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Writer's pictureJamie Daum

MSP Growth Is Tough… But, Tougher Without Trust.

Jamie Daum has firmly established himself as a commercial savant in the MSP ecosystem. Now, as CEO of Inforcer, he shares the secrets behind the explosive growth of successful MSPs. Discover Jamie's insights on transforming challenges into triumphs with strategic investments, trust-building, and seamless sales and marketing integration. Learn how top MSPs secure lucrative contracts and achieve sustainable growth in a competitive landscape.

Jamie Daum is Co-Founder and MD at Inforcer
Jamie Daum is Co-Founder and MD at Inforcer

Managed Services was a relatively new concept when I started in the industry. Over the past several years, I have had the privilege of working with some of the best experts in the field.


My journey includes growing a channel go-to-market consultancy, hiring over 30 MSP-specific sales and marketing experts, and collaborating with more than 200 MSPs and 30 channel vendors on their growth strategies. This extensive experience has provided me with a deep understanding of the challenges MSPs face in their growth journey.


When we as a business analysed the growth strategies of successful MSPs, it was evident that there are several critical factors to consider. These include CRM investment, integrating both sales and marketing processes and teams, productisation and positioning, sales resources and sales structure and commission plans, and overall understanding of the true cost of new customer acquisition. The most successful MSPs, those that consistently secure 3 to 4 managed service contracts per month, are typically investing between £80,000 to £120,000 monthly. Additionally, they are winning upsell projects each month worth four times their recurring revenue. Whilst this sounds like a lot, it considers sales management, sales representatives, junior outbound sales resource, marketing managers, marketing and event spend, CRM costs. It’s just what it costs to grow in a highly competitive market. The question is, where to start and what are the most effective investments.


To thrive, the first focus for an MSP must be on intensively creating and selling products that customers genuinely value and want to buy. This is not an easy task and requires a strategic approach to several aspects of the business. The next step is to understand how to build trust with clients. With the right products, and a mechanism to build trust, the rest of the sales and marketing process are simply tactical improvements.


The Role of Trust in MSP Growth


A crucial element in winning new business for MSPs is trust. As the saying goes, "People buy from people." To secure business, the buyer needs to trust that the return on investment (ROI) will outweigh any pain associated with the change. This can be summarised in the formula:


ROI > Pain of Change


From the early stages of my career, I have relied on the above, but also the below specific formula for trust:


Trust = (Familiarity x Credibility) / Risk


In this formula, risk is inversely proportional to trust. The higher the risk—whether due to the amount of money involved, the degree of change required, or past negative experiences clients may have had with other MSPs—the more familiarity and credibility are needed to establish trust that the ROI > Pain of Change equation holds true.


Familiarity


Familiarity is built through relationships and building intimacy with the buyer. Activities such as face-to-face meetings, client entertainment and events, and regular engagement on social media all help to build familiarity. People prefer to buy from those they know and relate to. Therefore, MSPs should focus on increasing both their own and their MSP’s familiarity with target buyers.


Ways to build familiarity include:


  • Meeting your potential clients face to face, early in the sales cycle

  • Bringing clients into your offices to meet the team behind your services

  • Hosting and attending industry events

  • Regularly engaging with potential clients on social media

  • Building a consistent brand and, as a services business, with your people being the core differentiator, putting your people at the forefront of your branding

  • Providing valuable content that addresses the pain points of potential clients

  • Personalising interactions and maintaining consistent communication


Credibility


Credibility can be established in numerous ways. Some effective methods include:


  • Being referred by a trusted advisor or existing client

  • Winning and showing industry awards

  • Gaining relevant certifications and qualifications, such as ISO27001

  • Adhering to sector-specific compliances, like HIPAA for healthcare

  • Focusing on a specific vertical such as legal or accountancy helps to make you hyper-relevant and demonstrate additional value to a potential customer from your chosen sector

  • Case Studies, both written and video


Ultimately, new business is won when the buyer believes that the ROI from transitioning to your MSP will significantly outweigh any associated pain of change. This belief is fostered by ensuring that familiarity and credibility effectively overcome any perceived risks specific to the buyer.


The Costs of Growth


To understand why many MSPs struggle to grow, it is essential to break down the various costs involved. These costs include:



1. Marketing Spend


 Effective marketing is crucial for reaching potential clients and generating leads. This can involve digital marketing, content creation, events, and more. We established that the average marketing spend was £12,000 per effective lead. There is a big difference between a lead and a meeting. A lead will require nurturing and takes on average almost 40 touch points from initial lead to convert into won business. Make sure you have the team to effectively turn a lead into money before you invest in marketing spend. Any sales rep that waits for “hot” meetings rather than works with marketing to nurture them are not good hires.


2. Sales Costs


This includes the salaries of sales teams, travel expenses, and other costs associated with pitching and closing deals, including Sales Management to drive accountability and provide sales training. Selling managed services is complex and difficult. It takes years of experience to truly be able to understand and articulate the value proposition. Make sure your value proposition is documented and coachable before investing in Sales Resource. It’s hard to find a great sales resource, but even harder to find a great recruiter. I would recommend companies like Bluebird Recruitment or Amberes who understand MSP, but most importantly understand what good looks like in sales.


3. CRM Investment


A robust Customer Relationship Management (CRM) system is vital for managing client interactions, tracking leads, and ensuring effective follow-ups and driving daily accountability to both marketing resources and sales reps. Having a CRM process that integrates marketing and sales is essential, allowing them to work together to push leads through the sales funnel, jointly. Sometimes a little extra support is needed in building out these processes so if you choose HubSpot consultants like Ben Spector can help you with your sales & CRM processes and get you better pricing.


4. Productisation and Positioning

 

MSPs need to clearly define their services and position them in a way that highlights their value to potential clients. This often involves packaging services into easily understandable products. Productisation must be ever-evolving. The technologies used by your customers are evolving so quickly, so should the products and solutions you sell them or you will be left behind in an environment where more agile MSPs prosper. This is hard to outsource, at the end of the day, what solutions you sell to your clients and how you deliver them is the lifeblood of your business. I’d recommend taking an offsite day with all the relevant stakeholders across your MSP; Sales, Support, Billing etc and really look at what your specific chosen verticals want to buy, what services your Teams skillset can deliver, and what value each of these services truly add to your prospective buyer.


5. Junior SDRs (Sales Development Representatives)


SDRs can play a crucial role in identifying and nurturing leads, setting the stage for the sales team to close deals. They push leads down the funnel and convert them into meetings or opportunities. If I were to start an MSP tomorrow I would hire both a senior sales resource and a junior SDR and pair them together. The senior resource would be responsible for coaching the junior and holding them accountable, and the junior would be responsible for nurturing leads. You can’t expect a junior resource to understand the solutions you sell and have spent years developing. It’s much easier for a junior resource to drive attendance to a lunch event your marketing team is putting on, at a good location (the compelling reason to attend), with a relevant and interesting agenda, than it is for them to book a new meeting to buy IT Support. An existing customer and senior sales resource stood up at the front during your lunch event will establish a lot more trust, much more quickly and be a more effective use of your resources. Depending on your model, graduates can often be the most effective SDR candidates and there are great partnership schemes to support hiring them. Any advice on graduates I would recommend speaking with Sarah Skelton. She’s been in the industry working with graduates for a long time and always gives great, strait shooting advice and knows what to look for in your next SDR hire.


6. Outbound Video


People buy from people. If like me your inbox and LinkedIn are spammed constantly by sales reps trying to flog you, R&D tax advice, Outsourced Lead Generation, Offshore development, even Outsourced IT you’ll recognise pretty quickly that it’s hard to stand out. Your also pretty busy and often your time isn’t respected. Video is a great mechanism to cut through the noise and also allows you to consume at your leisure, but it has to be personal. We use Vidyard, a few examples are here.


7. Sales and Marketing Management: Effective management ensures that the sales and



marketing process is streamlined, goals are met, and the team is motivated and bringing in the manager provides credibility in a sales cycle. Depending on your understanding of the sales and marketing process, your own value proposition and how to position and coach it will depend on if this is an essential hire early in your growth journey.


Given these expenses, it is no surprise that successful MSPs invest significantly in their growth efforts. However, for many MSPs, the high costs are a substantial barrier.


Overcoming Growth Challenges


To overcome these challenges, MSPs need to adopt a strategic approach. Here are some recommendations in the order I would suggest implementing them:


Understand Customer Problems: Identify the specific problems your customers face and determine what solutions they are willing to pay for.


Specialise in a Specific Technology or Sector: Choose a specific technology or sector to specialise in, such as becoming experts in Microsoft. If your chosen sector is recruitment or accountancy, become proficient in industry-specific technologies like Bullhorn or QuickBooks. Explore services around these technologies, such as implementations, Data Loss Prevention (DLP), or security solutions like Conditional Access for your customers' cloud applications.


Document Your Value Proposition: Create a clear and repeatable value proposition for clients that can be easily taught to your team.


Hire a Senior Sales Resource: Bring in a senior sales professional with industry experience to drive your sales efforts.


Leverage Referrals and Testimonials: Actively seek and showcase positive referrals and testimonials from existing clients to enhance credibility.


Implement a CRM: Use a Customer Relationship Management (CRM) system, such as HubSpot, to manage and streamline your customer interactions and sales processes.


Hire a Marketing Manager and Junior Sales Development Representative (SDR): Bring in a marketing manager and a junior SDR to support your sales and marketing efforts.


Design a Marketing to Sales Process: Develop a marketing to sales process within your CRM that everyone in your organisation is committed to.


Run Regular Lunch and Learn Events: Organise regular educational events to engage with potential and existing clients.


Invest in Marketing: Allocate sufficient funds for marketing activities to ensure they have a significant impact. From a digital perspective, prioritise Search Engine Optimisation (SEO) for strong returns, followed by re-marketing campaigns and LinkedIn lead generation.


Land and Expand: Focus on upselling high-margin project work to existing clients to maximise revenue.


By following these steps, MSPs can effectively address their challenges and achieve sustained growth.


Conclusion


The growth journey for MSPs is challenging but achievable with the right strategies. By focusing on building trust through familiarity and credibility, managing costs effectively, and continuously creating value for clients, MSPs can overcome the hurdles and achieve sustainable growth.


As someone who has been deeply involved in the industry, I have seen firsthand the struggles and successes of many MSPs. While the path to growth is not easy, it is certainly within reach for those willing to invest in the right areas and build strong, trust-based relationships with their clients.


 



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