Many MSPs offer cloud backup services. A few of them make moderate to high profits by cost-effectively offering high-value services and re-signing clients year after year. But many more MSPs offer backup services as an inexpensive commodity, only to reap razor-thin margins.
Predictably, competition in this rank of MSP is primarily on price. Customers expect one thing and one thing only: reliable backup for cheap. Yet cheap backup may not be reliable and it is likely not scalable. The customer is disappointed and moves on to the next cheap offering.
There is no getting around price sensitivity in the managed backup market. Even large, well-funded companies will feel the pinch of massive outsourced backup; mid-sized businesses and SMB certainly will. Yet when MSPs offer backup to their customers, they should not categorize themselves as a commodity seller. Instead they offer value: expertise, a service that allows customers to spend precious resources on their business, a high-value technology. Customers will know it too – and pay for it – if the MSP sells advanced technology and services at a reasonable price. Then the MSP becomes a valuable partner instead of a costly irritant.
Profiting with Cloud Backup Services
How do MSPs get there? By educating their customers on the value of cloud backup, and by partnering with a backup product vendor who offers high value backup services at a reasonable cost.
Customer education starts by highlighting their pain points. Customers know what they don’t like but they may not know they can do anything about it, or may not realize that solving the pain points can be a simple and cost-effective process.
Three of the biggest pain points for any cloud backup user are: 1) slow backup and recovery speeds, 2) uncertain security, and 3) poor technical support. When their service provider can cost-effectively solve these paint points for them, the MSP has a very attractive marketing message and the ability to charge more for the value they offer.