According to Service Leadership, best-in-class MSPs invest roughly 11% of topline revenue in sales and marketing in total (media, salaries, tools, etc.). Best-in-class does not mean biggest or those with the most topline revenue; it means they are in the top 25% quartile of most profitable and in year-over-year growth. Most MSPs underspend that number badly. But spending more will not rescue a campaign that is broken, because no amount of budget fixes a weak market, a weak message, or sloppy execution. What changes the answer for you is your growth target, your close rate, and how well you actually run the campaigns you already pay for.
Let me give you the number first, because that is what you came here for.
Most MSPs underspend the recommended 11% of topline revenue that best-in-class MSPs spend. Note that best-in-class does not necessarily mean biggest or most revenue, but rather those MSPs that are in the top 25% quartile in profitability and year-over-year growth according to Service Leadership data.
On a $2 million business, that is roughly $220,000 a year across sales and marketing employee salaries, commissions, SaaS apps, media buy, digital agency fees, list and data subscriptions and 1099 outside help.
But spending 11% alone won’t make your marketing work.
Will spending more money fix my marketing?
No. And I have watched enough MSPs prove it that I will say it plainly.
No matter what you are selling, the message matters. Pouring money into a product or service that your prospects are not interested in, or promoting a message that does not resonate with your target audience, will not produce better results just because you spend more to promote it.
Another way of saying it: you do not improve your off-key singing by singing louder.
I have seen MSPs with real budgets get beaten by MSPs with a fraction of the money, over and over, and it is never because the loser was outspent. It is because the winner got the fundamentals right first.
The main lesson I want to drive home is that no matter how much of a spending advantage you have, you can still miss the mark and fail to achieve your objective if you do not get all four M’s of a campaign right.
What determines whether marketing money works?
The four M’s. Get these right and a modest budget performs. Get them wrong and no budget is large enough.
Market. Who you are targeting.
Message. You must have a message your market will respond to favorably and passionately.
Media. How you get your message to the market.
Math. Leading indicators, performance metrics, KPIs, milestones, backwards planning.
While I have often said, “if you cannot make money WITHOUT money, you will not make it WITH money either,” I want to be clear: you SHOULD spend money on marketing, sales and the acquisition of new clients.
But simply spending money will not guarantee success. You still need meticulous targeting, strong messages, compelling offers and tight management of campaign production to ensure you get the outcome you want.
The fifth M nobody talks about
To that point, another M that is not on the above list but IS important is being disciplined and tough regarding the MANAGEMENT of the campaign and properly executing it, fully, completely and thoroughly.
Doing the WORK required. Inspecting your team’s work to ensure it is being done properly. Fully following up and following through, creating a straight path forward from lead secured to deal closed and happy client.
For example, when we sponsor an industry event, here is our master checklist to maximize the opportunity:
- Design the booth with a headline and messages that will attract the right prospect
- Invest in pre-event marketing and on-site marketing to attendees, working with the host, to drive people to the booth
- Secure a suite to have client meetings
- Create a show offer to SELL in the booth
- Plan the booth team and ensure they are trained on what to say and do
- Enlist the help of clients who will be there to promote us with buttons, offers, contests with prizes
- Pull a list of previous leads from that event and call or e-mail to visit us in the booth for a gift
- Secure a speaking spot, if possible, or at least attempt to get onstage in some manner
- Design postcards to hand out and drive people to the booth, or pay for seat drops
- Name-capture and book appointments in real time to enter into the CRM for follow-up
- Get packages specific to that event ready to mail so they land on the desk before or shortly after the event
- Create scripts and practice with the people in the booth
- Do management spot checks for compliance
- Create, print and ready a package to mail to those who did not buy
- Ready the callers with a script and time to call attendees after the show
- Create social ads to display to those we name-capture
- Walk the sponsor floor to look for potential sponsor clients and JV partners
I can guarantee you there is no one else sponsoring who has a plan as complete and measured as ours. How do I know? We ask. Plus, many of the same sponsors come to our events and we can see what they do, and do not do.
When we leave a show, we have dozens of appointments booked and actual sales, not just leads to follow up with. We do not need to spend as much as some of the sponsors who pay a premium for an extra-large booth or speaking spot. We spend less and make more because we have a comprehensive plan and we execute it well.
Far too many businesses are lazy about properly executing a campaign from beginning to end and therefore need to spend a lot more money to get the same result.
The cheapest marketing fix most MSPs are ignoring
When we secret-shop MSPs, posing as a viable prospect, and listen to the recording of how the phone call was handled, I am constantly shocked at how incredibly sloppy and ill-prepared the people are who answer the phone. And that is if we are lucky enough to get someone to pick up instead of having it go to voicemail or fail out entirely: bad number, wrong number, fast busy, voicemail full, disconnect.
This ONE mistake can make the difference between getting a positive ROI on your marketing efforts and failing out. It is a mismanaged detail most overlook.
It costs nothing to fix. And no increase in ad spend will compensate for it.
Why there is no excuse for this anymore
It always pains me to see really dumb or pitifully ineffective advertising. There is ZERO excuse for it.
There was a time in our lives when we could honestly say someone’s failure to succeed in life or in business was due to a lack of information. They simply did not have access to the books, teachers, schools or training that would help them.
We CANNOT say that anymore. Yet I have not seen an increase in success in people’s lives since the invention of the smartphone that gives us instant access to nearly any book, video or how-to information we need.
It is pure intellectual laziness. And because of it, you end up spending a lot more money to get a lot less performance.
So what should you actually budget?
Start with 11% of topline revenue if you are serious about growth, and understand that the number is an input, not a result.
Before you increase it, audit the four M’s. If your market is vague, your message is interchangeable, and nobody is inspecting how campaigns get executed, more money buys you a larger version of the same disappointing outcome.
Fix those first. Then spend with confidence.
If you want an honest read on which of the four M’s is actually costing you money right now, that is the work I do in one-on-one MSP marketing consulting.
Frequently Asked Questions
How much should an MSP spend on marketing?
Best-in-class MSPs invest roughly 11% of topline revenue in sales and marketing. Best-in-class does not mean biggest or richest, it means above-average profitability and year-over-year growth. Most MSPs spend well under that figure and then wonder why the pipeline is empty. On a $2 million business, 11% is about $220,000 a year covering salaries, commissions, tooling, media, lists and outside help.
Will increasing my marketing budget get me more clients?
Not by itself. Pouring money into a message that does not resonate with your target audience will not produce better results just because you spend more promoting it. You do not improve your off-key singing by singing louder. Increase the budget only after your market, message, media and math are right, otherwise you are buying a larger version of the same result.
What are the four M’s of a marketing campaign?
Market is who you are targeting. Message is what you say, and it must be something your market responds to favorably and passionately. Media is how you get that message to the market. Math covers your leading indicators, performance metrics, KPIs, milestones and backwards planning. Every campaign that works gets all four right. Missing any one of them is why campaigns fail regardless of budget.
Can an MSP grow without spending money on marketing?
You should spend money on marketing, sales and client acquisition. But if you cannot make money without money, you will not make it with money either. The discipline of getting targeting, messaging and execution right is what makes spending productive. MSPs that skip that discipline need to spend far more to get the same result as those who do the work.
What is the most common reason MSP marketing fails?
Poor execution of the campaign, not insufficient budget. Far too many businesses are lazy about properly running a campaign from beginning to end. That means not inspecting the team’s work, not following up completely, and not creating a straight path from lead secured to deal closed. Secret-shopping MSPs routinely reveals calls handled badly or never answered at all, which destroys the return on everything spent upstream.
How do I know if my marketing budget is being wasted?
Secret-shop your own business. Call your own number as a prospect would and listen to the recording. Check whether the call is answered at all, and whether the person answering is prepared. Then audit whether anyone is inspecting campaign execution, whether follow-up actually happens, and whether you can name your market and message precisely. Any failure there is costing you more than an increase in spend would recover.
