When it comes to understanding the eco-system that surrounds the Managed Services industry, there is no better source of information than this week’s guest Jay McBain. As Forrester‘s Principal Analyst of Channels, Partnerships & Alliances, he was able to shed light on a lot of the trends that are happening on the vendor side of the IT Channel and how this will have an immediate effect on the amount of Market Development Funds available to MSPs.

Here are a few takeaways that I have learned from this conversation and why it appears vendors are so eager to fund the growth of MSPs of all sizes:

Partner Marketing Strategies Have Matured

Jay’s comment about co-branded templates certainly brought back flashbacks from years gone by. I still tremble at the thought of hand-stamping over 1,000 envelopes as part of a co-branded direct mail campaign that probably cost our company more in my time then we were ever compensated for. To add salt to the wound, the campaign was a complete flop. We received only a few responses, most of whom were confused about who they were contacting and what we were offering.

Most IT and Security vendors have learned from these mistakes, adopting digital formats and dropping their co-branding requirement on campaigns. They appear to have come to the realization that not every MSP partner is the same and they want to help you build a stronger brand, not dilute it with their own. Proof of this can be found in MDF programs everywhere. I have even seen some vendors who will take Sales Engineering appointments on behalf of your company and pose as a member of your team on the call. This is a clear sign that they understand your success is their success and they are willing to make sacrifices along the way.

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Martech & Privacy Are Driving Major Change

As Apple continues to out App developers such as Google and Facebook over their use of data, the fate of digital marketing campaigns hang in the balance. With anonymous browsing becoming the new norm, vendors (and everyone for that matter) need to focus their attention more on where their end customers are and who influences their decisions. In the case of business technology use at the SMB level, that person is you (the MSP).

At the same time, the trend of large organizations leveraging decentralized communities to get closer to their customer is becoming quite evident. Last month’s ConnectWise acquisition of Service Leadership demonstrates just how far down the stack vendors are willing to go to enable MSPs to push product in their favor. As long as MSPs continue to influence their customers, these trends will only continue, especially in the areas of focus that Jay had mentioned (i.e., automation, topology and cybersecurity).

MSPs Hold The Keys To Adoption & Retention

The reason why I have always loved Managed Services as a business model is because of the natural rate of retention. While acquiring new customers is no easy feat, those customers who do come on-board are likely to stick around for years. Vendors realize this and they understand that you are responsible for the amount of time they are able to retain licenses, which to them comes in the form of revenue passed through from your end customers. This is why they will do whatever they can to keep their product in your stack, so that they too can share in the upside of your customer satisfaction well beyond the initial acquisition.

In reality, Managed Service Providers are much like local influencers for major technology brands. These brands are relying on you to take their money and their solutions and go where they can’t. The sooner you realize the value that you have in this regard, the better you will be able to leverage it to grow. MDF is not a “handout.” It’s a strategic investment based on years of data. You and your vendor want the same thing, and in most cases they are willing to put their money on the table, betting on your ability to make it happen.

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Most MSPs Require Third Party Services

As a Marketing Consultant who crossed the chasm into the world of Managed Services, I have always known that my situation was a bit unusual. The truth is, thinking like an MSP was a learned behavior for me and one that never came natural. While this presented many challenges along the way, it paid dividends in the way that we presented our brand. To echo Jay’s analogy, we were always able to “punch above our weight class” and keep most of our sales, marketing & business development in-house.

With the average MSP working very lean and highly technical, growing firms don’t have much room for seasoned marketing talent (nor should they on most occasions). This is why they rely on outsourcing to help with most of their marketing, such as social media, content creation, and pay-per-click. Vendors understand this reality, which is why many have become more flexible on the expenses that are getting reimbursed as part of their program. I have only had one vendor tell me that they were unwilling to reimburse expenses from third-party marketing service providers and agencies, which indicates that most are fully expecting these funds to be passed through to whomever you choose to work with.

Vendor Competition Is Heating Up

As if there aren’t enough IT and software vendors beating down the doors of potential MSP partners, there are even more on the way. Jay indicates that there are an additional 8,000 vendors creating partner programs right now and an additional 17,000 that are yet to launch. This will equate to dramatic growth opportunities for those MSPs who find ways to leverage this avalanche of partnership opportunities heading in their direction.

While MDF programs have become a requirement of sorts, we can expect some of these “new-vendors-on-the-block” to drive the innovation of these programs as a whole. After all, small vendors tend to work more intimately with their partners and will have the agility to better conform to each partner’s unique needs. In your search for Market Development Funds, don’t always think you have to go to the vendor with the deepest pockets. You may find that small to mid-sized vendors can offer you “smarter money,” as they will be far more hands-on with your campaign.

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