MSPs in the Age of The Customer

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The first decade of the 21st century was called the Information Age and it ushered in what Forrester calls: The Age of the Customer. In the case of technology companies, several forces and trends pushed the customer in the position to worry less about technology and rather focus on business:

  • Small switching costs – Common technology standards makes it easy for customers to switch products and providers. Switching between web-based apps can be very simple
  • Price Transparency – Access to pricing information and product information enables customers to shop around on their own. Customers will know how you stack up against your customers before your sales team brings up the topic of pricing
  • Commoditization – Availability of off-the-shelf solutions and a thriving open-source ecosystem eliminates many of the traditional differentiators. Companies can rapidly integrate new technologies that others took years to develop
  • Industry Barriers Disappear – Organizations who in the past operated in seemingly independent silos are now competing for the same business. An electricity distribution coop can become a powerful Managed Services Provider (MSP)
  • Every Customer has a Voice – Customers can now easily project their experience with a product or service to the point where they can significantly impact an organization’s brand. Over the course of few hours, a few tweets and posts can cost a company the image it so carefully cultivated over many years

 

Yes, expertise and experience do matter, but in The Age of the Customer the top metric, the key differentiator is: Customer Experience. Forrester demonstrated the dramatic impact CX has on business (https://www.forrester.com/Win-On-The-Basis-Of-Customer-Experience/-/E-MPL387) :

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The value and power of CX is obvious in the case of MSPs. MSPs enjoyed low customer churn often time due to customers lacking the time or the means to explore competitive alternatives. A changing of the guard sees a new generation of customers who are more comfortable with technology and the ways to purchase it. A changing of technologies and service delivery concepts prompts customers to re-evaluate their partners and providers. Customers expect more from their providers, they expect providers to take ownership for services that have many organizations involved in delivering them. Market information is easy to share making it easier for customers to “trust but verify” their long terms partners.

 

In the case of MSPs, the definition of Customer Experience is also changing. Whereas in the past the metrics revolved around infrastructure metrics, support tickets, resolution times, nowadays a more complex portfolio of services requires a refinement of CX metrics. On one hand, rightfully or not, customers do not care about the infrastructure, they do not care about the details of infrastructure. They want to invest in it only as much as is needed to ensure good user/customer experience. The MSP needs the metrics to both demonstrate the value of the service provided and also to justify expansion projects. Customers will care less about bandwidth or fancy hardware. On the other hand, customers care about a slew of new applications, most of the time SaaS based. It is easy for them to buy them to meet an immediate business need, it is the responsibility of the MSP to support them.

How do you do that when you, the MSP do not control most of the elements related to that application? How do you report back to the customer the value you are providing? Finally, MSPs expand into new services and these offerings must be operationalized based on metrics that are related to customer experience.

Customer Experience is a meta metric that involves multiple moving parts. Nevertheless, it is THE METRIC by which to measure the MSP performance. A comprehensive strategy should align processes around this metric and, as mentioned in an earlier blog, instrumentation must support the monitoring and reporting of CX: http://www.nephos6.com/msps-increase-profits-and-protect-brand-using-new-monitoring-tools/

In the Age of The Customer, MSPs will not stand out by becoming for example a Cloud Service Provider (CSP). That is an important component of the portfolio development however, the true differentiation will be built based on delivering and reporting good Customer Experience. Technology, Process and People investments must prioritized to support the delivery of exceptional CX that support customer lifetime value and profit.

 

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