Does Your LA IT Company Share Key Performance Indicators?
MSPs (managed service providers) basically maintain broad business goals: double revenue, pursue cross-sell opportunities, client satisfaction, and boost client retention, just to mention a few.
However, while they keep these big picture goals in mind, some MSPs are short on specifics on how to attain them. That’s where KPIs (key performance indicators) come in. When properly implemented, KPIs can be useful tools for gauging business performance. But here’s the rub: MSPs grapple with the daily demands of operating a business and might feel that they don’t have the time to create performance metrics, let alone use them to gauge performance.
While the press of business can be daunting, MSPs should still make time to assess their performance. KPIs can serve as guideposts, helping MSPs assess how well they are progressing towards achieving their ultimate goals. This post will walk you through some of the KPIs that MSPs should consider using. It will also enlighten you as to why it’s better to work with an MSP that has KPIs. Let’s dive in!
KPIs for MSPs
A business can use any number of performance metrics. So, an MSP’s first task is to narrow down the list and focus on those KPIs that best support its goals. Here is an outline of some of the KPIs MSPs should consider using:
1. Customer Lifetime Value
Repeat customers are great for business. Customer lifetime value is the total worth of a customer to a business over the whole period of their relationship. Assessing customer lifetime value helps MSPs consider the long-term value they accrue from repeat customers rather than focusing on short-term wins. Besides that, it also allows businesses to compare the relative value of different customers.
Customer lifetime value is a crucial metric, since it costs less to keep existing customers than acquire new ones. As such, increasing the lifetime value of your existing customers is an excellent way of driving growth.
2. Customer Acquisition Costs (CAC)
CAC is the amount of money a business spends to acquire a new customer. This KPI helps an MSP measure the return on investments of the efforts in trying to grow its customer base.
3. Monthly Recurring Revenue (MRR)
MRR refers to the predictable total revenue generated by a business in a particular month for all the active subscriptions. It includes recurring charges from coupons, discounts, and recurring add-ons. It, however, excludes one-time fees.
MRR allows businesses to track growth and the value of the business more accurately. Not only should you keep track of MRR, but also the percentage of IT support versus managed services such as backups or SEIM. When tracking MRR, it is important to know how many clients account for each percentage.
4. Employee Training Hours
Another important metric that MSPs should track is employee training hours. Generation IX has an employee training program called Elevate and provides access to ITProTV for all employees. This program provides dedicated hours during the workday for training. The essence of this metric is that suppose you don’t find time to develop your employees, you won’t grow as a company, and you’ll have difficulty retaining your employees.
5. Time and Profitability Matrix (TPM)
This KPI allows MSPs to negotiate mutually beneficial service agreements with their clients. It also helps fortify relationships with certain clients and, on some occasions, eliminate others. Typically, the data used in TPM is obtained from other metrics such as W2 ratio and client rating. The bottom line of this metric is that it allows you to know and rate clients based on how they utilize your support services. TPM allows you to adjust service agreements accordingly such that both you and the client benefit.
6. Service Gross Margin
This KPI represents the cash being generated to cover all the operating expenses. Office space, sales teams, and your marketing efforts all fall under the service gross margin umbrella. When your service gross margin is high, it means that you have more money to invest in your business and accelerate growth.
7. Net Operating Income
Net operating income helps measure a firm’s profitability rate. It accounts for a business’s direct and indirect expenses. This metric basically sums up the current health of an MSP business.
8. Technician Utilization Rate
This metric measures both the costs and how efficiently the support organization uses technicians. It can also be used to assess the current and future needs of support services.
The duration that technicians take to work on resolving a ticket is a vital measure. That said, MSPs must strike a healthy balance between the proportion of technician utilization value and the technician turnover quantity. When technician utilization is low, the cost per ticket will be high. Conversely, if an MSP ramps up technician utilization, the cost per technician will be low.
9. Average Resolution Time
Today’s customers expect speedy service. They don’t fancy waiting for long periods for a system issue to be resolved. Unsurprisingly, average resolution times play a significant role in how satisfied customers are with an MSP’s services. By monitoring and improving your average resolution time, you can not only keep customer satisfaction rates high, but you’ll also free up more time to take on new clients.
10. Service Level Agreement (SLA) Compliance Rate
This KPI defines the standard of performance of an MSP by specifying metrics used to measure service quality and defining the penalties that will occur in the event that a given threshold isn’t attained. By keeping track of SLA compliance, MSPs can maintain customer satisfaction and minimize turnover by either living up to or exceeding the set expectations.
Partner With an LA IT Company That Shares KPIs
KPIs inject greater discipline into how MSPs are managed and also into how they deliver services to the client. If you’re looking to partner with an IT company that not only keeps track of its KPIs to improve its bottom line but also those of its clients, then Generation IX is your go-to provider. Contact us today to learn more about our IT solutions.
