The Question Nobody Asks

Every year somebody surveys about a thousand managed service providers and asks them to name their biggest problem. Every year they give the same answer. In the most recent one, 71 percent said acquiring new customers, ahead of everything else on the list.

It is not for lack of people selling the solution.

The largest marketing program in this industry filled a room this year with more than 1,300 MSP owners, its eighteenth annual event, sold out. One agency in the category runs more than a hundred employees, has appeared on the Inc. 5000, and says it has served over a thousand MSPs. A subscription program out of the UK has seven hundred members paying a couple hundred dollars a month. A peer association has thirteen hundred member companies. Underneath all of it sits the marketing money software vendors hand their partners to run campaigns with, which no vendor has ever added up in public.

This is a real industry, two decades old, competitive enough that its firms buy search ads against each other’s names.

So here is a fair question to put to it. What does it cost an MSP to win a client?

Nobody has ever published the number.

What I went looking for

I checked eight of these firms for anything that would count as evidence: a result covering more than one client, a stated number of clients behind it, and a method somebody outside the company could follow.

There is none. Not a cost per lead, not a cost per client, not a conversion rate, not a response rate. What exists instead is case studies, one client at a time, written by the vendor or by the client, with the flattering figure in the headline. About half do not say what the company was doing before. Most do not say what was spent. Several credit a marketing program for a year in which the same paragraph also mentions a new vendor partnership and a price increase.

The literature

There is one exception, and it deserves to be described precisely, because it is the whole of the published record.

An MSP wrote a post on its marketing vendor’s blog reporting that it costs the firm $4,532 to acquire a client, and that every dollar it spends on marketing comes back as seven dollars of recurring revenue. The post explains the method. The owner tracks it in an Excel sheet.

That is the entire published cost-per-client literature for this industry. One company, one spreadsheet, on a supplier’s website.

The closest thing to data is a contest

The largest program runs an annual competition. Six finalists take the stage in front of the twelve hundred and present what they grew and how they did it. The companies are named. The dollar figures are specific. The periods are stated. Last year’s winner drove away in a new electric truck.

It is the closest thing to published outcome data this industry has, and it is not data. There are no published judging criteria. There is no verification or audit of the numbers. Entrants write their own accounts of their own results. And nobody says how many MSPs entered, so there is no way to know whether the six on stage are the best six out of twenty or the best six out of two thousand, which is the only thing that would tell you what an ordinary result looks like.

A leaderboard of winners is not a benchmark. It is a testimonial with a stage.

What a guarantee turns out to be

One firm markets itself on guaranteed leads, so I went to read the terms. The guarantee, in full, is that the firm guarantees growth for its clients will not be a fleeting surge but stable growth, securing a consistent flow of leads.

There is no number in it. No quantity, no timeframe, no refund, no remedy. There is no fine print because there is nothing that could be voided.

Why the number stays missing

I do not think any of this is sinister, and the piece would be worse if it pretended otherwise.

A cost per client only means something as an average across every engagement, including the ones that did not work. No firm in a competitive category volunteers that figure, and no MSP that spent forty thousand dollars for nothing writes it up afterward. The only people holding the data are the people selling the service, and they have every ordinary commercial reason to publish their best case and stop there. That is not a conspiracy. It is what happens when nobody independent is counting.

The effect is the same as if it were deliberate. An industry has been buying this service for twenty years without knowing what it costs when it works.

The part that should bother a buyer

There is a harder fact underneath all of it.

In the same survey where 71 percent call client acquisition their biggest problem, only 12 percent say their new clients are mostly first-time buyers of managed services. A third say their new clients come mostly from competitors. Roughly nine in ten prospects already have somebody.

Which means marketing spend in this industry, added up across all of it, cannot grow the market. It can only move share. Every MSP buying more of it is bidding against every other MSP buying more of it, often with the same templates, aimed at the same accounts. Operators report getting the identical letter from the competitor across town. One had a client hand him a rival’s mailer with LOL written on it.

So an investor looking at a target’s marketing line is looking at a number with no benchmark behind it, spent into a market where the industry’s total spending nets out to something close to zero, on a service whose vendors have never published a result anyone could check.

The question

Somebody should ask what it costs to win a client, and then answer it in public, with a method.

It would not take much. One platform, its own accounts, its own spending, how many of those prospects became clients, and what happened to each year’s new clients after they signed. Published in a form somebody else could check. That firm would immediately know more about this market than any of its suppliers has ever disclosed, and more than the surveys have ever thought to ask.

The question has been sitting there for twenty years while an entire industry sold the answer. It is still nobody’s job to ask it.