Survey: Customers Find MSPs Through Referrals, Shows

Referrals and trade shows are the most common ways for users to find an MSP (managed services provider), while traditional sales calls don't even make the list, according to research by the MSP Alliance.

The findings came from a recent survey of 50 end-user customers, half of whom said they have used managed services for less than a year and two-thirds said they were very happy with their MSPs.

The survey results reinforce the conventional wisdom that selling managed services requires a different kind of pitch, said Charles Weaver, president of the 230-member MSP Alliance.

"You cannot sell managed services in the traditional sense that you sell a product," said Weaver.

And though he didn't completely dismiss sales calls, Weaver said selling managed services requires cultivating a long-term relationship with the user. Weaver likened the relationship to those with lawyers and doctors, neither of which rely on outbound sales.

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According to the survey results, 33 percent of participants said they found a MSP through a referral, while another 33 percent named trade shows. Next on the list were advertisements and Web searches.

The referral finding reinforces anecdotal evidence from countless managed services providers, many of which have made the transition from traditional VAR models with a focus on product supported by break/fix maintenance services. Many say word of mouth has proven the most effective way to win new business.

"Most of my business is done through referrals," said Marcial Velez, president of Xperteks, New York, a managed services provider focused on the Mac OS platform. "Cold calling and mailers simply have not worked for me."

Velez said he has gotten no managed services clients through trade shows.

Jeff Kaplan, managing director of research firm THINKstrategies Inc., Wellesley, N.Y., was puzzled by the trade show finding. "Few MSPs participate in conferences or trade shows," he said.

As for sales calls, Kaplan said while a sales call alone may not make the sale, it is one of the components of promoting the model to potential customers.

An end user who answers a call pitching managed services may not base the decision to enter a managed services contract on the call, but on the research that follows it. The call serves as the catalyst, said Kaplan.

"Nobody wants to admit they bought something because of a sales call," he said.

The MSP Alliance survey found that one third of end users would "very likely" refer their MSP to another company and one third said they would be "somewhat likely" to do so.

While no participants said they would be "not likely at all" to make a referral, the survey also found that 66 percent of respondents said they are "very happy" with their current provider. This means, said Weaver, there is room for improvement on customer satisfaction.

"There's still some work to be done, though I think it's a good number to start with," Weaver said. "MSPs don't do a good job of communicating to their clients the value they bring."

Providers must get into the habit of flooding their clients with reports on the tasks they conduct daily to keep their systems up and running, Weaver said.

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Because MSPs remotely take over some or all of their clients' IT functions, the clients may not realize what is going on behind the scenes. Customers are used to only dealing with providers during purchases and when something goes wrong.

The MSP Alliance survey also found that nearly 67 percent of participants have seen improvements in employee productivity as a result of managed services, while 50 percent said they have enjoyed lower costs and improved IT performance and security.

Security is the primary reason customers want managed services, according to the survey. All participants named security, while two thirds also named the desire to improve IT performance and one third also wanted to reduce costs.