8 Signs You Need to
Managed Service Providers (MSPs) Business
There is an expansion in Cloud Solution Providers (CSPs) and Managed Service Providers (MSPs) recurring revenue for Microsoft partners, as demand continues to rise within the Microsoft Cloud market. Yet, we also see MSPs who want to transact in the CSP Program struggling to accelerate past initial roadblocks to scale their recurring revenue.
As your number of customers increase, so does the workload and the customer’s expectations. This result is a bottleneck creating friction in your revenue growth plan.
If your subscription and recurring revenue business are experiencing any of these eight friction areas, it’s time to examine a new process and/or system.
This first example is very common, and if you’re reading this, I’m sure you’re nodding your head. Tracking changes through email communication, then documenting that change in an excel spreadsheet can be painful work. Steve Cakebread called out this type of process in a recent interview with his former colleague, Tien Tzuo: “automation is key. A lot of companies realize this way too late. You can’t just throw bodies at the problem anymore. People just don’t want to do that kind of work these days.”
Provisioning and Billing are in different systems
This misalignment is the number 1 cause of revenue leakage. Even though you may have automation for Microsoft 365, Office 365, and Azure subscription provisioning using a 3rd Party SaaS application, your provisioning system is unable to calculate the customer billing. This could be losing between 0.5% to 3% of your recurring revenue.
Recurring billing creates the need to have prorated, refunds, pricing changes all being calculated at the point of a change. A Provisioning system that can’t generate invoices for your MSP billing processes is a recipe for significant friction amongst critical teams. Having an automated billing system that’s tied to provisioning will remove friction from your sellers and enable you to collect cash fast.
Sales Teams are spending too much time turning around quotes
If you’re a sales team member, you dread having that quote returned to you with corrections from your billing team. If you’re a sales leader or a business owner, you want your sales team out in the field selling. Creating a standard process for quoting, including product definition, terms, and pricing parameters, frees up your sales team to sell more. Having to customize pricing on every deal creates friction in your sales velocity and slows revenue.
Waiting until you receive Microsoft/Distributor invoices to invoice your customers
This area is also quite common with MSPs who want to transact in CSP Program, who are keen on waiting for providers to invoice before sending out client invoices. The result is friction with cash flow and increasing risk, in that you don’t know what your customers have purchased and have no record through the billing period. This strategy is reactive, which customers don’t like and can lead to recurring revenue loss.
Collecting cash before provisioning
We see this a lot from MSPs, CSPs, and VARs customers, and it’s an outdated model that can decrease client satisfaction. This strategy often stems from the difficulty in accommodating changes or tracking changes between collecting Cash and MSP or CSP Provisioning. This area is ripe for automation and needs to be examined before your customer satisfaction begins to decrease.
You only have one billing frequency (monthly or annually)
What’s best for you is not always what’s best for the customer, unfortunately. However, this challenge is a good thing because your client list is beginning to grow, and enabling your team to offer multiple billing frequencies without impacting the business is a natural step in your subscription business’s growth. Customers expect certain flexibility, and promoting this within your systems will empower your sales teams to close deals faster. Read more about adjusting billing contracts to new frequency using Work 365.
You spend too much time on reconciliation
Azure usage reconciliation is undoubtedly a hot-button concern for all billing teams. They want everything to match up correctly, and rightfully so. The fastest way to alleviate this concern is to have an integrated system that connects cloud services provisioning with billing. This billing automation relieves stress on your billing team, mitigates the risk of any error, and helps everyone focus on the areas of work that excite them.
You don’t let customers self-manage
We’re now deep in the customer experience conversation because this is one request we repeatedly hear from customers: they want transparency and the ability to manage their licenses on their own. In the MSP world, customer experience is the leading indicator of customer retention, and providing an optimal experience is why customers stay. Creating a self-service portal is what customers want. Of course, you should put guard rails in place, including a view into when changes were made and by whom. Manually entering these changes, creating reports to track the changes, then processing the addition/reduction all creates a long process.