Your Clients Reflect Your MSP Practice

Speaker A: If your clients are mature, then your MSP practice is going to be pushing towards a maturity in your service delivery, in your service catalog, in the way that you interact with customers, in the way that you vet new prospects, in the way that you market yourself, in the way you talk about yourself. Everything changes when you have more customers in your portfolio who are driven to and want to mature. There's a phrase that I've been thinking about a lot lately and I think it's a, it's a phrase, it's a concept, maybe a philosophy that I think every MSP business owner, uh, every MSP executive ought to ponder and really come to grips with. And that is this. MSPS don't just manage it anymore. MSPS manage client maturity. That fairly simplistic phrase, simplistic concept is actually pretty radical when you come to think about how modern day MSPs behave, uh, and the services they deliver. And it's radical in the sense of how customers respond to that type of a concept, of evolving with the help of their MSP, into a more mature state, at least in terms of cybersecurity and IT preparedness. And the distinction becomes even more stark when you consider that phrase and you look at some MSPs and they have, uh, it looks like it's almost easy, right? I won't say that managed services is ever easy, but some MSPs make it look easy. It's more of an almost effortless service delivery model. You know, they, they can scale, uh, they can scale with discipline and with, with compliance and security. They can scale by maintaining their margins. They have predictability in their IT service outcomes compared to others in their peer community who may feel like they're kind of struggling, right? They're always running uphill, they're always sprinting from kind of one emergency to the next. Those are very different types of service providers. Um, and I, I empathize with the, the msps in that second category that may feel like you're struggling because there is a way that you can escape that, there is a way that you can evolve beyond that and, and it doesn't have to take a lot of time. In fact, it shouldn't take a lot of time. But what I'm going to talk about today is this mirror effect of how you can really tell where you are in your managed services maturity journey because your customers are actually going to tell a lot about you as an MSP and really how mature you are or not. We'll get into that momentarily. Every MSP is a mirror in the Sense that you reflect in kind of real terms the aggregate maturity of all the customers that you service, you represent. And on one hand, if you have customers that kind of treat it almost like a fire department, right? They, they, they treat it almost like it's an annoyance. It's a, their MSP is there to be activated only when there is an IT problem. And when there is no IT problem, they have very little use for their msp. Or let's put it this way, they don't really understand how they should use their MSP or relate to them. I think that's probably a better phrase. Um, and you, you kind of see the beginning of two different types of polar opposite customers, right? The very mature on one hand, the very immature on the other. And in between a very broad spectrum of different grades of maturity levels. And this is the difference between being trapped in a kind of reaction mode or a reactive service provider mode, RSP as I call them, M and customers who really want to engage with an rsp, but they really ought to be engaging with an msp, a mature managed service provider. MSP doesn't mean mature provider, but maybe it should, who knows. But that's really what I'm talking about. So let's talk about this. And I don't want to be assigning blame or judgment, but I want to talk about this in very real terms because I know I've talked to a lot of MSPs out there, a lot of business owner MSPs who talk about, look, you know, they want to become mature, they want their customers to do it, but they just get a lot of resistance, there's a lot of, of conflict. When they bring up cybersecurity, they bring up it, they talk about governance, they talk about all of those types of things and the customers just kind of push back, right? So this, this mirror concept generally happens not overnight, but kind of in a gradual way. And I'll, I'll describe it here for those of you and see if you see if this doesn't sound familiar. Maybe you've come across this in your own practice. You start off with a service model. Let's, let's just assume that you have a fairly well grounded service catalog, right? It includes fundamentals, monitoring, remote management, patching, endpoint protection, backups, data backups, specifically some sort of maybe security awareness training that you offer and a quarterly business review. Right? Now on paper, that would look like a prototypical, very common modern day MSP practice, right? Pretty, pretty straightforward. But then the market pushes back customers, potential customers, and they start to Sing a little bit of a different tune. Right? Some clients, they don't want the full program and they start to cherry pick things, they start to remove things here and there. And, you know, you and I know what they're doing. They're probably trying to lower the price because they don't understand it, they don't, they can't afford it, or both. So what do they do? They say, uh, oh, you know what? I don't really want mfa. You know, remove that. Right. That's just, that's not really high value for me. So let's just remove Multi Factor Authentication. You know, the, the, the unsupported systems that you said that we have in our, in our domain. Uh, you know, we're not willing to give those up yet. So we would like you to, you know, either not monitor them, leave them untended, unsecured, or just monitor them and pledge that you're going to, you know, take on that risk. Even though they're not supported by the vendor. Maybe the OS is out of date. You've heard this before, I'm sure. Maybe they want to play around with the frequency of the backups or how much data is being backed up and how it's being backed up and where it's being backed up and all those things. The point is, is that little by little, the client starts to eat away at what you have presented and what they want. In the end, their final menu looks totally different than what you presented at the beginning. And it's not like, just like I said, like an overnight type of a thing. They, they will do that just like kind of a, a war of attrition. They're almost just wearing you down. They're wearing the, the salespeople down. The technical services engineer, whoever is interacting with the client is just, you know, they're, they're being kind of just, just kind of pummeled over and over and over again until finally, you know, they just. You just want to deal. You want to get to the final, final signing of the, of the agreement, and then you are giving up everything that you had proposed at the beginning, or a sizable amount of what you had proposed at the beginning. And you realize, wow, I have pivoted, I have changed a lot from what my professional recommendation was for this customer. And that's not a very good feeling. That's not a good feeling at all. And what will start happening is once you do that once, it's a lot easier to do it the second time, the third, fourth, fifth, 10th, 20th time. And before Long before you realize it, you are dealing with a fairly good percentage of your customer base who are not on anything that would be considered a very mature service catalog. They're not following best practices and they are engaging and treating you, the service provider, like a fire department, not like someone who is guiding them towards greater cybersecurity maturity. I wouldn't call that a moral failure. I think that that is just natural market pressure. But it is something that I'd like you to think about throughout this episode and even beyond this. I'd like you to always remember that scenario because chances are you're familiar with it, you've seen it happen, you've experienced it yourself. Maybe some of you out there, you've already dealt with this, and so you're beyond this. You figured it out. Kudos to you. Leave a comment wherever you're watching or hearing this and maybe share some of your wisdom with others. But there's quite a lot of you I know who are watching, listening to this, and you don't know how to figure a way out of that kind of hole that you've dug or more appropriately, the hole that your customers have dug for you. So I do want to talk about how do you get back to kind of an equilibrium that is more on the mature side than the less mature side. If, if you allow this kind of model to, to continue, if you allow your customers to beat down your service catalog recommendations and to just cherry pick the things that they want and they are picking a non recommended course of, of treatment or action, then, you know, you, you're going to have to make a stand and eventually make a decision of what type of customer do you really want to, and are you okay being a service provider for immature organizations? Now, I know this brings up a whole host of questions about, you know, what, what, you know, what type of treatment or care it care do customers deserve? And you know, you could rationalize it in so many different ways of, well, if I don't do it for them, then, you know, I don't want them to be, you know, finding their way to somebody who's really bad and who's going to really, you know, take uh, advantage of them or, or make them, you know, leave them in an even worse spot than we would. I, uh, I get that and I've heard that from a lot of you out there. But, but just think about this. If, if your clients are mature, then your MSP practice is going to be pushing towards a maturity in your service delivery, in your service catalog in the way that you interact with customers in the way that you vet New Pro, in the way that you market yourself, in the way you talk about yourself. Everything changes when you have more customers in your portfolio who are driven to and want to mature, right? I'm not saying that everybody's perfect. I'm not saying that. What I'm saying is that, you know, if you have, the majority of your customers are either wanting to become more mature or apathetic to maturity in general and don't care. They just are not willing to invest in it. They don't understand it or they don't care about it. Even if they do understand it. That's probably the most dangerous type of customer because they are the ones that are willing to put all their risk onto you as a service provider. And if you don't think that those types of customers exist, think again. They do. I've seen them. I know you. A lot of you out there have seen those. And those are the types of customers that, quite frankly, I don't think anybody reactive or proactive, uh, ought to be servicing those types of customers. They should be avoided completely because they are very dangerous to deal with. If your customers are reactive, kind of the opposite then happens, right? Your team starts to modify their reality and they modify their way of thinking in some way to become more conditioned to the chaos that a reactive customer is inclined to bring to your service provider practice. So you kind of normalize the exceptions to all the best practices that you know are out there. You build workarounds, you, you build circumventions to modern IT cybersecurity best practices, and you deviate. You deviate and you make a conscious choice to deviate from those accepted best practices. And you do so on the basis of, I have to close this deal and I have to get this customer, because if I don't, they're never going to sign up. So you, you kind of tolerate this slow creep of immature customers who come into your portfolio and they start to wear you down. And you may say you're winning business. You may say that you have, you have billings coming in, and that's what matters. But I want you to think about this. It's not as clear as just, are you sending out more invoices this month than you were last month? And who cares if they're less mature? It's an opportunity to win them over. I get it. And I understand some of you may buy into that philosophy of you just want to get anybody in there because that's your opportunity to kind of convince Them, you know, if, if they only see what you're capable of, then you will be able to modernize them, help them accelerate their maturity model. And maybe that's true, maybe it's true. But beware of a trap. And this is the trap that, that could come if you, if you sit in that equilibrium of accepting more and more customers who are reactive, treat you like an IT fire department, just don't care about IT or cybersecurity maturity at all, and you are normalizing and creating a new equilibrium with that type of a customer base, then you will stop growing operationally as a, as a msp. You will stop at some point evolving and maturing yourself. Think about that. Uh, it's impossible to have a preponderance of your customers who are not mature and are not evolving quickly enough in this modern age. And speed, velocity of maturity absolutely is an indicator of where someone is going. Meaning we do, we are not on a 50 year evolutionary swing here. We are in, you know, not years, but months. Right? We have to evolve fast because the threats that are facing us are evolving at an even quicker rate than we realize. But you, you have to accept at some point that your customers will become that mirror of you and you will now at some point wake up and realize I am no longer a modern day managed service provider. I am now an rsp. I am not a, uh, now a reactive service provider because that is what I allowed into my customer portfolio and that is who not only represents the majority of my customers, but it is now how I must, it's now how I must deliver IT services because that's what my customer base expects of me. Seems like a pretty straightforward statement, I hope right, makes sense to you guys. It's going to slow down your efficiency. It's going to create a lot of havoc for your technical people. Right? They're not going to be able to be perfecting their craft and doing what they're, they need to do in order to be efficient, high margin service delivery masters who are going to drive technically your managed services practice in the right direction. It's going to have the opposite effect. It's going to wear them down, it's going to drag them down, it's going to be an ankle on their weight as they are trying to run a marathon or a sprint, whatever, whatever analogy you want to use. Um, and, and that is where a less mature customer base becomes a very real risk to your MSP practice. If a client refuses basic cyber hygiene, that's not just their problem. It becomes your support Burden and your escalation burden, your insurance conversation, your incident response exposure, and your, dare I say it, your MSP reputation is now thrown significantly into a risky position. And in my opinion, having analyzed, having been part of a number of litigation matters between MSP and customer, and just generally witnessed and studied, as a student of managed services for quite a long time now, I've seen that those customers who engage in that type of behavior are really trying to do one thing, and that is transfer risk from them to you, the msp. And they don't care if the risk blows up. They just want it to be your problem, not their problem. And I hate if you think that that's a negative way to look at it. I'm, I'm sorry, but I think that there are quite a few customers who absolutely believe that their MSP is nothing more than just a bomb shelter for something really, really bad to go off. As long as it goes off in the MSP environment and not in theirs, or put a different way, as long as the MSP is there to pick up the pieces and make us whole, that's what they look at their MSP as. That's a very dangerous perception for any customer to have of their msp, because that is not what an MSP does. It never has and it never will be. So what should you do about it? What can you practically do about it? Uh, you have to raise the floor. You have to raise your service catalog floor to a modest level, an acceptable level. I am not talking about you having to be running like a super secret, highly resilient, because I get it, maybe you're serving, uh, a community where they just don't have that. And maybe you do. Maybe you have a mixture, right? That's the beautiful thing about managed services is that anywhere in the world you're going to find a completely unique, dynamic customer environment that demands a highly localized managed service provider to reflect the uniqueness of that market. But in today's modern evolution of cyber threats, that mirror reflection needs to be ever increasing in its maturity. And that is your responsibility as a managed service provider. You need to raise the floor. So you don't do that with vague kind of just concepts that you put up on your website. You don't, you know, I don't personally believe in fud. Right. Fear, uncertainty, doubt. Um, I know it works for some, but I think that an MSP ought to be very upfront and an MSP ought to be matter of fact in today's day and age that they are not going to take on a customer unless the customer is willing to do certain things because it is no longer just about issuing an invoice and it's just no longer about, hey, I'm going to deliver a service because who cares, I'm not at risk. I just established. I hope all of you will see quite clearly that you do take on risk as you take on more and more immature customer profiles. So you have to establish a minimum operating standard for every managed services customer, period. A minimum floor below which you will not accept. A customer below which you will not accept, sign an agreement with them. You will not agree that, hey, for. We'll try for a couple of months and maybe we'll see if we can bring them up or above that floor. No, you have to establish what your floor looks like. And I will say this, uh, on. In one, in one regard, it's fairly common what that floor should look like for anywhere in the planet, which is to say that you ought to have the fundamentals in place, which I consider monitoring, remote management, endpoint protection, backup, some security awareness training, right? And some sort of. Well, we talked about resilience, so that's backup, right? So I. What did I talk about? Monitoring, management, endpoint protection, security protection, backup, resiliency and security awareness training. Four core areas that any MSP worth their salt ought to be able to deliver anywhere on the planet and do so at a price point, procuring the right vendors in your area to match the price point for your customers. And you should be able to do that and deliver that at scale anywhere on the planet and set that minimum floor without which there is. You know, like I said before, I wouldn't take on any customer who wants to go below that floor and just deviate from accepted norms. That is what you should do if you want to future proof yourself and to start to evolve your existing customers. Assuming you have customers who are at or below that minimum floor right now and you can go from there, right? And I'm not saying that that's going to be the perfect solution or framework for everybody because some of you have very, very sophisticated customers and you need something, your floor is going to be much higher than someone else's floor, which might be lower, and geography is going to play into that. It's certainly going to be customer segment, customer size, customer verticals, service verticals, et cetera. So I don't want to go into all those. We've talked about those on this channel before, you already know that. But it's creating the floor for you and making sure that Your customer portfolio, when it looks back at you in that mirror, you're happy with it. You're safe in knowing that, yeah, you've set that floor and you've got customers who are no longer falling below it. And the customer, when you educate them and you've given them warnings and you've given them options, you've given them time and you've given them a practical path forward, and if they still refuse to meet that minimum standard, you're going to have to take a stand and you're going to have to just have a conversation which is, you either do this or we separate ways. And I think it's time for MSPs to start telling customers who are below that level, that threshold level, that they are really an exception to the rule. They are now so deviated from the norm and so risky in their behavior that you don't want to be associated with them. And I think that, that. Now, uh, some of you may be saying, Charles, why would we say that to a customer or prospective customer? Well, I'm not saying everybody ought to hear that, but I think there's a fair number of customers and customer prospects that, you know, you'd like to say that to. And I'm saying it's time that we start talking like that because that's what it takes to establish and enforce that minimum floor that we've been talking about. So the outcome, what's it all going to lead to? Well, when you clean up the client base and you've kind of graduated your customers and put them on that maturity path, your business is going to change, all right? Your margins are going to improve. I, uh, guarantee you they're going to improve. Your customers are going to thank you for it. Maybe slowly at first, but I guarantee you they're going to thank you for it. Your risk is going to plummet. Your risk as an MSP is going to drop. The moment you start to actively enforce that floor. Your insurance is going to thank you for it. Everybody, anyone else who's looking at you from a risk standpoint is going to thank you for it. If you're looking to be certified, we're going to, we're going to thank you for it. Right? There's no bad outcome for you doing this because again, I think the risk is one of the biggest things that immediately starts to fall off when you start to act and build a modern, mature minded customer portfolio. Your valuation is going to go through the roof. When you start to behave like this. If you're one of these MSPs who think, you know, one day I want to sell, I want to be able to retire, I want to be able to get some money out of this thing that I've built. This is going to help you. If you think that you are going to maximize value by having a whole bunch of customers who are below that minimum threshold line, think again. Your, your risk goes up, your valuation goes down. Right when you are below that threshold level, when you go above that threshold level and you start to have really good enforcement and, and that, that, that mirror reflection looking back at you is a good, good mature customer set, your MSP risk goes down and that valuation goes straight, straight up. And you should be able to, you will look different, you will feel different as an msp. Your, your, your peers will look at you different, they will respect you more. You're, you're, you know, I don't know if you care about what your vendors think. You know, some of you may, some of you may not, but I think what your peers think of you is far more important, far more important. And I think that that will make a big difference as well when you start to enforce this minimum floor. So here's, here's what I would like to leave you with and have each of you who is thinking about this kind of do ask yourself this one question. Do your customers define your maturity or do you define theirs? If you let the lowest maturity clients set your pace, then you are going to eventually reflect that mirror effect. Your team is going to feel it, your margins are going to show it, your risk profile is going to definitely prove it out. When you define that floor, you build a ladder, a maturity ladder, and you keep moving your clients upward each rung at a time. And you create something that is going to be really helpful for them and it's going to be really helpful for your MSP practice a more mature client base, a stronger MSP and a business that you will infinitely be able to scale. That's what I mean by the mirror effect. Make your customers reflect what you want to see back. Maturity, cyber risk averse and moving towards not. Perfection is never attainable, but you always want to try to reach for perfection. You want to always strive to be better. And I think that that's what you want in a customer, a customer who is pushing you as much as you're pushing them to become better in what you do. If you do that, you will see some amazing things happen with your MSB practice. I guarantee you try it out, give it a whirl. If you've tried it out and it did work. Leave us a comment, Drop us an email. I would love to hear from you guys. Just to know that this stuff, uh, stuff is working. But I know it's working because I've talked to a lot of you and I know it works. Until next time, be safe, get certified.