Most MSPs start by funding lead generation, which is the wrong end. Before you spend a dollar attracting prospects, fix what happens to them when they arrive. The A.C.E. framework covers the three drivers of growth: Attract, Convert and Expand. The correct order to work in is the reverse of the acronym. Fix Expand first, meaning pricing, margins and monetizing existing clients. Then Convert, meaning lead capture, follow-up and sales process. Only then fund Attract. Improve all three by 10% and you do not get a 30% gain, you get 56%.
Play along and imagine this fictitious scenario for a moment.
You live in an extremely rural area where clean water is not piped into your home via a modern plumbing system.
To get water, you have to carry a bucket a long distance to a well, and pay dearly for it. You get exactly one shot per day. Miss it, and you're waiting until tomorrow. No hose with a pump is available. No digging your own well. No moving somewhere with free-flowing water.
If your family depended on you to bring that water home, what would be the ONE critical tool you would want?
Answer: a bucket without any holes in it.
I know this is a ridiculous scenario, but it is a metaphor that illustrates a crucial point:
MSPs routinely waste thousands of dollars and YEARS of their lives putting "water," meaning money, time and effort, into a bucket, meaning their marketing and sales process, that is full of holes.
They pour money into hiring salespeople and outsourced appointment setting services. They pour money into "experts" and advisors to tell them what to do. They pour money into building websites and SEO, buying Google Ads, direct mail and trade show booths, filling the bucket at full blast, while all the water leaks out of three massive holes in the bottom.
Every lead they happen to secure or every opportunity presented is leaking right out of the sales funnel, and all they have left are a few drips that managed to pool at the bottom.
The three holes in the money bucket
Here are the three I see most often in MSP businesses:
A non-existent inbound lead capture process (referrals, website, phone, in-person)
A broken conversion process (no lead capture, sales process, proper follow-up or drip marketing)
A lifetime value that is embarrassingly low
Every dollar you spend attempting to fill your bucket full of leads and customers is wasted while these giant holes exist, and most MSPs aren't even aware of them.
They just blame their marketing failures on the last agency they hired, or the fact that "good salespeople are hard to find." While some of this may be true, the bigger issue is that you don't have the proper fundamentals in place to plug the holes in your bucket.
The good news is that even modest improvements can add up to a lot of money.
But before we can start plugging the holes, it's important to understand the three categories, or drivers, of getting more customers, making more money and generating more profits.
The three drivers of revenue and profit growth
I call these three drivers the A.C.E. framework. Here they are, plain and simple.
Driver 1: Attract (lead generation)
What are you actively doing to drive qualified prospects to call your office and book a consultation? What are you doing to find new prospects who are open to switching IT providers?
This is what most MSPs start with when they think about marketing and growth. More leads. More inbound calls. More appointments.
And it's the WRONG place to start, for two reasons.
First, you're not operationally ready to handle inbound leads. The phone rings and nobody answers, qualifies them properly, follows up or sells them on moving to the next step.
Second, you're probably not even profitable on the clients you already have, and cramming more clients into an unprofitable service department at margins that are too thin isn't growth. It's just more work for less money.
Driver 2: Convert (sales process and lead nurture)
Lead conversion is not just your active opportunity close rate, although that is a big part of it. It's also what you are doing to properly capture and follow up on inbound leads to move them to an appointment and, ultimately, a customer.
Most MSPs can't convert the leads they get because they lack any sales or marketing training and therefore don't know what a "good" sales process is. What makes this worse is that they've been successful closing referrals and therefore think all leads that come in will behave in the same way.
They won't.
So they don't know how to properly handle an inbound call from a prospective customer, qualify them and sell them on moving forward in the sales process. They lack a CRM or marketing automation platform to capture, track, segment and follow up with leads. And don't even get me started on their sales process, which looks more like an episode of the Three Stooges doing a plumbing job than a well-planned, strategically designed process.
Often, it's not bad marketing but bad CONVERSION that's crushing the ROI.
Driver 3: Expand (fully monetize every client you get)
Best-in-class MSPs outperform their competition for a lot of reasons, but the number one advantage they have is knowing how to fully monetize every client they have.
They know how to charge the right fees and not discount. They know how to sell the value of a complete managed services plan instead of break-fix or "cheap" management. They also know how to set an IT budget and project roadmap for each client, driven by technology business reviews, or TBRs, also called QBRs. They don't have high churn, meaning less than 5% of their clients per year.
All of this, coupled with a well-run service department, delivers best-in-class GROSS MARGIN, not top-line sales.
Remember: top line is for vanity, bottom line for sanity. If you're adding customers to an unprofitable, high-churn business, you'll go broke fast, and you won't be able to afford to spend an appropriate amount on sales and marketing to get new managed clients, essentially suffocating your business growth.
Why all three compound
ALL THREE DRIVERS matter for profitable growth and a sustainable ROI on your sales and marketing investments.
And here's what makes this so powerful.
Improve any ONE of those drivers and you'll grow your business. But push all THREE simultaneously, 10% more leads, a 10-point jump in your close rate, and 10% higher MRR, and it doesn't add up to a 30% gain.
It compounds into a 56% revenue increase.
Here's how the math works:
| Lead generation | Close rate | Average client MRR | Annual result | |
|---|---|---|---|---|
| Today | 3 leads/month (36/year) | 33% (12 clients) | $1,000/month | $144,000 |
| After | 10% more (40/year) | 43% (17 clients) | $1,100/month | $224,400 |
That's an increase of $80,400. Not a 10% increase. A 56% increase.
What to work on FIRST
These drivers have a correct sequence of implementation to get maximum benefit, and nearly every MSP starts at the wrong end.
In the A.C.E. framework, I get clients to start with the E (Expand), THEN the C (Convert), and then, and ONLY then, fund your marketing and drive inbound leads.
Here's why.
If you are generating leads BUT can't convert them, all of your marketing and sales spend will be wasted. Same story if you're selling an unprofitable service contract because you're afraid to raise your prices or charge for onboarding.
Same story if your sales process is so crappy you couldn't close a door with a handle, a well-oiled hinge and a welcome mat.
Further, adding new clients to an already unprofitable business model only buries you deeper into debt and stress. You're not charging enough. You're not properly managing the accounts you already have. Piling more clients on top of that doesn't fix the problem. It just makes the hole bigger.
In my two-plus decades of working with MSPs, I can count on one hand the number who were properly prepared to handle inbound leads generated from marketing and simply needed more leads.
Everyone else is like a baby bird who's had momma drop pre-chewed food in their mouths their entire lives, meaning referrals, and is now attempting to eat a steak whole.
All of this can be fixed. But the key takeaway is that you must FIRST get the E part of A.C.E. right, then the C. THEN you can start driving leads into your sales and marketing funnel.
Where are the holes in your bucket? A quick self-audit
Here are the most common places MSPs leak opportunities, new revenue and profit, often without realizing it.
1. Do you accurately track and review all leading and trailing KPIs in your marketing and sales funnel?
Lead volume per month, conversion funnel metrics from entry to paying client, pipeline metrics, and customer acquisition cost against lifetime value are SUPER basic, yet very few actually track them. Keep a running spreadsheet or report of these simple numbers, update it weekly and watch the trends. These become your baseline, and the benchmark you improve against. If you have never done the backwards math on your own funnel, start there.
2. Are 100% of your inbound leads captured and properly followed up on?
What happens when a prospect calls your office? Or fills in the "Contact Us" webform? Downloads content? Or hands you a business card at a networking meeting? Comments on something you posted on social media or direct messages you? Do you have a documented process to not only capture that lead into your CRM, but to follow up and book an appointment? Or do you email a couple of times, get busy and forget about them?
3. A prospect calls your office RIGHT NOW. Does a knowledgeable, well-trained person answer live, or do they hit voicemail?
This is CRITICAL. The number one reason someone fires their current MSP and moves to another is lack of response. That inbound call is the FIRST IMPRESSION of how responsive you will be after signing the contract, so don't bungle it or they'll just call the next MSP on the list. This one change alone can move your close rate significantly.
4. Do you have a marketing automation system that is ACTIVELY used to store, manage, follow up and track inbound leads?
Something like HubSpot, Keap or GHL. Most MSPs do not have a CRM in place, which is a critical tool for lead tracking and follow-up. If you're not capturing the leads coming in, putting them into a functioning system, properly categorizing them, keeping notes and meticulously following up, you're handing money to your competitors and missing out on hundreds of thousands of dollars.
5. Do you have lead generation magnets on your website AND an easy way for prospects to book meetings?
If not, why? You've got people coming to your website and you're offering them NO way to engage. No buyer's guide, no free information and no button to click to book a consultation. You got a prospect to go to your website and NOW you fumble the ball? You need top-of-funnel offers such as free reports and guides, and middle-of-funnel offers such as a consultation, so that when your marketing works and gets them to the site, it converts.
6. Do you have an online and offline drip marketing system?
This should not just be a weekly email, but also a newsletter, magazine or oversized postcard. Is your content all about tech, or do you connect with your prospects and clients about business issues, reducing risk, lowering cost and using tech to be more productive, profitable and competitive? Do you conduct a regular webinar for your unconverted leads? In-person events? Unconverted leads aren't tire kickers to be thrown away and forgotten. They are a critical part of your sales pipeline that could represent hundreds of thousands of dollars.
7. Do you have a documented, practiced sales process that closes 70% of the qualified opportunities that come in, at FULL price, with no discounting?
Most MSPs walk into a first appointment as a stranger and expect to close because they've been spoon-fed baby food called referrals, which require zero sophistication to close. When they start doing lead generation marketing and are faced with leads that aren't perfectly teed up, they're shocked to find they can't close deals. Know this: great marketing paired with a broken, dysfunctional sales process is a recipe for failure. If you are not asking for the order, you are not closing.
8. Are you being forced to discount your fees to win deals?
A 10% discount doesn't cost you 10% in top line. In most MSP businesses it wipes out your entire net profit margin. The average MSP only earns 8% EBITDA, so they're already underpricing, and a discount means you're working for free or paying the client to be their IT company. Every dollar you discount comes straight off the bottom line, which is how YOU get paid. Don't discount. Get better at selling the value you bring and building trust. This isn't a marketplace or economy problem. It's a SALES failure.
9. Do you have a strategic TBR or QBR process with your current clients that you consistently run?
Do you do this with 100% of your managed clients every quarter, or at least semi-annually with the smaller ones? Is it designed to ensure alignment with your tech stack, standards and current service plan? Do your clients show up for these meetings, or do they refuse because the process is more of a ticket review than a strategic conversation? Spending time, money and energy getting new clients while overlooking the acre of diamonds in your current client base is dumb. Plus, you don't get the full value of clients and often have higher churn.
The Bottom Line
Fix ANY of these holes in your bucket and you'll instantly start getting a higher return and faster growth.
But work in the right order. Expand first. Convert second. Attract last.
Because filling a bucket with holes in it is not a marketing strategy. It's an expensive way to stay exactly where you are.
If you want help working out which hole is costing you the most, and the order to fix them in, that is the work I do in one-on-one consulting.
Frequently Asked Questions
Where should an MSP start with marketing?
Not with lead generation, which is where nearly everyone starts. Work the A.C.E. framework in reverse: fix Expand first, meaning pricing, margins and monetizing existing clients, then Convert, meaning lead capture, follow-up and sales process, and only then fund Attract. Generating leads you cannot convert, or adding clients to an unprofitable model, wastes every dollar you spend.
What is the A.C.E. framework?
Attract, Convert, Expand. Attract is lead generation and getting qualified prospects to book a consultation. Convert is capturing and following up on those leads and closing them through a real sales process. Expand is fully monetizing every client you already have through correct pricing, complete service plans, technology business reviews and low churn. All three drive growth, but they have a correct order of implementation.
Why shouldn't I start with lead generation?
Two reasons. You are probably not operationally ready, meaning the phone rings and nobody answers, qualifies or follows up properly. And you are probably not profitable on the clients you already have, so cramming more clients into a thin-margin service department is not growth, it is more work for less money.
How much difference does improving all three drivers make?
More than you would expect, because they compound. Ten percent more leads, a 10-point jump in close rate and 10% higher average MRR does not produce a 30% gain. On a business doing $144,000 a year from 36 leads at a 33% close rate and $1,000 average MRR, those three changes produce $224,400. That is an $80,400 increase, or 56%.
What does discounting actually cost an MSP?
Far more than the discount. A 10% discount does not cost you 10% of top line, it typically wipes out your entire net profit margin, because the average MSP only earns 8% EBITDA. At that point you are working for free, or effectively paying the client for the privilege of being their IT company. Every discounted dollar comes straight off the bottom line.
Why does answering the phone live matter so much?
Because the number one reason a business fires their current MSP is lack of response. That inbound call is the prospect's first evidence of how responsive you will be after they sign. Send them to voicemail and they simply call the next MSP on the list. Fixing this single thing can move your close rate significantly, and it costs nothing but discipline.
What are the most common places MSPs lose money without noticing?
Untracked funnel KPIs, inbound leads that are never captured or followed up, calls that go to voicemail, no CRM in active use, a website with no lead magnet or booking option, no drip marketing to unconverted leads, an undocumented sales process, habitual discounting, and no consistent technology business review process with existing clients. Most MSPs are leaking from several of these at once.