Are Organic Referrals Enough to Grow Your MSP?

  • Hosted Network October 25, 2022
  • Hosted Network James Davis
  • Hosted Network 5 mins

I am going to preface this article with the fact that I am not a marketing professional, I know, shock horror! But I talk with so many MSP owners who keep telling me that one of their biggest business challenges is lack of leads.

My first instinct is always to immediately ask 2 key questions

How well are you farming and managing your existing client base?

Can you clearly and concisely tell me what you do and what your value is to me as a small business?

Most MSPs do not have manage their current clients effectively and even fewer can convey why I should work with them. So why would throwing money at marketing magically generate more profit growth?

We all know the answer when we think like that, so why do we as MSPs keep going back and making the same mistakes? I think I have some answers and starting points to help change that.

I have been an owner, management level and involved with small business the majority of my working career. I have started 3 businesses with varying success in my career so far, I have also been coaching MSPs for the past 5 years so I have seen a lot of mistakes we make.

Firstly, its important to acknowledge how we have most often started and grown our businesses. We have a skill and wake up one day deciding that we will turn that skill into a business, we let our circle of friends and family around us know and we get some clients. We do great work (Nearly almost always for way too cheap!), we get some more and then some more.

We are so proud that we don’t spend a $ on marketing, especially because we aren’t charging enough to actually do that. Because we aren’t experienced business people, we think this is the only way to grow the business, but we never realise that this organic referral method hits a ceiling. Now that ceiling really depends on our network and the market conditions, but there is always a ceiling. After all there is a reason that most MSPs that have been in business for 15 to 20 years are still $1M to $3M Revenue

Because we have organically grown in this fashion, we have never had to stop and ask ourselves these questions;

  • What are my clients really buying? What needs are we fulfilling?
  • Who are my clients? What are the verticals? What are the profiles of the key stakeholders? Who makes the decisions and how? Where can I find these people?
  • What is our culture? What do we bring to the table that others don’t? What do we do that is unique?

These are extremely important questions to successful marketing as we can make a clear plan which will allow us to focus on the clients we want, and more importantly who will want to work with us.

We should also acknowledge that generally we who start our businesses based on our skills are very rarely comfortable with sales and are generally more technical. So in the MSP space we are very attracted to automation, set and forget. Which is really counter intuitive when we all know and say that our client engagements are relationship based. So why do we always try to market impersonally?

Its time to think a bit differently, I want to share my personal experiences to show where you might be up to on your journey and to think a little differently.

I started my first business doing gardening (If you can even call it that) at age 20, so I obviously knew everything that there was to know! My whole marketing strategy was as easy as getting a mate to make a logo, get some magnets for my ute doors, print some business cards and hang some self printed flyers with phone number tear offs. I leveraged that friends and family network and would get direct referrals, so I grew my income to $65k in 18 months. Now I was way too cheap etc. and burnt myself out, I was growing fast for that kind of business, but I was nearing my ceiling very quickly and had no idea who my clients were.

My 2nd business was a trade services company (Gardening, Cleaning, Carpentry, Painting etc.) which I grew to over $1M in revenue in 14 months. This was all based off a web presence for validation (In 2012 no other company like mine had a presence on face book) and I produced high quality colour flyers on hard card board (no one else was doing this at all). I knew my market was middle income earners that wanted no fuss professionalism to get the job done and because my competition wasn’t this I could charge a high premium. I knew I could spend $4k on a flyer drop and I would get $40k of once off gross margin and get MRR, or get repeat business in the future.

Then there has been Sea-Level, I went into this knowledge based business that was founded in the US deliberately because I knew straight away I had the skills to leverage, knew the client profiles and had a service package that brings a lot of value to their business. My marketing strategy that was unfolding was based around sharing the wisdom and showing expertise. My target market being MSP owners buy due to relationships, due to COVID there was no opportunity to attend industry events (Which any MSP vendor will tell you that it is critical to their success) so I have had to focus on eMarketing. I knew that my target market won’t just buy on the spot from an ad on Facebook, so I have been focusing on providing educational content through Vendors that we all know and utilise. This has greatly helped me break out of the friends and family circle that I could so easily have gotten stuck in. I was planning further activity, and starting to attend events, but we were acquired by Pax8 before it really got going.

I have started all of my businesses in tough economic times. 2008 during the GFC, 2012 during the massive drought, 2020 during Covid and I was able to grow because I did some form of marketing, was it perfect no, but each time I have been refining my approach and it makes a huge difference.

Back to MSPs, using my examples above. Where do you sit? Do you know who your clients are? Are you doing activities? Are they Targeted?

Typically I find most MSPs are organically horizontal (no specific verticals), we aren’t being deliberate in any kind of activity and we don’t really know what we do. So what are the successful MSP doing?

They are deliberately horizontal but have technology niches or have vertical niches, they know who their clients are and what they need.

Then they are then able to deliberately focus able to focus on the specific activity, which often look like these;

  • Regularly having people attend networking events that are relevant to their target markets to develop relationships over the long term
  • Present expert content at industry events to share knowledge and insights to help the industries they work in
  • Hold in person and online events partnered with vendors or other experts
  • Targeted eMarketing ads on specific platforms and a website that shows the values they are trying to convey
  • Specific cold contact to targeted leads whether cold calling or LinkedIn contact
  • Putting out videos and webinar content to educate around business technology

All of these activities are deliberate, focused revolving around a plan. Each can be done individually or apart of a wider marketing strategy. That is the beauty of this, to get started all you need to do is work out the questions I keep talking about, can pick an activity and make it a habit, then add on.

The most important thing to realise in all of this is, you as the expert are integral to all of these activities. Whether you directly attend, you will need to commit time to sharing this wisdom and presenting your expertise, no one else can do this for you.

So when looking for resourcing for marketing, we should be looking at services/resources that will coordinate our activities, interview us to get the knowledge from us into content, execute to the marketing plan, undertake the tasks to distribute the content.

About the author

James Davis is the Director of Pax8 Academy Asia. Originally from Canberra, he recently moved as far south as he could to Hobart. He joined the Sea-Level family in 2020 to grow the Sea-Level Operations offering locally in the APAC Region, joining Pax8 in May 2022 to elevate the industry through education.

James is a coach that has over 16 years industry experience in owning and managing SMBs. His core purpose is “To create freedom from chaos from the lives of others so they can thrive and grow”.

He values personal development, always trying to learn something new to build his body of knowledge to grow as a person and leader. James tries to share his knowledge and experience as much as possible, believing in the go-giver mentality.

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