How MSPs can optimize sales and marketing investments
2 in 3 MSPs expect 2022 revenue growth to come primarily from new logos, up from ~1 in 10 last year.
This insight comes from our MSP Growth Survey conducted in collaboration with Wingman Marketing about MSP business challenges and opportunities during the pandemic and beyond.
Over 120 MSPs shared their views on their growth plans, their analysis on the past year and predictions for the next.
Let’s look at the survey results and how you can optimize your sales and marketing efforts and investments to meet your 2022 business goals while recognizing your position in this dynamic market.
Budget and Revenue in 2021
The biggest driving factor of business in the last two years was the pandemic. Businesses were forced to adopt an online model, changing their working style which influenced budgets, investment, and business growth.
More than half of those surveyed said they increased their sales and marketing budget since the pandemic. What’s more interesting is that despite the continued challenges of the pandemic, 95% of MSPs remained stable or grew!
A potential correlation here is between investment in promotional sales and marketing activity, and those that grew their revenue last year. Whoever increased their sales and marketing spend also saw an increment in revenue.
Meeting your 2022 Sales and Marketing Goals
So how do you optimize your investments and meet your goals? Our survey revealed some interesting figures and analytics.
Sales and Marketing is a forward investment
44% of respondents decided to invest more in their sales and marketing, influenced by the pandemic
Interestingly 13% also took the plunge to start investing in sales/marketing for the first time – because of the pandemic.
No one halted spend entirely!
MSPs realize the importance of continued sales and marketing activity and want to build budgets for it.
Where they lack is how to keep it stable.
Although 70% of respondents said they have sales and marketing activities ongoing for their MSP business only 39% regard those marketing programs as live and proactive.
Deciding on healthy budget to build your confidence is important. However, once you allocate a budget, discover your brand, and finalize your ideal customer profile, spend time on building a digital marketing plan that reaches your target audience over multiple technology platforms.
We know that investment in sales and marketing is a forward-investment. Investments made in starting campaigns now, may not start to payback until 12-18+ months time. This is because of the time it takes for many of these prospect opportunities to come to fruition around current contracts and commitments elsewhere.
Also, it’s imperative to appoint someone dedicatedly handling marketing resources, not just someone who does marketing as only part of their job function. This person can actually monitor spend and whether it’s being used to full capacity.
You should also ensure your sales process, marketing and customer success teams are tied together in a single, seamless process. Your sales representatives should know how to follow up with ready prospects and nurture those who are not ready to buy.
As we discussed above, sales and marketing is a long term activity. You will reap it’s benefits only in the long-term.
Look for more opportunities outside of client base
Bucking the MSP trend of being reliant on existing business, 62% of those surveyed said that 2022 growth will be mostly from net-new clients.
This is quite a jump from the 49% that saw growth through net-new in 2021.
While MSPs have traditionally relied on existing clientele to bring revenue, it’s interesting to see that tech partners are trying to actively take on new business. This is in correlation with the increase in sales and marketing spend.
Here are some tips from Industry experts on how you can add new business:
- Join relevant communities and create continuing education materials for intended niches.
- Use the three C's to prospect and attract clients on - Connect, Content, Contacts.
- Avoid comparing yourself to the competition. What’s working for them is only working for THEM.
- Your growth is tied to building scalable solutions for clients. Solving their biggest business problems with your solutions is how you transition from business owner to business consultant.
- Don’t just focus on technical aspects, dedicate yourself to the success of your customers' business
Bring structure to your targets
Likely indicative of most average business sectors, more than half of those surveyed said that they don’t have formalized and tangible targets.
And what is keeping them from achieving those targets?
40% said it’s likely a lack of time, resources, or both to find new business.
Another 35% said it was lack of capacity.
The key to business growth is setting S.M.A.R.T. Targets. Without some structure to your targets, you cannot ensure you’ll be confident and on-track with your desires for growth. When your goal is tangible, you have a better chance of achieving measurable and attainable results.
So how do you go about setting formal targets? Here are some tips:
- Work backwards on setting targets. Start by looking at your own business. Most MSPs would have their ideal customers of 40-60 seats but it’s not reflective of the market at large.
- Look at seat/year value. Compare that to a revenue target that you have in mind. This gives you an indication of how many seats you need to add. Depending on the number of seats you can decide how many business you go after.
- Analyze your conversion rate. This means the number of deals you won out of the existing deals in your pipeline. For net-new business conversion rate would be lower when compared to referral business.
You may have a revenue target but you have to break that down into per seat because those seats are in business of a certain size. You need to know what your target is to - how many conversions you’re having to - what does it filter down to - your conversion rate. If you’re converting 30% of them, you need to be having conversation with 3X the amount of companies that you need to bring in at that seat level.
Build a long term sales pipeline with Zomentum
The survey revealed that while 45% found confidence that their pipeline is likely to sustain capacity for over 6-months. Over half, however, found their pipeline will only sustain them for the short-term of less than 6-months.
There are always going to be challenges to growth, especially for a concerted business owner who is constantly reassessing effectiveness.
Concentrating efforts on building a long-term sales pipeline gives you the ability to make long-term business decisions, knowing your predictable revenue can accommodate growth or unforeseen changes. It’s all about building the process. True pipeline management means you’re designing, measuring, and optimizing the sales process to drive performance.
A well-managed sales pipeline allows you to analyze and implement different sales techniques, manage and allocate resources, and provide valuable data to review your progress year-over-year.
Bottlenecks Happen in Business - Where are yours?
The first thing to do when you are setting business strategy is to ask yourself - where is your bottleneck?
- Is it marketing activities?
- Sales activities and building a pipeline?
- If not, is your pipeline healthy but you’re afraid you don’t have the capacity to meet demands?
- Or maybe where you need to start assessing contracts, setting those QBR meetings and getting commitments beyond 6 months from now?
You’ll learn more and more about what kinds of deals are best for your business and maybe even dial down to a specific niche. Maybe next you’re going to take on marketing campaigns for a new service offering, or to try to move upstream and attract bigger clients, whatever it is, it’s always a PROCESS.