There’s a lot about the MSP industry that lends itself to commoditization. MSPs must embrace the fundamentals of the business, but then they need to rise to the challenge of intentional differentiation.

“Strategy is about setting yourself apart from the competition. It’s not a matter of being better at what you do—it’s a matter of being different at what you do.” — Michael Porter

Ask any MSP what makes their company different. Chances are you will get a list of the same exact answers, which usually look something like this:

We’ll let you in on a secret. If most MSPs are telling the same prospects the same things, those things are not differentiators. Those MSPs are just one more step down the path to commoditization and competing on price with a million other MSPs.

Here’s part of the problem: When prospects ask us about our offering, we start telling them all the things that we can do for them. This is the same list another MSP just went over with them, but we explain how we do it better, and we try to be more likeable and credible.

“Cybersecurity? We rock that. Backup solution? It’s solid. And 24/7 monitoring? We have that too! And we’ve invested a lot of time in training and automation.”

MSPs sometimes think that by explaining how they’re the same, but better, they separate themselves from the rest of the pack. But the reality is, the more they compare themselves to their competitors, the more they look just like them.

The MSP says, “We provide that, but here is how we are different…”

The client hears “We do that too.”

And the rest just sounds like Charlie Brown’s teacher: “Whah-whaaa-whah.”

In a market where everyone else is selling apples, you should want to show up with a big, juicy orange (or maybe a pumpkin)! With a totally different offering, you will have the prospects’ attention—and best of all, if they see unique value, price is no longer their primary concern. You are the only one selling oranges.

This does not mean MSPs have to offer a dramatically different service than their competition. They just need to find ways to package, deliver, or promote it differently.

Consider Starbucks. Do they offer a unique beverage that is unavailable in other places? No. They sell coffee—tasty brown water. 

What does Starbucks offer that the others do not? 

A lot of what Starbucks is selling isn’t selling coffee. It’s the experience.

You don’t deal with a cashier; you have a barista. You don’t get a large; you get a vente. You can buy all kinds of fancy variations. When your drink is ready, they call your name. You have a café to sit in, with user-friendly Wi-Fi. You can sit in a cozy chair and meet someone or get some work done, or just read the news and people-watch. Same product, better experience. 

A Starbucks customer will walk out of their home (where the coffee is close to free), past the gas station or deli (where the coffee costs 50% of what it does at Starbucks), and then wait in line at the altar of the Green Goddess to pay $5+ for a cup of coffee. And they’ll do so with a smile of anticipation. They’ve essentially taken price off the table by differentiating.

The business world is full of companies that take a commoditized product or service and change the marketing and delivery enough to attract a loyal client base. Often that client base is willing to go out of their way for those experiences. This puts those companies ahead of their competitors. Think of businesses like Southwest Airlines, citizenM hotels, or Chick-fil-A.

Copying Your Neighbors’ Test Answers
We’ve got a bit of a plagiarism problem in the MSP industry. Owners tend to watch how other MSPs do things, and then try to copy them.

Makes sense sometimes. Why reinvent the wheel? We think it will help us achieve the same success they have had. And it can…to a degree.

In our peer groups, it is not unusual for members to ask, “Does anyone have a contract to cover this?” And a half-dozen members will email the person a copy of their contract. Or someone asks, “Does anyone have a process for X?” and other group members email out their process.

Sometimes owners take these things and implement them without asking the most important question:

“Is this really right for my company?”

Sure, there is a lot to learn from other MSPs, and there are fundamentals to this business. Granted. No doubt. But if everyone follows the same blueprint or playbook to a tee, then everyone looks the same. This means that in the end our prospects see no difference except price, so it becomes a race to the basement to be the low bidder.

Do you really want to be the low bidder?

Copying someone else’s strategy has its limits. Each MSP needs to identify their own sweet spot. They can’t just copy their neighbors’ answers.

When we were facilitating ConnectWise User Groups, members regularly asked us, “Why do you stand up here and share all your best practices? Don’t you have competitors in the room?”

Part of the answer was that a rising tide lifts all boats, and sharing best practices helps the whole industry. We wanted to be Go-Givers (if that’s not a familiar term, go order that classic book before you finish this paragraph). But the other consideration is that we weren’t really worried about anyone cloning what we were doing.

Everyone needs to put their own spin on things to really succeed exponentially. Your sweet spot is going to differ from the MSP next to you and the MSP next to them.

When strategy is copied, the copying party might get 90% right, but 10% will be different. To differentiate, you must develop a strategy that consists of a unique offering that plays off your company’s unique strengths.

Think back to the old Xerox machines. You make a copy of a pristine page, and it comes out almost exactly the same, but not quite. When you make a copy of that copy, it comes out a little worse. Make a copy of that copy, still worse, and so on. This is what happens when a competitor tries to copy unique aspects of your company.

In the essay “What is Strategy?” Harvard Business School professor Michael Porter explains: “The probability that competitors can match any activity is often less than one. The probabilities then quickly compound to make matching the entire system highly unlikely (.9 x .9 = .81; .9 x .9 x .9 x .9 = .66, and so on).” That’s one reason MSPs shouldn’t pilfer strategy from someone else.

What’s the first step being an orange in a bowl full of apples? Simply deciding that you will figure out how to be one. It starts with determining that your MSP will be different. Most MSP owners never get past that simple step. Either differentiation never crosses their minds, or they just consider commoditization a fait accompli.

There’s a million ways to be different. Perhaps it’s the way you answer the phone. The way your employees dress. A vertical specialization few of your (soon to be former) competitors have. An expertise in a particular compliance structure. Geek Squad did it by inventing an “upscale nerd” brand, dressing their techs in faux tuxedo chic and giving them Volkswagen Bugs to drive around in.  Maybe you put a bow and a congratulations card on every new laptop your company delivers. 

How will you stand out from the pack? It starts with identifying your Sweet Spot, which we’ll cover over the next two weeks.