Episode 89: The holy trinity of Monthly Recurring Revenue

Episode 89: The holy trinity of Monthly Recurring Revenue

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Paul Green's MSP Marketing Podcast
Paul Green's MSP Marketing Podcast
Episode 89: The holy trinity of Monthly Recurring Revenue
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In this week’s episode

  • You’re listening to a podcast for MSPs, so you’ll know all about glorious ‘monthly recurring revenue’… but do you know how best to grow it for your business? This week Paul shows you the 3 core areas to focus on
  • Also, do you have your ‘scatter work’ under control? On the show Paul explains what ‘scatter work’ is, why it’s inevitable and how to get it under control so you have more time for the important stuff
  • Plus on the show this week, your clients will increasingly be turning to you to help them be more data compliant. Listen to a fascinating conversation with a data security expert about how you can benefit from this opportunity

Show notes

Episode transcription

Voiceover:
Fresh every Tuesday for MSPs around the world. This is Paul Green’s MSP Marketing Podcast.

Paul Green:
Hi there, and welcome to the show. Here’s what we got coming up for you this week.

Kevin Coppins:
Guess what? Next month, a new compliance law is passed; a new regulation comes forward.

Paul Green:
We’re also going to be talking about the holy trinity of monthly recurring revenue: three things that you should do at the same time, to grow the average revenue per user per month. And we’ve got a book suggestion from an MSP just like you. I’ll play that to you at the end of today’s show.

Voiceover:
Paul Green’s MSP Marketing Podcast.

Paul Green:
There’s a certain type of working, which seems to plague MSPs more than any other kind of business owner that I’ve ever worked with. And that type of work is known as scatter work. What’s scatter work? It’s kind of a word I’ve made up, but it describes where you’re trying to get things done, and you can’t ever really deeply focus in and settle into a task, because you’re being constantly interrupted by other people: be that phone calls, messages, emails, that urgent knock on the door when, “Uh, something has gone wrong, and we need you.” All of these things, all these constant interruptions, what they do is they break your flow, and they prevent you from doing big, important things; which is kind of annoying, because as the boss, as the owner of the business, that’s your job, is to do big, important things. Increasingly more and more, scatter work stops MSPs from doing the things that matter, the small things and the big things that make the massive things happen.

Paul Green:
And the goal for you, the challenge for you, if you like, is to reduce the amount of scatter work, and increase the amount of focused chunks of time that you can spend working on things in the business. This is something I work on almost constantly with the MSP clients that I do work closely with in our peer groups in the MSP Marketing Edge. And it’s a challenge. It’s a real challenge, because the very nature of your business is reactive; you’re there waiting almost, for people to have problems, so that you can fix those problems. The trick I find is to schedule specific time in your diary to do focused work. So you almost kind of give up part of your day and accept you’re going to have that scatter work approach; you’re going to be open to interruptions, you’re going to deal with the emails, and zing over to this ticket and zing to that and zing there, that kind of horrendous scatter work. But you put time aside in your diary for that to happen.

Paul Green:
And then you have other time in your diary that’s for focused work. And that’s when your phone goes on to “do not disturb.” That’s where you log out of Teams. In fact, where you log out of your PSA as well; you have no access to tickets, you have no access to the random chat that’s happening between your team. You have a sign on your door that says, “I will shoot you between the eyes if you interrupt me for any other reason than the building is on fire.” Slightly extreme sign, maybe, but you get the idea. You need to have two to three hours a day as a minimum, where you’re working on big things. Now, sometimes that might involve doing little tasks, sometimes that might involve doing big tasks. But you are working on big things; and the big things are the things that grow the business.

Paul Green:
Remember, there are only really three things that you can do that will grow your business. You do things that get you more new clients, things that get your existing clients to buy from you more often, and things that get your existing clients to spend more when they buy. So if you’re doing some kind of work on your marketing that is going to attract more people to your website, that’s going to get more of those people then, to inquire with you to book a 15 minute video call with you, to enter your sales process. Or you’re doing some work that’s going to improve the amount of revenue that someone spends with you; you increase that. In fact, we’re going to talk about that shortly, the holy trinity of monthly recurring revenue. All of these things are big things that you should be spending time on; but you have to do this kind of consciously.

Paul Green:
You can’t do it unconsciously. It’s far too easy to lose time in the day. And we, all of us, or most of us anyway, suffer from this phenomenon where we believe that we can get things done a lot quicker than we actually can. Do you find this on a daily basis, that you sit down to do a task, and you think, “Uh, it’ll take an hour.” And three hours later, you’re still doing it and you haven’t quite finished it, and you’ve got a bit lost in it? Well, that gets worse and worse and worse, the more the scatter work is allowed to infiltrate your life. So that’s my recommendation. Segment your diary; give the scatter work time to interrupt you; to all those little bits that need to be done.

Paul Green:
Give your staff some time. I’m a big fan of you having a call once or twice a day, where your staff can just call you or dial in. And it’s a group call or whatsoever, particularly if you don’t sit in the same office as your tech team. So they have access to you at specific times of the day, but they can’t just call you or WhatsApp you throughout the day, because that’s not a particularly efficient way to access you and your time. You’re the boss; you’ve got many more important things to do than to help them to answer a question that really they know the answer to, but it’s just easier for them to pick up the phone and ask you than it is to go and look in IT Glue, or whatever it is that you’re using.

Paul Green:
So segment your diary; find some time every day, two to three hours every day, to work on the big projects. Do you know what? Even if you could do that just three days a week, you’re going to make some major leaps forward in the next few months. All you need is that diarised time, and the focus to make sure you protect it.

Voiceover:
Here’s this week’s clever idea.

Paul Green:
So because marketing isn’t just about getting new clients, it’s, as I was just saying, it’s about growing the average revenue per user per month. Let’s talk about the holy trinity of monthly recurring revenue. These are three things that you need to do simultaneously, in order to grow your monthly recurring revenue. And I’ve talked about each of them individually in the podcast in previous episodes. This, as far as I’m aware, is the first time we’ve put all three together. Let me tell you what they are, and then we’ll go into a little bit more detail on each one.

Paul Green:
The first of them, is you’ve got to do something called the profit matrix. I’ll explain that in a second. The second thing, is you need to be doing strategic reviews, or quarterly business reviews, as they’re sometimes known as. And the third thing is, you need to be constantly adding new services. These are the three things you need to be doing at the same time.

Paul Green:
So the profit matrix then, is literally a grid. You’ve got your clients down one side, you’ve got your services on the other side. It doesn’t matter which of the axes they go on. And you fill in that profit matrix according to which services they buy. So client number one buy services A and C and G, so you put a little mark in the corresponding square where service A and client one match up, and you do the same for client two and client three, et cetera, et cetera, et cetera. Essentially, you strip out information that’s in your PSA, and you create a nice visual summary of who’s buying what; or actually, more importantly, who’s not buying what. Because that’s the power of the profit matrix; it’s a visual, instant summary of who is not buying what within your business.

Paul Green:
You want to see which services are not being bought by which clients. And that information works better offline, by the way, because the temptation is to do a spreadsheet for this, and maybe even to put that spreadsheet up on a big screen in your office. My experience is that actually, that’s never as powerful as making it physical; put it on a giant whiteboard or something that’s on a wall in your office, and make someone in charge of keeping that up-to-date. That’s a much more powerful way of seeing who’s buying what within the business.

Paul Green:
So once you’ve got your profit matrix, you then use that to shape your strategic reviews. Now, these are also known as technology reviews or quarterly business reviews. It’s where you sit down with your clients, and you go through a specific process with them, looking at their plans for the future, how they think they’re going to grow, what’s coming up, what’s new, what fears they’ve got, all of that kind of stuff. They’re forward thinking reviews. And the idea is that over time, you put together a technology roadmap for them. So this is a real partnership thing.

Paul Green:
We talk a lot, don’t we, about being someone’s partner, and how MSPs want to partner with clients. But you’ve got to back that up with action as well; partners plan together, and you can put together a three-year technology roadmap with them through their strategic reviews, and then you can review those technology roadmaps when you meet with them in the future. This is a beautiful way of not only securing that partnership with them, and hooking those clients in long-term. They are not going anywhere when they are making strategic plans with you. But also, it’s a way of getting them to commit to spend in the future.

Paul Green:
If they’ve got big plans to grow their business in the next couple of years, and you’ve identified with them, that actually they don’t really have the technology capacity to implement those plans, you can get them to commit to the required spend on the infrastructure they need. And you can talk about this stuff a year or two years before they need to go and spend it, which is great, because they’re going to budget for it. They’re going to actually put that into their own growth plans, because they know that spend is coming up at some point. This is great; it gives everyone confidence and security about what’s going to happen with that client’s technology in the years ahead.

Paul Green:
So we’ve got our profit matrix. We’ve got our strategic reviews. The final part of the holy trinity of monthly recurring revenue is to be constantly adding new services, because you need to constantly have things that you can sell to people. And there are a number of different ways that you can do this. You can, for example, do better versions of things you already sell. So you will have a backup solution. Why not offer a better backup solution? Now this could be the existing backup solution you’ve got, but you might, for example, and remember, I’m not a technician here, but you might, for example, throw in a NAS box as well. So they’ve got their online backup, their Cloud backup, somewhere away from their office, but also they’ve got a local copy, sat in their office for immediate recoveries. And you could sell that to them as an enhanced backup solution, because it’s faster, and it gives them two copies or three copies, or whatever they’ve got of their data. So it’s a safer, faster solution.

Paul Green:
Now you might think, “Ah, that’s a bit overkill, Paul.” But here’s the thing; it’s not up to you to decide what your clients buy. Your job is to educate the clients, and then to offer them a range of options. And it’s up to them to decide what it is that they want to buy; completely up to them. Some people will always buy the better solution, because there is a better solution available. It’s not our place to decide whether they should buy it or not; it’s completely their decision. People hate to be sold to, but they love to buy.

Paul Green:
So, put these three things together: the profit matrix, the strategic reviews, and constantly adding new services. And you will grow the amount of recurring revenue you generate per user, per month, and watch as your net profitability goes up alongside your monthly recurring revenue.

Voiceover:
Paul Green’s MSP Marketing Podcast.

Paul Green:
So every couple of weeks or so, we are giving away cool stuff here on the podcast. And next week, we’ve got another great prize that you could win.

James Lett:
Hey, this is producer James, and this prize could have a transformative effect on how you work, what you work on, and go on potentially to change your business and your life. We’re going to give away one of the most effective time-tracking tools from Timeular; they’ve developed the world’s first eight-sided, physical tracking dice, that automatically tracks activities when flipped; and you can win that, plus a lifetime pro membership, just by listening to next week’s show, episode 90 out on the 3rd of August.

Voiceover:
The big interview.

Kevin Coppins:
Hi. I’m Kevin Coppins. I am the President and CEO of Spirion, headquartered in sunny St. Petersburg, Florida. Thrilled to be here today, and hoping to go ahead and spend a little bit of time discussing how data privacy and data compliance is relevant not just to the big companies, but to companies around the world.

Paul Green:
Absolutely. And thanks for coming on, Kevin. I want to talk in particular, about how we can use compliance to generate more revenue, to drive more revenue into MSPs. Because compliance is something that people need; there are many more laws that have been passed. In fact, you were telling me just before, was it something like there have been more privacy regulations passed in the last two years than the previous hundred? So the clients of MSPs have a need for this kind of stuff; but obviously, we want to sell them more solutions, and solutions that help them to sleep better at night. So tell us what’s been happening with privacy relations over the last few years.

Kevin Coppins:
In 2019, 10% of the world’s population was covered by a privacy regulation, and by 2023, 65% will be covered by at least one. So when you think about that, you can take a step back and say, “All right, well, what does that really mean to me? What does that mean to my clients?” When you think about compliance and you unpack compliance, it really gets down to doing the right thing in the first place, and then being able to prove that you did. I think that cuts through a lot of the noise, when you start reading through the 9 million page regulations coming from all the various legislative bodies around the world, and just say, “What are the fundamentals of what I know my clients have to be doing correctly? And if they can prove that they’re doing those things, then compliance should be a by-product of it.” And that’s really where we focus our efforts with our partners, to make sure that they’re not getting caught up in the hype, but they’re focused on the fundamentals.

Paul Green:
In your experience, do most MSPs get involved with this by choice, or is it the case they get dragged into it by a couple of clients? Because compliance and data security and managed services all seem to sit together.

Kevin Coppins:
Yeah, it used to be more the latter, where they were getting dragged in; but I’m seeing a lot more get a lot more proactive as again, they start boiling it down to the building blocks. When you think about the fundamentals; I came out of the identity and access management world, that’s where most of my career was spent. You’ve got identity; and people get a handle on that, “Who works here?” All right. “So what do they have access to?” But that “what” part of the conversation is where a lot of this compliance comes in; that’s the data. If you have your identity stuff figured out, and you have a good handle on your data, then access is just a bridge between the two. And if you can boil it down, in terms of how they can be compliant, and why they should be, and why it’s maybe not as hard as they might have thought.

Paul Green:
So do you think this is something that all MSPs are going to have to get involved with?

Kevin Coppins:
Yes. Because for the same reason that MSPs… If you’re a five-person organisation or a 50-person organisation, you can’t do everything. You’ve got to pick which services you’re going to provide to your clients. Your clients, let it be the local dental office that has three different locations, or the ice cream shop that’s got locations in five different counties or boroughs; they’re all going to have to have some level of conversation about the data that they collect, why they collect it, how long they keep it. So they’re going to be leaning on MSPs to say, “Help me through this, because I don’t know where to go.” So they will be, most typically, the MSP is the most trusted advisor when it comes to all things IT; and in the mind of those buyers, IT is everything that has to do with technology.

Paul Green:
And of course, we want to give the clients what it is that they ask us for. If someone asks you for something, there’s a want there, or a need; and it’s when you can’t fulfil that want or need that you start to run into potential long-term retention issues. So what is the easiest way in your experience, Kevin, to teach end clients about compliance? Because we know that they don’t know much about technology; they know even less about data security. And compliance, while it’s something that hangs over them, depending on how regulated they are in their sector. But do you find that taking an educational approach is the right way to go?

Kevin Coppins:
Yeah. Taking the educational approach; but the first thing that I would to do is make it personal. So let’s take the regulations, put them off to the side for a second. When it comes to data, and I’m specifically talking about data-related compliance; when it comes to data, make it about bits and bytes, or records or files; make it about people. And the business that you are in, whether it be as a vendor, let it be in the B2C business; talk about the data that you own, and make that your neighbour’s data. Make that your mother’s data. Make it your sister’s data. And say, “What happens if that data is exposed in certain ways? What could possibly happen to that?”

Kevin Coppins:
And once they start understanding and making it personal, I actually show videos, Paul, of people that have had their data compromised, let it be their healthcare data, let it be their personal financial data, and how that can impact somebody’s life. Then the light bulb goes off that says, “This isn’t about compliance. This is about doing the right things by my customers, my colleagues, my employees, my community.” Then the compliance thing gets easier. If not, compliance is just a cheque that I have to write, and it feels very painful. And then guess what? Next month, a new compliance law is passed; a new regulation comes forward. So when you make it personal, and understand that, “I’m going to do the right thing for the right reasons,” the compliance part gets easier.

Paul Green:
I love it. The idea of making it about someone you know; that it’s directly affected you. Because we see this in physical security; if someone gets burgled or burglarised in your streets, then other houses on that street go off and buy security alarms. The more personal it is to someone, the more likely, the more relevant it appears, the more likely they are to take action. Kevin, tell us a little bit about your company. Tell us about your reseller scheme, and what do you do to MSPs?

Kevin Coppins:
Spirion, we focus on the data that matters. When you’re talking to your clients, when it comes to data, make sure they collect only what they need. People are gathering way too much information and digital forms, because they think they can. All that has a long tail on it, so collect only what you need. Keep only what’s required; get rid of your redundant data, your obsolete data, and your trivial data, so you can then protect the stuff that matters, and don’t get caught in the noise. That’s what Spirion was founded to do: to help you find that data that’s sitting on somebody’s laptop, or sitting on a point-of-sale machine, or sitting out in the data store that you didn’t know was there. Because everything else is putting your business, your customers, your clients, your colleagues at risk. And that’s got to be the primary focus, is, “How do I protect that smaller subset?”

Kevin Coppins:
So when Nancy’s laptop gets lost, I’m not terrified that the entire customer list is lost, because I know she doesn’t have it on there. Because I used a tool like Spirion to go ahead and solve for that. So our company wakes up every day; we have a host of solutions, by which we can do to help solve the fundamental data problem, but also things around GDPR, when it comes to subject access requests, also alerting around the data.

Kevin Coppins:
And the way that we work with MSPs, is typically, you don’t have clients that are giant that need this ongoing; so they can offer a service that says, “Let us take a look at your data once a month, once a quarter, twice a year; be able to scan that data, and then come back and say, “Based on what we saw, delete this, eliminate this, shred this, hide this, quarantine this.” So they can constantly be moving that footprint down, based on their appetite for risk. That’s the type of partner program that works out fantastic, especially for midsize clients that know they have a challenge; they want to do something about that challenge, but might not have the resources to hire two data-centric, security people on staff.

Paul Green:
That sounds great. What’s your website’s address, Kevin, and spell it out for us as well.

Kevin Coppins:
Yes. It’s www.spirion, S-P-I-R-I-O-N .com.

Voiceover:
Paul Green’s MSP Marketing Podcast. This week’s recommended book.

Earnest Murry:
Hey, this is Ernest Murry with Genuine Technology Group. The book that I recommend is Leadership and Self-Deception: Getting out of the Box, by The Arbinger Institute. It is a book that gives you a lot of self-reflection on how you interact with people, and how people and problems and friction can occur in any relationship, whether it’s business or personal. This was a life-changing book for me, and the way that I communicate with my business partner and team, and in the way that I communicate with our clients. Because of that, it’s required reading at our organisation.

Voiceover:
Coming up next week.

John Clark:
Hi, I’m John Clark. I’ll be on next week’s show, where I’ll tell you how you can add an additional revenue stream to your business, based around customising Microsoft dynamics. It uses five CRM, and power apps for your clients.

Paul Green:
We’re also going to talk next week about a slightly difficult subject. So we’re going to put it in more comedic terms. What would happen if I kidnapped you tomorrow? Tomorrow morning, I kidnap you with no warning, and you’re not available to your clients, to your staff, for the next four, five, six weeks, maybe even longer. What would happen to the business? We’re going to explore that next week, and what you can put in place now; the things you can do to prepare your business to not just survive, but thrive, if you have to take an unexpected break from the business. We’re also going to be talking about the never-ending goal for your business: how can you grow your per seat revenue, and reduce overheads at the same time? Because that’s how you max out your net profit every single year, and ultimately make the business worth more when you come to sell it. So we’re going to be doing all of that, plus of course, that great competition we were talking about earlier. It’s all in next week’s MSP Marketing Podcast. See you then.

Voiceover:
Made in the UK for MSPs around the world; Paul Green’s MSP Marketing Podcast.

 

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