Because of the often-complex nature of what they provide to clients, Managed Service Provider (MSP) sales teams may have to spend weeks – or even months – working to get a sale over the line. Once they succeed, the whole process starts once again.
For this reason, increasing numbers of MSPs are looking for ways to grow the recurring revenue side of their business. They know that recurring revenue removes the seasonality of monthly highs and lows that occur during off-peak periods and when large deals are delayed.
It’s a trend that has been underway for some time. In some cases, leading MSPs have already reached the point where up to 80% of their annual revenues comes from a recurring source.
The benefits of UCaaS
Across Australia and New Zealand, many MSPs are turning to the rapidly developing area of Unified Communications. They realise that, if they can provide Unified Communications as a Service (UCaaS) to their clients, it can become that sought after source of recurring monthly revenue that rounds out their offering.
UCaaS is a portfolio of technologies that covers voice and video communications, chat, instant messaging and presence – all delivered over the internet and accessed through a specially designed app.
Users of a UCaaS platform can take advantage of these services regardless of their location. All they require is a smartphone or device that is running the app and a reliable internet connection. There is no need for on-premise equipment or dedicated phone handsets.
Pleasingly, this new revenue stream can be created without the need to attract and retain new clients. In fact, existing clients make the best prospective UCaaS users because they already have a trusted working relationship with their chosen MSP.
There are a number of key reasons why MSPs should consider adding UCaaS to their portfolio of offerings to increase monthly recurring revenue. These reasons include:
- Build a baseline of recurring revenue: Lumpy, unpredictable revenue streams can make it difficult to cover monthly operating expenses. UCaaS can help to smooth your income out and make paying regular bills much easier.
- Increased business valuation: The higher the percentage of recurring revenue, the higher the multiple prospective buyers will pay for the business.
- Set and forget: Because UCaaS is delivered ‘as a service’, there is no complex hardware or software to be deployed at the client’s premises. This means that, once it’s been configured and deployed, there is less maintenance work for the MSP to have to complete.
- Strong margins are on offer: MSPs can expect to enjoy attractive profit margins with selling UCaaS to their clients. In some cases, these margins can be as high as 50%.
- No need for capital investments: Selling UCaaS doesn’t require an MSP to invest in expensive new technology or resources. This lowers the barrier to market if you choose the right provider.
- Less Overheads: With UCaaS delivered from a cloud platform, MSPs don’t need to worry about system monitoring and maintenance as that is the responsibility of the provider. The MSP can instead focus on supporting their customers’ needs and ensuring their business outcomes are met.
- Makes customers ‘stickier’: With a UCaaS service in place, clients are more likely to have a long-term relationship with their MSP and less likely to shift to a competitor.
The reasons for an MSP to add cloud-based UCaaS to its product portfolio are significant while the barriers to entry, if the right provider is selected, are low. Access4 promises to provide profitable, recurring revenue with our easy-to-adopt platform resulting in happier customers. Find out how!