and light on sales.

But without good marketing, how will this industry’s growth change when SMBs cease to be so organically interested in managed IT?

“This is an industry that does not market very well. This is an industry that is focused on sales, and there are folks who sell well, but relatively few people view marketing as the front end of sales,” Lewis said.

Private Equity

Datto's Rob Rae 2018

Datto’s Rob Rae

This one isn’t a concern, but rather a subject of great interest in the industry. We seen frenzied M&A, such as Vista Equity buying Datto and merging it with Autotask. Rob Rae, Datto’s vice president of business development, spoke at the conference about the future of MSPs.

Rae, a winner of our Channel Influencer award, said he has at trade shows encountered various types of unexpected companies who want to find new MSPs.

And he said the increased private-equity investment is a validation of the industry.

“These guys are not dumb,” Rae said. “They spend money because they want to make money.”

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