After carrying out reviews on deals lost last year, "a huge percentage" were lost due to price, claims founder and CEO of Albany, NY-based MSP Compete Network.
Jeremy Wanamaker said he discovered that his firm was losing out on deals to smaller MSPs with very little overheads offering bargain prices to potential customers.
"We've got to get sharper there," Wanamaker said in an interview with CPI
"Typically they're smaller players. And so if we know who they are, I look them up, and generally what I see is there are a lot of MSPs out there who are operating with very small teams, very little overhead, virtual companies, no office space, and so they're able to work at cheaper prices. I also happen to think that many of them are not profitable and won't be around in a few years."
Wanamaker notes that research for potential acquisitions has given Complete Network insight into the books of a number of smaller players, revealing that they are often not profitable.
"Their prices are low, overhead is also low, but their operational efficiencies are low," he said. "So it's sort of easy with that combination to plateau pretty quickly. If your revenues are not seen at a rate that allows you to hire good talent, you're going to outrun your capabilities pretty fast."
While such players may not be in the market for a long time, they are still a cause for concern, Wanamaker pointed out. However, their presence has also offered up insight for Complete Network as to where their area of focus should be for 2019: in marketing.
"It's a bit of a worry, but I think one of the takeaways that we're set to focus on this year is sharpening our marketing messaging, because what we need to do a better job of is differentiating between the value that we can provide and the value that somebody like that can provide, both in terms of longevity and engineering expertise," he said.
Wanamaker said his marketing efforts are centered on its primary offering of fixed-fee managed services for small and mid-market companies. The aim is to increase revenue in this area by 20 percent in 2019.
"We've invested heavily in our sales and marketing process and in our materials in [order to] develop our operational maturity around sales and marketing," Wanamaker said. "So it's really just getting better at selling the services that we've been selling, while keeping an eye on newer opportunities around security and cloud."
Wanamaker said there's "a lot of work to be done" for MSPs in demystifying the security space for customers. With Complete Network's security business making up between 10 to 15 percent of the firm's overall business, the MSP noted that while there are "many, many different flavors of MSSP out there today", the challenge for MSPs and MSSPs is helping customers manage the myriad tools and vendors in the security space.
"I think it's very difficult for the people who are buying these services to understand what all the different flavors of the offerings are. You've got all these different vendors, all these different tools…and many of them are not effective, don't do what's claimed - over promising and under delivering. So it's very nascent. And there's a lot of work to be done to figure out how to select tools and then package up the offerings and sell them in a way that SMBs will see the value and spend the money on them."
He noted, however, that there is "a definite need" for SMBs to invest in security products because of the "very real" threat they are facing.
"If you haven't experienced it as an SMB company up to this point, you may be thinking that you can just get away with what you've been doing, but everybody needs to be increasing their security posture or they're leaving themselves open to attack or catastrophic financial loss."
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