As a business, you need to measure its performance to know where you are headed, more so if you are an MSP. The majority of the Forbes 1000 companies have outsourced some part of their business to an MSP, especially related to IT support.
It makes monitoring performance crucial for an MSP to retain its operational efficiency and effectiveness, and that is what we will focus on here.
Managing an MSP effectively:
To successfully run an MSP, you need to be aware of how it is performing in some critical regions. These could be:
- Customer satisfaction
- Business Productivity
- Profitability
Setting key performance indicators (KPIs) in the abovementioned areas is crucial for an MSP. Because as most of the time, it performs as an outsourced IT service provider, and it needs to provide top-quality services to its clients.
The clients expect that an MSP will save them time and money and is well aware of the industry-leading trends and practices, which is why they hire an MSP in the first place. So, to effectively deliver its services, an MSP needs to keep track of its performance by setting up specific KPIs and regularly monitoring them for the best results.
It is always advisable to rely on factual data than your assumptions and perceptions. It will help you make a more informed and potent decision. You will also get to know your performance in relation to your competitors and your past.
We will now discuss different KPIs for an MSP and learn how to measure them.
Customer turnover rate:
It also goes by the names of churn and attrition rates. It will tell you the rate at which an MSP has been able to retain its clients at the end of a given period. A higher customer turnover would mean that the MSP needs to reevaluate its performance and focus more on delivery.
How to compute: No. of customers at the start of a period-No. of customers at the end of a period x time period/ No. of customers at the beginning of a period
Renewal rate:
It measures the revenue you generate from your existing customers who continue using your services. It helps you make plans and accurately picture incoming revenue streams. This metric is crucial for companies that are subscription-based or offer services on contact.
How to compute: Average revenue per client x Total number of clients
Average problem resolution time:
As simple as it seems, it is a crucial determinant of an MSP’s efficiency. It measures the average resolution time of a problem, issue, or conflict. An MSP would like to keep it at the minimum possible level. During an agreement with the client, this vital metric is invariably discussed. It is determined according to the problem-solving capacity of the MSP and the client’s willingness.
How to compute: Total resolution time for all solved problems/No of problems = Average problem resolution time.
First contact resolution rate:
Customers want the resolution of their problems in the quickest time. They prefer to avoid calling again and again with the same issue. That is why this metric is imperative. It will tell you how many complaints your MSP was able to resolve when the customers first reported them.
How to compute: Total number of complaints resolved on first contact/Total number of complaints x 100
Resource utilization rate:
An MSP needs to keep track of its employees’ productivity and efficiency. It must know how the employees spend time at work and how much of that time is going into valuable activities.
How to compute: Total number of utilized hours/Total number of hours x 100
Client satisfaction rating:
Client satisfaction is the ultimate aim of any MSP or any business, for that matter. A happy and satisfied customer is your best brand ambassador, and you can rely on him for highly effective word-of-mouth publicity.
How to compute: Several client satisfaction surveys are available online for this purpose. To calculate your client satisfaction rating, you should divide the total possible points in a survey by the total survey score.
Client value:
It is another helpful metric for an outsourced IT service provider. It helps measure a customer’s long- and short-term value for your business. You can also use it to compare two customers and ascertain which brings more value to your business.
How to compute: Average revenue per customer/Average length of a contract or client turnover rate
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Additional reference:
https://gbr.pepperdine.edu/2021/07/developing-a-kpi-driven-data-strategy/