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MSP Marketing | February 16, 2018

Does Your MSP Firm Know How Much to Spend on Marketing?

MSP MarketingMSP marketing may not be cheap, but it is not without the bounds of affordability. What you want to do is assume a 5% to 10% marketing tax as subtracted from your revenue. If you make $50k in a month, spend between $2.5k and $5k on marketing. If you make $100k in a month, double those numbers. Spending five percent will help you essentially tread water at the position you are at; going the 10% route will help your business grow.

Pragmatic Provisos

These rules are not hard or fast; they are just generalizations. Some organizations may be able to maintain their status quo by spending only 1% on marketing; some have to spend 15% just to keep their head above water. It is going to differ for every MSP, but if you have not approached this before, budget between 5 and 10 percent, then see whether you need to increase or decrease your marketing spread.

You have to understand that there is no magical formula for marketing your MSP company to deliver the sustenance in terms of ROI. Sometimes things are going to be better; sometimes they are going to be worse. There will always be some level of variance.

Surprising Opportunity

That said, as an MSP, you are privy to some astonishing opportunities. You can build recurring revenue expansion via our MSP business in a way many other businesses cannot. The reason is that technology solutions are in hot demand, and that trend has been rolling since the computer’s initial innovation. People need tech systems to remain competitive, pure, and simple. If you can provide something for less money and with greater impact, you are likely to do well.

With that in mind, an MSP marketing budget needs to be established under auspices of the right attitude. You need to understand that you are investing in a very likely positive outcome going forward and consider the 5% to 10% you are spending on marketing as infrastructural. Additionally, MSPs have one more advantage in terms of marketing: because of their unique niche as a bottleneck industry providing a pathway toward cost-effective service provision and the generally positive upward momentum this position generates, MSPs can stand to spend more on marketing endeavors than most other businesses can.

Establishing a Foothold

This can be useful in terms of establishing your foothold in the market. You may start out with a bold strategy that spends more money on marketing than the competition, and once you have hit your “cruising altitude,” slack off a bit. Thinking of it in aeronautical terms is very helpful. A space shuttle expels the majority of its fuel breaking the Earth’s orbit. It is the same case with many airplanes. The initial climb is that which is most fuel-intensive. Gaining profitable altitude does cost resource fuel, but at the same time, it allows you to take your company all over the place.

Competitive Advantages

You also need to consider the competitive advantages between yourself and other MSPs. The truth is, many IT organizations do not even ask whether they should market. They get themselves listed, acquire a few regular customers, and serve anyone who trickles through their penumbra of service provision. Otherwise, they never market. That kind of model can work for a while because of the aforementioned need in the marketplace, but it is not a forward strategy, that will produce growth. You need funds for R&D if you want to grow successfully. Marketing frees up those funds by increasing profitability, and so giving your business the ability to scale flexibly out as such strategies become viable.

Established Tech Companies

You should employ several strategies:

• Establish marketing budgets as infrastructural
• Market more in the beginning, and less going forward
• Aim for a 5% to 10% market budgeting spread
• Expect idiosyncrasies

If you are diligent to structure your MSP marketing in such a way, you are likely to see positive ROI or Return on Investment for your outbound marketing efforts. One final thing to remember is that markets ebb and flow; so, whether you see immediate ROI may or may not be a success indicator. The key is observation over time.

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