The Value of Customer Happiness in Growing Sales

Aug 21, 2017

The Value of Customer Happiness in Growing Sales

BY Larry Cobrin

MSP Best Practices

Larry Cobrin is the CEO and co-founder of MSPCFO, a business intelligence company that analyzes the data in your PSA to deliver actionable data about your customers, agreements, project, engineers, etc.  Do you want to know which clients generate the most profitability per hour invested?  How about which agreements are priced best?  Perhaps you are interested in a P&L by an engineer. MSPCFO provides all data to partners on a web platform that is updated multiple times a day with new data from your PSA.

In the world of key performance indicators (KPIs), one of the most crucial is the amount of revenue you bring home at the end of the year. To drive this metric, you can do one of two things:

  1. Take home more of every dollar you bring in

  2. Bring in more dollars.

We’re going to focus on the second item.(Spoiler Alert) If you want the greatest success growing your top line, focus on keeping your existing clients happy and referenceable. Put another way, high client satisfaction makes sales growth easier.

W. Edwards Deming, the legendary management consultant, said as much in his reflection on his career transforming industries, “Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them.”

How do we confirm this is still true for today’s MSP? We surveyed 100 MSPCFO clients and came to a number of interesting conclusions.

First, companies who had growing sales got most of their growth from existing clients (60% of growth) by selling new or expanded services, not from new relationships. Many of your clients can benefit from more of what you offer. Your success in selling to them will come from their trust of your ability to deliver. Keeping the client happy goes far beyond retention, it’s a growth strategy.

Beyond growing existing relationships, we went further to look at the value of referenceable clients. We would argue that the ability to get a referral is strongest within verticals. A dentist is more likely to take the recommendation of a fellow dentist. To that end, we looked at market concentration as a measure of the value of the referrals. The more concentrated an MSP was in a vertical, the more value they got from referrals.

To better understand the impact of market concentration, we and put survey respondents into one of three categories:

Very concentrated:  Top vertical market makes up more than 40% of revenue
Very unconcentrated:  Top vertical market makes up less than 20% of revenue
In the middle:  Top vertical market makes up between 20% and 40% of revenue.

We then looked at year over year growth in sales. We found that the very concentrated segment had the highest level of growth: 13% year over year.

Referenceable relationships are earned by providing a superior service. You do that, you build trust and hopefully customers  talk about it. Do you follow your CSAT scores through a service like Smileback? Are you monitoring your SLA compliance and ticket counts? The numbers provide evidence that a happy client base is a tremendous asset.

This is all not to say that you shouldn’t try to also get new relationships. Your clients are one significant source of growth. New clients are the foundation for new growth.

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