Increased customer demand for subscription-based services is placing new pressure on managed service providers (MSPs) to differentiate amid a crowded channel marketplace.
Driven by a shift from capital expenditure to operating expenses, businesses are building out strategies with as-a-service as the centrepiece, triggering a ripple effect of change within the ecosystem.
Standing out from the crowd has never been more challenging for MSPs, as partners, distributors and vendors pivot business models in the pursuit of customer dollars.
“Technology is creating a better future but what does this mean for MSPs?” asked Craig Fulton, chief customer success officer at ConnectWise. “Look back 10-15 years ago and most customers were running businesses using only a small amount of technology, but they were still competitive.
“Whereas today, we know that customers must have technology, they can’t exist without it which means there’s lots of technology in the market that MSPs can manage.”
Addressing partners during IT Nation Connect 2019, Fulton questioned the level of maturity within the MSP ecosystem today, stating that most partners struggle to grasp the fundamentals of creating a successful as-a-service business.
“Most MSPs think they understand as-a-service,” he acknowledged. “They pick new solutions, they buy them, they deliver them to the customer and then they invoice for them. But it’s so much more than that.”
The as-a-service catalogue is evolving into a sushi menu of choice for customers, driven by 15 core technology categories that will be delivered on a subscription basis, spanning all aspects of the market.
Specifically, key areas include cyber and physical security; copy and printing; Internet of Things; audio visual and collaboration, in addition to disaster recovery; line of business applications; office applications; network infrastructure and onsite computing.
Delving deeper, other segments cover cloud computing; business intelligence; application development and artificial intelligence.
“There’s opportunity everywhere to sell technology as-a-service,” Fulton said. “But as-a-service is about customer experience, not customer support and MSPs make this mistake time and time again.
“Partners promote the fact that they have a strong customer support offering and a great help-desk service. They speak of how friendly their support team is and that they get back to customers on time and if a customer is unhappy, then they make them happy quickly.
“That’s not as-a-service. Customer experience covers the entire chain of working with a customer, from marketing all the way through to invoicing.”
Fulton said MSPs are now living in a “customer world”, placing new requirements on the channel to add value through the provision and delivery of technology.
“Look back 10 years ago, partners owned the relationship,” he recalled. “Partners persuaded customers to buy technology and spend heavily on infrastructure, then they would lock them into a contract. They’d say to customers, ‘call me when it’s broken and I’ll proactively fix it for you’.
“And the customer wouldn’t ever go anywhere because switching costs were high and they were signed up to a long-term agreement. But through the cloud, new technologies and subscription services, the ball is now in the court of the customer.”
In a direct message to the ecosystem, Fulton said MSPs now have to “win the customer over every month”, breaking with a cycle of tradition spanning more than three decades. The sell and forget approach of old will no longer suffice.
“MSPs used to say they had great differentiators in their business,” Fulton said. “They had great unlimited remote support, they carried out proactive monitoring of devices, they offered quarterly business reviews and they provided endpoint security solutions.
“Partners could differentiate on those points in the past, but not anymore, they are simply table stakes - every MSP is offering this. Customers want to know how an MSP can differentiate in an as-a-service world.”
According to Fulton, there are seven ways MSPs can differentiate:
1 - Focus on outcomes
“Partners that are outcome focused are more successful,” Fulton said. “And by outcome focused, that means talking to the customer and saying, ‘here’s what technology X will do for your business which will ensure you’re more productive’. Take a construction company as an example, understand this business and say ‘I know you have to share blueprints and schedule sub-contractors, I understand that and this solution will help you achieve that outcome’.
“It’s crucial to understand the customer and what the technology is actually going to do for them. Customers don’t want to hear about gigahertz, RAM or speeds and feeds - they don’t care. Those days are over, the customer wants to know, ‘what are you going to do for my business?'"
2 - Next-level proactivity
“Proactivity as a table stake is putting an agent in the field and auto-fixing something before the customer knows about it,” Fulton explained. “This is about proactively watching how they are using the service you provided within their business and helping them get better at it.
“Watch how they are using file-sharing services or Office 365 for example, and suggest ‘your business would benefit more from using these features’. It’s time for MSPs to become super focused on this area of expertise.”
3 - Align expectations
“The customer has expectations of what technology will do for their business but MSPs have to manage those expectations closely,” Fulton cautioned. “Customers have become smarter and they understand what technology is capable of, and partners should be mindful of this.”
4 - Go deep in security
“This is an obvious one,” Fulton added. “The days of selling basic anti-virus, malware or firewall solutions are over. This type of approach is not going to cut it anymore and it’s time for MSPs to up their game.”
5 - Monitor customer churn
“The first 6-9 months represents the most critical time period with your customer,” Fulton advised. “Partners should look at their own businesses and see how well they are doing in this area. We see a lot of churn, customers leave during this time period but it’s an important time period - this is when partners should be building loyalty.
“We call it attitudinal loyalty. Customers are not going to be happy all of the time but are they going to stay? Is the experience that much better? Partners have to be aware of this. We know because we talk to MSPs regularly and this is what happens. The customer comes on-board, partners don’t meet their expectations or differentiate enough and they leave.”
6 - Ease of adoption
“We’re seeing this approach increase, particularly among US-based partners,” Fulton observed. “For example, one partner sells Cisco collaboration offerings such as WebEx, and for a long time they would go out to the customer, install the technology and tell the one person they were dealing with to call them if anything broke.
“But now, adoption services are crucial. MSPs are winning by ensuring the customer knows how to use the technology, so they are not wasting the first 15 minutes of every meeting trying to get the software to work.
"Partners should monitor customers and reach out proactively to say, ‘why aren’t you using this? We sold this to you and it’ll benefit your business in a number of ways’. Then provide the training services to them.”
7 - Symbols of quality
“This is very important,” Fulton said. “Take a hotel for example, they might leave a chocolate on your pillow which is a symbol of quality. What are the things that stand out in your business that differentiate you from everyone else? What will make the customer attach themselves to you? Why would they build loyalty with you?
“Provide insights and understand the business of your customer. ‘If you used this technology, you’ll increase productivity by six per cent’. Always be closing and always be connecting, remember, you have to win the customer over every month.
“I’ve met some MSPs that are so advanced in this concept that they no longer offer yearly contracts anymore, they just tell customers to pay monthly. They are that confident in what they do, and this is a huge differentiator for them because their competitors are still offering yearly deals.
"Customers love them so they come back every month and pay monthly. Plus, it also makes the MSP accountable and ensures they are continually delivering the best customer experience.”