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You must know your MSP’s greatest strength and what your ideal customer looks like. Then you must build processes around delivering that service to those kinds of clients. If you don’t, predictable issues will ensue. If you do, you’ll avoid all kinds of distractions and dead ends for your business.
In Part 1 of The MSP Sweet Spot, we explained that that the right foundation for explosive MSP growth involves determining what you are uniquely best at and who your best customers are, and then building repeatable processes that allow you to deliver that service to those customers repeatably and consistently. Know your identity, understand your ideal customer avatar, and commit moving away from an elbow grease approach and towards functioning like a well-oiled machine.
The key to finding your giant pumpkin seed is to make sure that you have all three of these areas defined. If you only have two, a critical piece is missing, and you can fall into any number of hamster-wheel traps that so many others fall into. By going three for three, you can begin to identify not only your best customers, but your best potential customers. As Michalowicz puts it, “those who give you the most business, have reasonable expectations, and communicate well.”
If you only go two for three, the following issues will probably ensue.
No Systemization = Dollars For Hours
If MSPs know who their good clients are and have established their unique offering, but have failed to systematize, they risk spiraling toward trading dollars for hours.
You might say, “We’re not doing that. We’re on an MSP model.” But without repeatable processes, you are really only halfway there. The billing model might be right, but the service delivery model is still time-consuming and dependent on strong (aka expensive) individual technicians and engineers. As the owner, you may continue to get sucked into the day-to-day operations. Profitability and scaling could be an ongoing struggle, and customer service headaches are entirely predictable.
No Unique Offering = Price Pressure
If MSPs have systemized processes and know who their top clients are, but fail to have a unique offering, they may fall victim to price pressure. An offering that has no differentiation is subject to commoditization. When there is nothing unique in an offering, price becomes the determining factor. No one wants to buy a dozen eggs for $7 if they can get them down the block for $4.
No Top Client Profile = No One Cares
When MSPs have a unique offering and systematize their delivery, but they don’t know who their top clients are, then no one cares. Their uniqueness is lost on their clients, who won’t appreciate the value of their systemization. Most clients aren’t concerned with what goes into the sausage. It’s more important to us than it is to them. Your prospects may not connect with your message, and they will likely not align with your core values.
In the best-case scenario, they will smile and nod during the sales meeting and then go with another offer.
In the worst case, they will accept your proposal. Yes, this is the worst case, because now you have a client who sees the relationship with your firm as strictly transactional. Chances are you only made the sale because you were the low bidder, and the client will value the relationship accordingly. There is a good probability it will be a contentious relationship in which neither you nor the customer are happy over time.
Like a chemical reaction, when you combine all three elements, your sweet spot transforms into your superpower! You will have clients who want to work with you because you know them and you know their business. These clients will appreciate your unique offering. After all, that’s why they chose you over the competition. And your systems will ensure that the client receives consistent service delivery that turns them into raving fans.
Stay In Your Lane
Once MSPs have found their sweet spot, they need to operate consistently in it. Most people think that’s about chasing the right kind of clients and delivering on those opportunities regularly, using consistent processes—and that’s certainly a key part of it. The less obvious, and often more gut-wrenching, consideration is what to say no to.
“The essence of strategy is choosing what not to do.”
— Michael Porter
Saying no to AFAB opportunities that are outside of your sweet spot, even if they have significant revenue associated with them, is just as important. If an MSP’s sweet spot is providing all-in managed services to dental practices with up to 25 employees who use Microsoft 365 and a particular dental software package, that MSP shouldn’t bid on the support for a local municipality that has 100 users, runs on Google Docs, and just wants a tech sitting there onsite two days a week. Even if the MSP has an insider’s shot at the contract and it’s a lot of money.
Stay in your lane. It’s sometimes hard to do, but it’s necessary in order to grow a giant pumpkin.
A Confident Business
If you were to personify your business, we’d say you want it to have a strong sense of identity. Know thyself, MSP. This is who we are. This is who our clients are. This is what we do. This is how we do it. At that point, you can easily recognize distractions and landmines, and then navigate around them without a hint of second guessing. “The essence of strategy is choosing what not to do.” Go three for three and you’ll be in a great position to do just that, making room for more and more real opportunities.
Adapted from Chapter 4 of The Pumpkin Plan for Managed Service Providers by Dave Cava and Shawn P. Walsh. Read a chapter for free here