The fastest, cheapest and highest-return revenue growth available to an MSP is not a new client. It is the client you already have. The six things top MSPs do differently: they take only fully managed clients, they run a deep-dive assessment at onboarding, they hold quarterly technology business reviews without fail, they design those reviews as C-level strategy rather than ticket reviews, they review client profitability twice a year, and they ask for referrals in the meeting rather than hoping for them. Proper account management grows MRR by no less than 10% year over year from existing clients, through price increases, service upgrades, projects and natural expansion. The benchmarks to aim for are 60% to 65% service gross margin per client, project revenue equal to roughly 60% of ARR, churn under 5% a year, and at least one referral per client per year. How much upside you have depends on how underdeveloped your base is right now, which is usually more than owners expect.
The 6 Ways Best-In-Class MSPs Attract, Keep And Fully Monetize Their Clients
Here is what consistently separates the most profitable MSPs in client development, and how they grow their MSP without being overly dependent on referrals and acquiring new clients. Six things, in order of impact.
1. They do not offer break-fix services and only take fully managed clients. If they have legacy clients who are break-fix, a campaign is put in place to move them to managed services. Over the years I've helped thousands of MSPs move even their most stubborn, "cheap" clients to managed services. In most cases, better than 90% will move to managed services when you sell it properly, and the ones that refuse usually are the clients you don't want to keep anyway.
2. Every new client is taken through a deep-dive assessment process as part of onboarding. This is a detailed analysis of their entire environment so you can provide support, but also to create an IT Roadmap and budget for upgrades, hardware refreshes, additional cyber protections and more, along with a budget, to get the client aligned to your tech stack and quality standards. This sets the stage for quarterly TBRs.
3. TBRs are scheduled and conducted quarterly without fail. Clients are not permitted to skip these meetings because it's critical for you, the MSP, to address high-priority security risks as well as out-of-warranty equipment and outdated systems that could cause an increase in support tickets, downtime or other significant disasters that you would then be responsible for.
4. TBRs are strategically designed and planned, not low-value "booty calls" or ticket review sessions. Top MSPs design TBRs to be a C-level discussion about how to lower the client's risk, ensure legal compliance, improve productivity and provide support for growth. Yes, selling happens, but it's done to a strategic plan designed with the client's best interest, not your quota.
5. Client profitability is reviewed at least twice a year. If any single client is found to be under 65% in service gross margin, not including hardware sales or product resell, a plan is put in place to raise prices, upgrade their plan and/or sell them a project to fix something in their environment that is causing a lot of tickets and driving down profitability. If the profitability is severely low, under 50%, they are given an ultimatum to upgrade or pay more, or they are transitioned out.
6. Referrals are asked for and expected. If you're doing a great job, clients will want to refer you, but you'll need to incentivize and ask for them during the TBR, not just hope they'll remember to give them to you or toss a "we love referrals" comment on your way out of the meeting.
Where Are You Leaking Profits? A Quick Self-Audit
Here are the most common ways MSPs under-develop their existing client base, and the questions you should be asking yourself right now.
1. Do you know the gross margin on every client? Not revenue, gross margin. Topline is for vanity, bottom line is for sanity. If you don't know which clients are profitable and which are money pits in disguise, you can't make good decisions about where to invest your time and which clients to develop versus which to fire. Pull this number for every client. The results will shock you.
2. Are you conducting QBRs or TBRs with every client at least twice a year, ideally quarterly? Not check-in calls. Not ticket reviews. Strategic meetings where you show up as a CIO, present an IT Roadmap, and talk about their business goals and technology plan. If the answer is no, or "only with some clients," you are systematically leaving project revenue and service upgrades on the table AND underserving your clients.
3. Are any of your clients still on break-fix? If yes, you have an immediate opportunity to convert them to managed services, and you should do it before you spend a single dollar on finding new clients. A break-fix client is not a client, they're a drain on your profits and enterprise value.
4. Are your clients buying cybersecurity, compliance, or backup services? If you're not providing EDR, MDR, MFA, employee awareness training, immutable backup solutions and the rest to every client, you're putting THEM at risk and leaking profits out of your business.
5. Do you have clients you dread dealing with? Every MSP does. The question is what you're doing about them. Clients that make you cringe every time they call are draining your profitability and your team's morale. The time and energy you spend managing your worst clients is time you're NOT spending developing your best ones. Fire them. You'll make more money with less misery.
If you want help building the account development process that makes this happen consistently, rather than in fits and starts, that is the work I do in one-on-one consulting.
Frequently Asked Questions
How do MSPs grow revenue without acquiring new clients?
Through proper account management of the clients you already have. That means quarterly technology business reviews conducted as strategic C-level discussions, a documented IT Roadmap and budget for each client, twice-yearly profitability reviews, and moving any remaining break-fix clients to managed services. Done properly this grows MRR by no less than 10% year over year, through price increases, service upgrades, projects and natural expansion.
What gross margin should an MSP make on each client?
Aim for 60% to 65% service gross margin per client, not including hardware sales or product resell. Any client under 65% needs a plan: a price increase, a plan upgrade, or a project to fix whatever in their environment is generating excessive tickets. If a client is severely unprofitable, under 50%, give them an ultimatum to upgrade or pay more, or transition them out.
How often should MSPs conduct QBRs or TBRs?
Quarterly, without fail, and clients should not be permitted to skip them. These are not check-in calls or ticket reviews. They are strategic meetings where you show up as a CIO, present an IT Roadmap, and discuss the client's business goals and technology plan. Skipping them means leaving project revenue and service upgrades on the table while underserving the client.
Should MSPs still offer break-fix services?
No. Best-in-class MSPs take only fully managed clients, and where legacy break-fix clients exist they run a campaign to move them across. Better than 90% will move to managed services when it is sold properly, and the ones who refuse are usually clients you do not want anyway. A break-fix client is a drain on both profitability and enterprise value.