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How much do you use data as a managed service provider (MSP) to measure your success? Many IT professionals focus on getting the work done, and don’t stop to collect, monitor, and measure their performance. If you fall into that category, you could be missing a trick. By tracking data, you can get important insights into what works and what doesn’t. Here are 7 important metrics to measure that could make all the difference to your profits.

CSAT

This stands for customer satisfaction scores, and is an indication of how happy your customers are with the service that you‘re providing. By sending customer satisfaction surveys after tickets have been resolved, (which you can automate directly from Atera) you can get a clear indication of the percentage of customers who are happy. Remember, not all customers will respond to CSAT, so make the form as simple and easy as possible, for example using an emoji format where they can click on the reaction that meets their feeling about the support interaction.

If CSAT scores are low, look to reduce wait times, check your SLA is clear, and look for opportunities to gain more open-ended feedback so you can work out what you need to improve.

EBITDA

Often used to understand the worth of an MSP business before selling the company, this stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Even if you aren’t looking to sell up, it’s a good metric to stay on top of. After all, if you imagine yourself looking to sell – you’ll want the business to be as profitable as possible! The way you work it out is to take Net profit, then add interest, taxes, depreciation, and amortization.

This metric gives you a comparable way to measure the worth of your business, regardless of your taxes or industry situation. It takes the expenses that usually cloud your worth out of the equation entirely. You can use this metric to compare the worth of your business to another MSP, even if they work in a different area.

Monthly Recurring Revenue (MRR)

An abbreviation for monthly recurring revenue, will help your will help your MSP software and IT management solution for internal IT departments to recognize patterns in the way that you’re working. Do you have financial security? This metric is specifically for customers who are signed up to a monthly or annual subscription, not for ad-hoc and break/fix clients.

The way you work it out is to take the monthly revenue and multiply it by the number of customers that you have. If your monthly charge is $800 per client, and you have 10 clients, then your MRR is $800 * 10 = $8,000. If you have customers on an annual subscription, divide their yearly charge by 12 before completing the multiplication. You can get granular with this metric, looking at this quarter’s MRR compared to a year ago, or looking at just the MRR of upgrades or upsells.

Customer Lifetime Value (CLV)

Customer lifetime value is the total worth of a specific customer, from when you are introduced to them, through to when they stop working with you. The higher the CLV, (also known as LTV) the better. If it costs you $1,000 to onboard a new customer, (which includes technician time, site visits, marketing expense, and discovery calls for example) and they stick around for 2 months of a $500/month subscription, the LTV for that customer is $0. If however, they stick around for a year, your LTV has jumped to $5,000.

Work out your customer lifetime value by subtracting the cost of acquisition from the revenues you receive from that client.

Profitability

Don’t only measure your profits overall, look to measure the profitability of each customer in a silo. That allows you to see which part of your service is the most lucrative, and understand how you’re spending your time. You might have a customer who is always agreeing to upsells and expansions, but they use up a disproportionate amount of technician time, so in actuality – they aren’t that profitable. Each customer can be analyzed with the calculation of their revenue minus the cost of goods and services sold (also known as COGS). Remember, this should include hours of work. At Atera, we automate this for you with the Customer Profitability Report.

Load analysis

Having an eye on your tickets is the route to staying on top of your whole MSP business. The right reporting suite will show you what tickets are stuck and why, which areas of the business needs better self-serve, and even what technicians are the slowest at getting to resolution. Mean Time to Respond and Mean Time to Resolution are essential SLA metrics that your customers want to see you meeting and surpassing, and are tightly tied to loyalty and satisfaction, too. You can also use ticket load analysis to keep track of total tickets, which with the right onboarding, self-serve, and customer education strategy should be going down over time, freeing up your CSMs time to add more strategy-based conversations elsewhere.

Client Effective Rate (CER)

Standing for client effective rate, this is all about how much you make from a specific client. How much do you charge the client each month, and how many hours have you spent working with them? Simply divide the cost by the hours, and you have your CER.

Ideally, as you move past onboarding and onto general monthly maintenance and support, the amount of time you spend with any given customer should reduce each month, and then plateau at a similar amount to other good clients. If you see that you’re spending more hours with a client for the same fixed costs, it’s time to talk about increasing your subscription costs or adding other IT services that they may need.

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