4 Sales Challenges MSPs Must Overcome To Increase MRR

Managed service providers are an integral part of the IT infrastructure. As organizations embrace technological change to better compete in the global marketplace, the demand for capable and knowledgeable managed service providers is on the rise. While organizations are turning to MSPs to implement new infrastructure solutions like hybrid and multi-clouds, they are also entrusting those technology firms with day-to-day maintenance because of the increasing complexity and mission-critical nature of those systems. 

With the rising technological advances and increasing demand for experienced MSPs, this is the best time to be in the market as a service provider. However, as a provider, you must remain focused on eradicating challenges that may hamper your company from reaching revenue goals and ensure you are providing your clients with solutions that address their business needs. 

Challenge 1: Getting new customers

A 2017 Datto survey of 1200 managed service providers identified their greatest area of concern as lead generation and conversion (more precisely, marketing and sales). Other challenges included selling BDR, staffing and training, and ransomware and cybersecurity. 

Most MSPs rely on referrals to generate new sales. While that form of marketing is a good practice for every business owner, it does not provide a sustainable path for consistent, long-term growth. 

It’s easy for MSPs to become locked in a cycle of maintaining existing relationships and occasionally adding a new prospect via a referral. However, you must focus on ways to expand services outside that normal sphere of influence and find new ways to position your firm in an increasingly competitive market. 

For more sustainable tips on keeping your sales pipeline full to drive long-term growth, read our blog 9 habits to keep your MSP sales pipeline full

From a business perspective, your clients have plenty of ‘break-fix’ IT solutions and data migration services to choose from. Many MSPs focus on data center practices, but only as part of differentiated service. While others may provide services related to hardware and software, your firm can address a real need by differentiating and highlighting your data center expertise. 

At the prospecting stage, MSPs must think out-of-the-box and create solutions that bridge various clients’ gaps, provide a wide range of services, and develop connectivity offerings. Those options set your firm apart from the competition and allow you to gain more customers. 

Challenge 2: Building effective pricing models

One of the single biggest pain points for MSPs is pricing, which can be tricky to decode (match client needs to costs) and implement. In a quest to win more prospects, many IT services firms underprice their services and undervalue their time, resulting in lower-income and missed MRR goals. 

There are two major concerns when MSPs set their prices too low. First, they can't elevate rates to align with market standards prior to contract renewal, and second, commoditization and margin erosion become self-fulfilling prophecies as competitors race to drive down rates. 

The best way to build a viable pricing model is to start with competitive and market research. Consult with industry experts who can guide you through the process and ensure your products and services are affordable for prospects and help you meet revenue goals. 

Challenge 3: Prospects invested in legacy IT systems

Again, one of the most common prospect issues MSPs deals with concerns companies that don’t want to migrate away from legacy infrastructure and systems. Getting companies to upgrade their hardware and applications is one of their toughest challenges, especially when budgets are tight. 

While legacy systems are prone to vulnerabilities and security concerns, it may just be difficult to convince prospects to upgrade when they think the systems are ‘working fine.’ The best approach is to explain which specific security vulnerabilities and threats they face. Offer services and security measures, as well as regulatory compliance assurances, that will provide those businesses with substantial protection against cybersecurity attacks. 

Challenge 4: Handling repetitive tasks without automation

Time is valuable, and MSPs typically work on multiple projects at the same time. The major problem for IT services firms is managing schedules and tasks, and without effective best practices in place, efficiency and payroll costs can rise exponentially. 

MSPs can end up spending most of their time performing repetitive tasks and manually completing processes that could be automated. They use many applications to run their operations, including CRMs, proposals and quote builders, sales, and assessment tools. However, many fail to take full advantage of these platforms due to incomprehensible user interfaces, lack of appropriate tracking features, and disconnected sales automation processes. All of these disjointed systems lead to more repetitive tasks for MSPs, which consume far too much of their time and money.

IT services providers can leverage automation to eliminate those wasteful steps. A unified sales management system like Zomentum, which integrates all your valued MSP business applications into a single application, will improve efficiency, saving time and payroll costs.

These platforms let IT services providers create multiple sales pipelines, manage and prioritize the opportunities, and send proposals and quotes in minutes. MSPs can also use these tools to edit proposal templates, track proposals, set email reminders, offer electronic signature options, integrate PSAs, and automate workflow. 

To learn more about streamlining and automating your sales process, contact Zomentum.  

What’s next for the MSPs?

MSPs are tasked with performing many complex and difficult activities each day. Convincing prospects to sign a contract for new services or to upgrade working systems can be just as difficult. While they think their ‘working systems’ are all fine, provide real-time examples for them to relate with. 

Drive more value and efficiency for your prospect’s business while addressing your MSP’s pain points. Sales automation can help your brand stand out from the competition.