Many managed services providers (MSPs) depend on word-of-mouth referrals to generate new customers and grow their business. And while relying on these can work to a degree—especially if your company provides outstanding customer service—it isn’t an ideal strategy if you want to really scale or grow. There are several serious downsides to relying solely on these types of referrals:
1. Inability to forecast
One of the biggest downsides to relying on word-of-mouth referrals is an inability to forecast your business growth. Referrals do not come in steady streams. One month you may land two new accounts, the next month you have a dry spell. Even then, it’s practically impossible to predict how large of an account each of your new clients will be. With bills to pay, you need to know you can pay them. The unpredictability of referrals adds uncertainty you don’t need.
2. Hiring can be difficult
Because it’s hard to predict new business, it’s easy to face financial strain when hiring a new employee. For example, say a new client signs on and is big enough to overwhelm your current resources. You realize you’re unable to serve them and your existing customers without help so you decide to hire a new employee. Now you have additional overhead but you don’t know when the next referral will come in, which puts an unnecessary strain on your finances.
3. Unprofitable referrals
Referrals do have the potential to cost you money. Because you have little control over who gets referred, you may end up with customers who are less than ideal, or even downright bad. You may feel you can’t let these customers go, thinking any business is better than no business. But if you look at the amount of time you spend serving them, you may find these customers are costing instead of making you money. Spending time finding and building relationships with good customers could be much more profitable.
Word of mouth plus proactive marketing
Because of the inconsistency and potential for unprofitable business, a strict word-of-mouth strategy is not ideal. Instead, we advocate for a more proactive marketing strategy with some word-of-mouth in the mix. When you proactively market your business, you can generate leads on your own terms, without waiting for someone to do it for you. The potential benefits of marketing are numerous. Here are some of the biggest:
As you market, you should begin to see an increase in new business. Not only that, there should be a new level of consistency with that business. Over time, you should start to expect a certain number of new leads and a certain number of new customers every month. As business becomes more consistent, you can start to forecast revenue, when to hire new employees, and what type of employees you’ll need to hire.
2. Market directly to your ideal customer
Whether you’ve formally created an ideal client as part of a marketing exercise or not, you likely have an idea of what they look like. In fact, having your ideal customer in mind helps you be more efficient in your targeting. If you know you’re looking at healthcare enterprises, for example, you know to ignore a lot of the other people in your search efforts. But this is also where word-of-mouth still works—you can pick up leads while chasing the big game. And better yet, you may start to get word-of-mouth referrals from your ideal customers.
3. Let automation do the work
Consistent marketing helps you stay in front of your customers, keeping you top of mind. And with automation, it’s possible to stay there without much work on your part. For example, if you set up and deploy a marketing campaign based on endpoint detection and response (EDR) and capture a lead from one of the social ads, you can place that lead in an EDR-specific email campaign that continues to share the value of EDR to your lead. Since it’s an automated campaign, you can let it run without lifting a finger. Over the course of several days, while you’ve kept yourself busy serving current customers, you may get a call from your lead, asking more about your services.
MarketBuilder helps make marketing easy
MarketBuilder is a platform that’s specifically designed to help MSPs advertise their services. It’s full of value-based marketing material that puts things in the customers’ language and helps educate them on how your services can support their business. You can use the collection of ready-made marketing materials to help accelerate your business’ growth, even without any prior marketing experience.
The intuitive platform allows you to quickly brand the marketing materials with your own logo, value proposition, and contact information. Marketing campaigns center around different topics such as security, monitoring, and backup. Each campaign contains several pieces of content, like emails, landing pages, product sheets, PowerPoint presentations, and social media posts. You can automate this content inside the platform or put it in your own marketing tool. Either way, it was built to be intuitive and easy to use, no matter your skill level. Best of all, MarketBuilder is included in any active N-able product subscription. N-able partners can sign up here to start using MarketBuilder.