The fast-paced world of managed service providers (MSPs) is undergoing constant transformation. As an MSP professional, you’re well aware the landscape is as dynamic—and competitive—as it gets. Gone are the days when MSPs operated quietly in the background, ensuring seamless IT functions for locally owned small- and mid-sized businesses (SMBs). Today, your company’s role continues to expand as MSPs evolve into an indispensable part of organizational resilience, transforming IT management, business continuity, cybersecurity, and compliance.
The Competitive MSP Landscape
The adoption of MSP services is on the rise. According to a report from JumpStart, 87.5% of small and medium enterprises currently use an MSP or are considering one, an increase of nearly 4% from the previous year. Businesses are using MSPs for everything from IT infrastructure management, cybersecurity, and governance, risk management, and compliance (GRC) initiatives.
Not only are more businesses using MSPs, but they’re also spending more with them. According to the 2023 State of IT report, managed services is the only IT budget category with increased growth over the past two years, increasing from 16% to 18% during that time.
The investments come as businesses see the value of outsourcing complex cybersecurity, compliance, and IT management programs to more specialized third parties. They’re doing so because MSPs:
- Stay up to date on the latest technologies (61.2%)
- Provide a better user experience (52.5%)
- Are cost-effective (52.4%)
MSPs play a critical role in the modern business ecosystem, acting as strategic partners rather than mere service providers. Yet, many MSPs struggle with developing an effective client retention and acquisition strategy.
In such a competitive market, retaining existing clients while attracting new ones is a delicate balancing act. MSPs have to ensure their new clients acquisition plans don’t overshadow current client needs. Doing so increases the risk of unhappy clients and attrition.
MSP clients are also demanding more complex services while MSPs struggle with adopting a flexible approach to manage the latest technological innovations, utilizing cybersecurity frameworks and controls, and meeting compliance requirements. With the pressures of competition and competitive pricing, there often seems little time to focus on client strategies.
But this isn’t an insurmountable challenge. Successful MSPs will find ways to prioritize client needs, improve client service and personalization opportunities, and open more channels for a two-way flow of meaningful communication that creates action items directly aligned with business goals.
By staying ahead of market demands, MSPs can position themselves to add client value with new and more effective managed services without sacrificing service quality. The key is navigating the balancing act of meeting existing and potential client needs, while also adapting to the evolving landscape.
Changing Client Expectations and Demands
Clients are the linchpin of every MSP business. They’re the key to resilience and growth. Why? Retaining clients is not just cost-effective, it’s also a way to establish a continuous revenue stream. When MSPs consistently meet or exceed client expectations, they’re more likely to continue to do business with you and make additional investments in your services. And, if they’re really happy with what you do, they’ll likely spread the word, creating opportunities for you to attract new clients.
To build an effective client attraction and retention plan, your MSP must have a good grasp of the seismic shift in client expectations and demand. And, it’s not just enough to know about them, to thrive in this competitive landscape, you must be prepared to meet these requirements:
- Access to industry and technical experts: Clients want more than just service providers; they’re looking for trusted advisors and partners. They expect MSPs to have deep industry knowledge and technical expertise to fill gaps in their own operations.
- Leveraging technologies and automation: MSPs can leverage cutting-edge technologies and automation to streamline processes and enhance efficiency in ways many clients don’t have the budget, resources, or skilled professionals to do. They want to reap the full benefits of tools like artificial intelligence, data analytics, and machine learning and they understand that without MSP support, they might not ever have this type of access.
- Flexibility and scalability: There is no one-size-fits-all MSP solution to meet every client’s needs. Today, clients want flexibility and scalability. Successful MSPs will offer tailored solutions that adapt as their clients’ businesses evolve. That’s not just growth-focused. It’s also about being agile enough to scale downward during lean times.
- Comprehensive visibility and analytics: Data is king and MSP clients want to break down data silos to get the most out of their data so they can make more effective business decisions. MSPs, especially those using compliance technologies, can provide clients with this insight, complete with reports and detailed analytics into everything from real-time compliance scoring to program deficiencies, and from security weaknesses to opportunities to optimize costs and resource usage.
- Continuous monitoring and proactive best practices: For true business continuity, it’s no longer enough to just provide effective response when an event happens. Clients expect their MSPs to proactively seek out and mitigate risks to their operational resilience. By implementing industry-recognized best practices, MSPs can proactively seek out issues and address them before they become critical problems, while also decreasing response and downtime with enhanced system reliability.
- Cybersecurity and compliance expertise: Businesses struggle to keep up with cybersecurity, regulatory, and compliance changes. That’s why they’re shifting those responsibilities to MSPs. With laser-focused subject matter experts, MSPs can stay ahead of changing regulations and help clients navigate these complexities to maintain compliance.
- Acing audits: Audits are necessary, but often painful. Clients want MSPs to help them ace audits with less hassle and fewer headaches, including meticulous record- and evidence-keeping, compliance documentation, and audit support to ensure a smooth and successful process.
- Cost optimization: In an uncertain economy, budgets are under constant scrutiny. Clients need to do more with less. MSPs can help with cost optimization without compromising quality, security, or compliance. It’s especially helpful when MSPs use security and compliance technologies that create cost savings with more efficient automated processes.
Impact of Unhappy Clients
Client retention rates vary across industries, ranging from as low as 25% for media, all the way up to 84% for insurance. One of the biggest factors affecting this is client service, something nearly 90% of companies identify as mission-critical. The reality is it only takes a few unhappy clients to upturn a business’ client retention strategy.
When MSPs fail at client service, they put the future of their business at risk. In a client-centric industry, it's imperative to prioritize client needs and expectations. Failure to do so increases both dissatisfaction and churn.
That also means you must deliver on the commitments you make, for example, terms of your service level agreements (SLAs) or contracts. Not doing what you say you’re going to do can erode client trust and damage your credibility. When clients don’t receive what you promised, they’ll likely look for alternatives that will.
Some MSPs also struggle because they don’t offer flexible — or enough — services to meet client needs. Clients count on MSPs for end-to-end solutions. They want solutions that will provide everything they need. If you can’t, they may seek out competitors that can.
Pricing is another area where MSPs sometimes struggle to keep clients happy. Some MSPs bundle services, requiring clients to pay for features and options they don’t want and won’t use. Others don’t have clear and transparent pricing models and some set prices so far outside market norms, clients just won’t bite.
Other client service impediments range from not setting expectations and explaining service value at the beginning of an engagement, to using inefficient processes that frustrate your clients and your employees, and not establishing clear, two-way communication channels.
All of these MSP stumbling blocks can negatively impact client service, which can lead to more than losing one unhappy client. When unhappy clients share their negative experiences with others, it makes it even harder to acquire new customers. To mitigate these challenges, MSPs must focus on client satisfaction, effective communication, and continuous improvement.
Client Retention Strategies
MSPs want their clients to love the work they do and often will go above and beyond to fill gaps. Yet, doing so can create additional challenges that make it even harder to focus on client retention while also maintaining consistent, quality service.
However, with a client-service focus, there are some retention strategies that may help you overcome these challenges:
- Regularly assess client needs and align your service offerings to them.
- Be flexible and offer clients tailored solutions that adapt as their needs do.
- Don’t wait for clients to tell you what they want; be proactive in proposing services they need, even before they realize they need them.
- Be consistent and reliable, ensuring you’re always solidifying a foundation.
- Offer onboarding and training so your clients understand what you’re doing, why you’re doing it, and why it’s needed.
- Listen and engage with two-way omnichannel communication options that facilitate open and transparent communication. Encourage and incentivize your clients to provide feedback and suggestions. Where you can, put those recommendations to work and let your clients know how their responses help with service improvements.
- Find ways to upsell. It’s easier to offer existing clients expanded service offerings than it is to go out and recruit new clients for your business.
- Offer subscription, package, and a la carte pricing options.
- Offer client retention incentives such as loyalty programs, discounts, exclusive service access, rewards, and enhanced support for those with established relationships.
- Manage and measure progress with key performance indicators (KPIs) that align with your client’s business goals. Regularly report on your KPIs. Demonstrate the tangible value your services provide for their business. Communicate performance in a language they understand — not bogged down in technical jargon.
By implementing these strategies, you’ll be better poised to retain existing clients and strengthen relationships over time. Building trust, demonstrating value, and being adaptable to changing needs are key to client retention while maintaining service quality and excellence.
New Client Acquisition
Attracting new clients is essential for your growth and sustainability. However, you must find ways to do so without compromising service quality for your existing clients.
Here are some strategies to help strike that balance:
- Define your market and niche by targeting businesses that would most benefit from your services. By specializing in a specific industry or area, you can add additional client value for those seeking expertise related to their specific field.
- Let others speak for you with client testimonials and case studies that demonstrate service quality and value.
- Ask your existing clients to make referrals to others in their industry or partners who could benefit from your services.
- Network. Go to industry events to make new connections and strengthen existing relationships.
- Customize marketing and sales plans to reach your target market. Use omnichannel marketing to meet your clients where they are, for example, pay-per-click (PPC) campaigns, emails, social media, content marketing, search engine optimization, and other strategies. There are many affordable agencies who can provide these services out-of-the-box.
- Do a competitive analysis and highlight what sets you apart from others in your market.
- Provide real-world examples of client success, real cost savings, and ways your services increase efficiency and productivity.
- Like with client retention, competitive and flexible pricing models will help you attract new clients.
- Offer demos and free trials of your services. Let them explore how your processes work so they can get a better feel for how your services will meet — and hopefully, exceed — their needs before they’re locked into a commitment.
- Make it easy to find out about your services and sign up online, and be responsive to new client inquiries.
Client Engagement Best Practices
In addition to building specific client retention and acquisition strategies, there are some best practices you can employ to ensure consistent experiences for your clients regardless of how they engage with your business:
- Clearly define the scope of your services and ensure your clients understand what's included at the beginning of the engagement. Include this in your SLAs and contracts.
- Be flexible and proactive.
- Offer strategic guidance.
- Foster collaboration between your MSP and your clients.
- Go above and beyond to deliver value and service.
- Focus on the relationship.
- Identify key stakeholders who are decision-makers and influencers within your client’s organization.
- Understand your client’s risk landscape and make plans to mitigate those risks while meeting compliance standards.
- Create repeatable, standardized processes to ensure consistency.
- Document and develop an audit trail with a single source of truth that includes detailed action records.
- Collaborate with other consultants and experts to enhance offerings.
- Leverage technology and automation tools to increase efficiency and streamline processes.
These best practices will benefit your existing clients while attracting new clients through positive client experiences.
The Apptega Solution
Having the right tools and strategies can make all the difference in MSP client retention and attraction. Apptega offers a comprehensive solution tailored to your MSP's unique needs, such as:
- Access to a network of consultants for specialized guidance and support. These consultants have deep industry knowledge and technical expertise to address complex MSP challenges, stay compliant with regulations, and optimize your services.
- Robust automation capabilities to streamline routine tasks, improve response times, and reduce human error.
- Tools for real-time visibility into client systems so you can proactively identify and address potential issues.
- Comprehensive documentation capabilities to maintain thorough and accurate records of client engagements, system configurations, compliance processes, and service history.
- Robust analytics and reporting features to give your clients actionable insights and establish and measure performance metrics.
- Apptega Edge has pre-vetted MSP cybersecurity and compliance resources, tools, and solutions to enhance and expand your service offerings.
If you’re ready to step up your game to increase client retention and reduce churn, consider partnering with Apptega to ensure you can meet changing client expectations for long-term success, increased client satisfaction, and confidence you’ve got what it takes to set yourself apart from competitors in an increasingly crowded MSP marketplace.