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When you’re starting out as an MSP, or looking to grow your IT service business, a lot of people believe that you should sell as widely as possible. All customers are good customers, and you want to cast as wide a net as possible in order to get as many new prospects through the door as you can. The reality is that selling everything to everyone doesn’t work. Apart from anything else, there are time constraints involved in marketing your business, and you don’t have time to prospect equally to everyone.
This how-to guide will look at how you can use market segmentation to categorize your audience, and work out the groups within your audience, to make better use of that time, and market more effectively.
Specific demographics to consider
If you outsource market segmentation to marketing teams, they will have specific demographics that make up the category of ‘best leads’. These primary demographics are unlikely to be the same as you would choose for yourself as an IT service provider. For example, a top lead for a marketing agency might be based on the number of employees, or the annual revenue. In contrast, as an MSP company, you want to look for companies who don’t have an internal IT function, or who are reliant on their network. These factors won’t come up from leads companies or generic research, so this is something you need to consider alongside the rest of your market segmentation.
For example, you may know from your experience the break point where companies usually start hiring internal IT. This could be anything from about 30-60 seats on average. So therefore your ‘best lead’ will likely be SMBs that have around 50 employees. Don’t worry about the lifespan of these relationships, as once you onboard the client, you can manage their growth, add automation and proactive support, and push this to a higher number of seats, even past 100. If you create a good relationship with the client, you can support them in bringing in someone internal who can act as the escalation point, while you retain control over the backbone of the networking and servers.
Other demographics you might want to consider are your location, as even with the best remote monitoring and management tools, you’re likely to want clients close to home for site visits, time-zone considerations, and more.
Choosing a niche
Once you know what size of business you’re targeting, you may want to choose a specific niche, an area of business or industry in which you’re interested in becoming an expert. Sometimes this happens by accident, especially because word of mouth is often the best sales technique! For example, you start working in one Healthcare business, and additional departments onboard your services, or you get recommendations on social media groups where the same types of stakeholders network, refer and discuss services.
In other cases it will be a more mindful choice, because you’d like to become an expert in that area, and become “the” MSP or IT service provider for anything from accountancy firms or telco, to manufacturing or maritime. (Check out our interview with Danny Merkenhof, the principal of Apex ICT, who does exactly that!) This could definitely be a value-add on getting prospects to reach out to you instead of the other way around, and in proving the value of your services by showing examples of similar networks, or business growth in their industry.
However, one important consideration is the idea of putting all your MSP clients in one basket, so to speak. As Frank Greco mentioned during our MSP Minds webinar on Growing any MSP Business, it’s important to spread your load and risk. For example, during COVID-19, there was a lot of work lost in the hospitality and travel businesses, and if all of your clients work in the same area, this can be a real problem.
Segment by pain point
Another option is to segment by what your customers need. If you choose to categorize your clients by particular challenges, this can allow you to streamline your offering as an IT Service Provider, and might improve your ability to add value. While some companies might want to say yes to everything that their clients ask for, this could mean that you do everything well without doing anything great.
Instead, think about narrowing down your service offering to something more specific, One example would be cybersecurity. You can then market yourself against a specific pain point, and look for customers who are struggling with this particular need. In this example, your marketing campaigns and brand awareness will be around the latest cyber-threats, such as offering a secure Work from Home package to meet the new remote landscape, or providing the latest antivirus offerings, back-ups, or ransomware protection.
Don’t be afraid to say, “no, that’s not in the scope of what we offer.” Providing niche services can take away from your own margins, and you won’t perform them as well as someone who does it as their main offering. Instead, build partnerships with other service providers, whether that’s hardware vendors, cloud MSPs, or software technology providers, and create a little black book of referrals that can build on one another’s success.
Understanding how to target for different relationships
Your marketing will be different whether you’re speaking to a new client, an existing one, or one who churned and you’re hoping to win back, for example. As a result, this is also a valuable way to segment your lists. Think about who you’re talking to, and create targeted communications that get your point across clearly, taking their own situation into consideration.
A discount offer might work for a new prospect, while a feature update will be a bigger draw for churned users. Existing clients have more trust in place, so a personal recommendation is far more likely to lead to an upsell.
Segmenting for success
Creating razor-sharp segments will help you to target your communication and offerings more specifically to users at all stages of the prospect and client lifecycle. Whether you choose to look at location, company size, relationships, niche or pain-points, make sure you’re thinking about this essential element of business from day one.
Want to learn more about how to be a super successful MSP? Our Atera Academy course has got you covered.