The Growth Engine Moved

Every January the MSP industry gets a fresh look at itself. In ScalePad’s 2026 MSP Trends Report, published in January, the top-ranked growth driver is the familiar one: acquiring new clients, cited by 60% of MSPs. The number worth attention sits right below it. Growing existing client accounts jumped from the #4 growth driver to #2, named by 49% of MSPs this year against 35% last year.

That is a big one-year move for a survey ranking that usually shifts a point or two at a time. Half the industry has noticed something the math has said for years: the cheapest revenue an MSP will ever close is sitting inside its install base.

The rest of the board is worth reading too. Offering new services came in third at 39%, improving marketing efforts fourth at 38%, making service delivery more efficient fifth at 34%, partnership opportunities sixth at 30%, and acquiring another MSP last at 20%. Most of those drivers need new budget before they produce a dollar. Expansion starts from revenue you already earned and a relationship you already paid to build.

What net-new actually costs

First Page Sage tracks cost per lead across industries, and its May 2025 update puts the blended figure for IT and managed services at $503, with paid channels at $617 and organic at $385. That money buys a lead, not a client. Between the lead and a signed agreement sit qualification, discovery, a proposal, references, and however many weeks the sales cycle runs. Every stage leaks.

The broader benchmark most operators reach for comes from a 2014 Harvard Business Review piece: acquiring a new customer costs five to 25 times more than retaining an existing one. A caveat belongs next to that number: HBR states it without citing an underlying study, so treat it as directional. The research the same article does cite, Frederick Reichheld’s work at Bain, found that improving retention by 5% lifts profits by 25% to 95%. Direction and magnitude point the same way. Selling to clients who already trust you costs less than convincing strangers.

The number most MSPs cannot see

Expansion has a visibility problem. The same ScalePad report found that only 44% of MSPs track net revenue retention, and only a little over one-third track client churn. NRR is the metric that tells you whether the existing book grows or shrinks on its own: starting MRR plus expansion, minus churn and contraction, divided by starting MRR. Above 100%, the base compounds before a single new logo signs. Below 100%, new sales are refilling a leaking bucket. An MSP that does not measure NRR is guessing at both.

Industry economics make that blind spot expensive. Service Leadership’s benchmark of 2025 performance, published this June, shows IT solution provider revenue grew 9.6% while adjusted EBITDA grew 17.1%. Profit is growing nearly twice as fast as revenue, which tells you the winners are selling more efficiently. Expansion is the most efficient revenue there is: the lead cost is zero and the delivery relationship already exists.

Why the motion stalls

Half the industry now says expansion matters. Far fewer run it as a motion, and the failure pattern is consistent enough to name.

Nobody owns the number. Expansion revenue sits between account management and sales and often reports to neither, so it becomes everyone’s second priority. Compensation pays for hunting: when the plan pays more for a dollar of net-new than a dollar of expansion, rep energy follows the plan, whatever the strategy deck says. The QBR gets colonized by service: ticket recaps and SLA charts fill the agenda because they are easy to produce, and the one meeting that should open expansion conversations closes them instead. And the whitespace itself is invisible: the PSA knows what each client buys, the RMM knows what each client runs, and almost nobody joins the two tables.

These are design problems, not talent problems, and design problems have known fixes.

Map the whitespace

Build a grid: accounts down one side, the service catalog across the top, a mark in every cell an account already buys. The empty cells are the expansion pipeline. That is the whole concept, and a spreadsheet is enough to start.

The useful version pulls from systems you already run. Agreement lines from the PSA say what each client pays for. The RMM inventory says what they actually operate. The delta between the two is your first pass at whitespace. Then rank the cells on two axes: fit, meaning how much the gap costs the client to leave open, and readiness, meaning contract anniversaries, budget cycles, and where the relationship stands today. Take the top ten, put an owner and a date on each, and review the grid quarterly.

Seat counts belong in the same review. Per-user billing is now the predominant model for about a fifth of MSPs, per Kaseya’s 2023 benchmark, with a blended per-user and per-device model at another quarter. On those contracts, headcount growth inside an account is expansion revenue nobody has to sell, and headcount shrinkage is churn nobody noticed.

Run technology alignment reviews

Write down a reference standard: what a well-run environment looks like for the segments you serve. Security stack, backup coverage and tested restores, hardware age, licensing posture, identity and M365 configuration. Then assess every client against it on a set cadence, twice a year for most books.

Score each line red, yellow, or green, and resist the urge to editorialize. The power of the document is that it reads as engineering, not sales. Every red cell is a risk conversation with a project attached, and the conversation opens with the exposure, not with a product: the firewall is end of life, the restore has never been tested, the tenant has no conditional access. Done this way, the review produces the most honest pipeline an MSP can own, because the client watched it get built.

Make the QBR earn its seat

The quarterly business review is the highest-intent meeting on the calendar: the client shows up expecting to talk about their business. Most MSPs spend that intent on ticket counts.

Structure the agenda in three parts instead. The scorecard from the alignment review. The risk conversation the red cells demand. A twelve-month roadmap with a budget window attached. Close every QBR with a named next step that has a number on it: a project scoped, a proposal date, a seat-count change, a renewal term. One discipline protects all of it: the service recap gets ten minutes at the top and no more. If tickets colonize the hour, the sales meeting you were owed becomes a status call. Handled well, four QBRs a year become four expansion conversations the client asked for.

The motion scales up-market

None of this is small-business-only advice. Co-managed IT, where the MSP runs monitoring, patching, tooling, and after-hours coverage alongside an internal team, is a growing share of the business: in Kaseya’s 2025 Global MSP Benchmark, 61% of MSP executives said their co-managed revenue grew year over year.

A co-managed account carries whitespace just like a fully managed one, usually more of it, because the surface area is bigger: the security layer internal IT does not want to staff, the backup estate nobody has tested, the license sprawl a 400-seat company accumulates. The map is different but the motion is identical. Know what they run, know what they buy, and put the gap on an agenda.

Instrument it

Three numbers tell you whether the motion is real. Expansion MRR: new monthly recurring revenue added inside existing accounts, tracked as its own line, never blended into total new business. Net revenue retention: the compounding check, defined above; watch the trend, not a single reading. Whitespace coverage: the share of your top accounts with a current alignment review and a mapped grid.

The first number says the motion produces. The second says the base compounds. The third says the inputs exist. An MSP that looks at those three monthly will not need a survey to tell it where growth comes from.

Keep hunting, start farming

None of this argues for abandoning net-new. Grand View Research sizes the managed services market at $401.2 billion in 2025, headed for $437.3 billion in 2026 and growing near 10% a year. There are plenty of new logos to win. That said, when half an industry moves existing accounts into its top two growth drivers in a single year, the signal is hard to miss. The growth engine moved. The operators who win the next stretch will be the ones who built the motion to run it.