Running a successful MSP business requires navigating far more than technical challenges. From market opportunities and talent acquisition to sales, marketing and human resources, MSPs must maintain a differentiating edge in a competitive landscape. But first, you must define your purpose.
“Managed services is hard. There's not much that's easy about it,” said John Tippitt, COO at Cytracom and former owner and operator of a technology services company.
One of the most crucial, yet often overlooked, aspects of running an MSP is understanding the fundamental “why” behind the business. Whether the goal is generating steady cash flow, building for an eventual exit or creating a legacy business for the next generation, this core purpose should drive all strategic decisions.
Otherwise, “You end up kind of getting lost, and then you just are working, and you’re busy and then all of a sudden the business owns you,” Tippitt warned. It’s easy to lose sight of original goals without clear purpose, and hard to run an efficient business.
Operational Efficiency: The Science of Measurement
Operational efficiency in managed services demands precise measurement and accountability. But efficiency isn't a destination, rather an ongoing process that should be defined and measured across different areas of the business.
Key performance indicators (KPIs) are critical tools for measuring and improving efficiency. Among the most important metrics are:
- - Technical resource utilization
- - First contact resolution rates
- - Ticket volume per client and end user
- - Monthly recurring revenue (MRR)
- - Client dispute rates on invoices
- - Net promoter score (NPS)
- - Client churn rate
Each item involves a good amount of detail and strategy, so Tippit cautions against trying to optimize everything at once. “If that’s your answer, you will fail. Instead, MSPs should choose focus areas that align with their business goals and assign clear ownership of each KPI to specific team members. Everything else remains in maintenance mode for the time being.
The Art of Client Acquisition
When it comes to winning new business, many MSPs make a fundamental mistake. “If you're trying to acquire clients, and your marketing and sales collateral are talking about technology, you’re doing it wrong,” Tippitt said.
The key to successful client acquisition lies in shifting the conversation away from technical specs and toward business outcomes. Too many MSPs fall into the trap of discussing firewalls, patches and technical details when they should be focusing on solving business problems and delivering value.
“The MSP that stops talking about tech, and makes it about the business conversation, will win. Every time,” Tippitt said. It’s an approach that requires confidence in one's expertise and the ability to prescribe solutions rather than presenting multiple options that can overwhelm prospects.
The Value Proposition
That confidence is something MSP leaders will call upon when it comes to demonstrating value.
“You are smart. You are knowledgeable. You put in hard work to be able to say that is the answer,” Tippitt said, encouraging MSPs to own their expertise and price their services accordingly. Just as patients pay for a doctor's years of education and experience rather than the few minutes of consultation, he said clients should understand they're paying for the MSP's accumulated knowledge and problem-solving capabilities.
“You need to sell and charge for the value that you have provided, not based off the cost of the widget that you're using to do it.”
The Natural Evolution of Client Relationships
MSPs that master efficiency and acquisition as Tippitt suggests will eventually see some clients start to drift away—and that’s a good thing, “You technically should be losing clients as you grow,” he said, challenging the common assumption that client retention should always be 100%.
This dynamic exists because most MSPs start by serving smaller businesses that can’t afford established providers. New MSPs typically operate opportunistically, filling gaps where businesses need technical help but can't afford larger providers. While some of these initial clients will grow and mature alongside the MSP, others won’t. As MSPs develop more sophisticated services and move upmarket, they often find that serving both one-person firms paying $300 monthly and organizations paying $4,000 monthly become operationally inefficient.
This natural evolution doesn't mean abandoning early clients. Instead, MSPs can transition clients to providers better suited to their scale and needs when they recognize client needs and MSP capabilities no longer align. The key is measuring churn not just by client count, but by evaluating the dollars lost compared to dollars gained, ensuring that any client transitions align with the MSP's strategic growth goals.
Balancing Strategy, Operations and Growth
Success in managed services requires mastery beyond technical capability. By maintaining focus on core business goals, implementing proper metrics, and approaching client acquisition with a business-first mindset, MSPs can build sustainable practices that effectively deliver and communicate value while maintaining operational efficiency. As the industry continues to evolve, these fundamental principles are the ones that help MSPs thrive in any environment.
