The Win-Win of a Healthy Monthly Recurring Revenue (MRR) Relationship

The foundation of a successful MSP business is consistently providing customers with the best technology and quality of service available. However, on the business side, it is all about generating recurring revenue, which enables the MSP to boost its operations and ensure reliable, long-term growth. The best-case scenario is that an MRR arrangement is ‘win’ for both sides. 

Monthly Recurring Revenue (MRR) is the part of an MSP’s revenue that is expected to come in at regular intervals over a long period of time, as opposed to one-time fees. For an MSP, this is commonly seen as service contacts with customers, which are typically charged monthly. The advantage of recurring revenue is clear: it is predictable and creates a strong pipeline of income to support operations and growth. This is the golden goose for a successful, profitable, investable business. If you want to be attractive to a buyer, this is it.  

Establishing MRR for Your MSP 

Building a strong recurring revenue base, like many good things, is often easier said than done. It can be especially difficult for businesses established in a more project-based, value-added reseller model, who are accustomed to large influxes of revenue from single projects.  

The good news is that any MSP can work to establish a solid recurring income base. The MSP should begin by developing its services bundle, which are comprise products that were previously divided between hourly services and products. The bundle should include a comparison of a single monthly recurring fee and individual line items for those same services. For the potential client, this approach is advantageous since it provides an “all-in” price for all the services you offer.  

The competition between MSP businesses is growing, so finding ways to differentiate your offers is an important key.  If you specialize in any service area, such as cloud technology, cybersecurity, or customer support, be creative with ways to sweeten and enhance your service package. It will allow you to charge more and separate you from your competition.  

Better Relationships Become Better Business 

Never to be forgotten is the attention to service, by putting your customer-service as a priority.  

It’s easy for a technology-focused business, like an MSP, to forget the core principles of building successful, lasting business relationships with clients. While it’s hard to build business and acquire customers, it should be easier to keep the ones you have. That requires you to be nurturing towards that relationship – and not just focusing on the technical-tools of the trade.  

 A “help first” mentality with your sales and support team will always steer you in the right direction. It shouldn’t need to be stated, but the motivation for any business transaction is that you want to help your customer. Losing sight of that perspective will render your ability to listen to the needs of your clients less, while you insist on the ‘plan’ you’ve created for them. Stay flexible, make the channels of communication open and clear. Build a customer-oriented culture within your team. 

Establish a Service-Level Agreement (SLA) to Mutually Understand Expectations 

Even while you are flexible and attentive, clear boundaries are healthy for any kind of relationship. With clarity, you will be performing to an expected standard and everyone involved can measure the level of performance fairly. Any issues that arise where expectations are not met can be assessed by revisiting the SLA document – and corrected in a way that reaffirms the goals for positive, mutually beneficial outcomes.  

The Win-Win of a Healthy Monthly Recurring Revenue Relationship 

You’re taking care of customer concerns by solving their technology problems while gaining the stability of a steady income-stream. This is good for both of your businesses – and is categorically a Win-win! 

About MSP Corp

MSP Corp understands you’ve worked hard to build your business and you want to protect it. With a mission to be a world-class business partner for MSP owners across Canada, we actively seek to acquire and partner with owners looking to secure the value of the business they have built and provide a seamless exit process that ensures business continuity and employee and client stability.

Contact us today to learn more about selling your business and maximizing its value.