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Top 6 Common Mistakes Growing MSP Businesses Should Avoid

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The demand for managed services is at an all-time high. However, the managed IT niche is becoming increasingly competitive, and customers are demanding more from managed service providers. According to the 2021 MSP Day Report, these are the top five reasons why SMBs outsource IT services to MSPs:

 

  • Cybersecurity concerns
  • Increasing IT complexity
  • Remote work
  • Cloud migration
  • Skill shortage
startup msp business errors action1 blog
The report summarizes that one of the biggest challenges facing MSPs is choosing the areas to base their offering. But by understanding what customers want from an IT-provider and the market challenges, you can fine-tune your managed IT offering to come out on top. Part of doing so is avoiding MSP mistakes that could jeopardize your growth efforts. As a managed service provider, here are six common mistakes you should avoid:

Overselling and underdelivering

Some MSPs have a habit of overselling their tools and solutions to potential customers as a baiting technique. This is common when pitching to new clients or starting an MSP business. Calculated overselling to customers whom you know will never buy more than what you can offer may seem harmless, but what do you do should they demand what you promised. Creating false expectations and inevitably failing to deliver will hurt your brand’s credibility and lead to loss of trust with customers.

Instead of overpromising and underdelivering, sell what you have without exaggeration and do your best to exceed customer expectations. Don’t let the urge to impress get to you when chasing sales. Take pride in what you can offer and make the customer see its value too.

Not explaining the offers well enough

Poor communication is another common MSP error. You may lose a client simply due to a preventable disconnect. Not everyone will understand the technical information on your website, pamphlets, or SLA documents. Also, the customer may not have the right words to explain what they are looking for. So, your offering might seem unfamiliar or too complicated. It’s up to you to make the customer understand exactly what you’re offering and how it aligns with their needs. Take the time to explain every detail of your services at the customer’s level and context. Don’t talk down to them, but water down the technical jargon to make everything clear. Visual aids, case studies, and one-on-one walkthroughs might come in handy to showcase your services instead of plain boring text and scripted generic sales pitches.

Too much or too little flexibility

Managed services are not one-size-fits-all. You need some wiggle room in your offering to cater to different businesses with varying IT needs. The problem is that some MSPs limit their service delivery flexibility too much, while others go too far the other way.

A stiff managed services structure limits the kinds of businesses that can buy your services. For instance, if you have only one service package, only the businesses fitting that package can benefit from the offering. On the other hand, being too flexible increases service delivery and accountability complexities. For instance, maintaining the service levels for nine or ten service bundles can be a management headache. Plus, giving customers too many options often leads to poor purchase decisions.

Standardize your managed offering by packaging services and tools into just a few manageable bundles. Also, settle on particular service delivery and MSP pricing model — whether tiered, per-device, per-user, or value-based—so that you’re not all over the place. The important thing is to choose a service model that suits your target customers and the type of solutions your business offers.

Commoditizing

Nowadays, customers expect more from MSPs than tech products and tools. They expect expertise, reliability, knowledge, and most importantly, a strategic growth partner. By focusing solely on the monetary side of the business, you’ll miss the big picture and the value that each customer places on their managed package.

Instead of commoditizing your offering, focus on creating and nurturing meaningful relationships with your clients. Become their growth partner, not just the go-to IT support. Remember, accelerating your clients’ growth also gives you more stake in their expanding IT infrastructure.

Pushing for fast growth

Trying to scale too fast is a peculiar mistake for growing MSPs. Moderating growth might seem counterproductive, but in this case, gradual expansion is actually a good thing. An aggressive marketing campaign can land you several high-ticket clients in a relatively short time. But such rapid growth can quickly get out of hand. You’ll probably end up overworking your team, hastily hiring inexperienced new workers, and running half-baked business strategies. All these issues could ultimately lead to poor service delivery and dissatisfied customers. Take on the clients you can comfortably handle with the available resources. But that doesn’t mean you shouldn’t have a growth vision. Just be careful not to stretch the business too thin by biting off more than you can chew. That way, you can grow and develop sustainably.

Not working with the right partners

You’ll obviously need software tools and tech services to deliver managed IT to customers. That’s where B2B MSP partnerships with tech vendors and other third parties come in. The brands you choose to partner with can make or break your MSP business. The wrong partner can turn an MSP into a value-added reseller and take over the brand’s identity—you don’t want that.

Ensure that your business partners provide solutions that align with your MSP model and enhance service delivery, and whose value trickles down to the end client. Besides the financial incentives, ask yourself what each partner brings to the table, and weed out those that are only holding you back.

Talking about MSP partnerships, Action1 offers cloud-native RMM solutions for MSP helping managed service providers streamline service delivery through automation. Action1 MSP software includes remote monitoring and management tools with a wide range of capabilities such as patch management automation, remote software deployment, remote desktop, and more. Sign up to start your free trial today.

November 23, 2021

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