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4 Secrets to Fast-Tracking Your MSP Revenue Growth

September 14, 2017

4 Secrets to Fast-Tracking Your MSP Revenue Growth

Listing all of managed services provider Vintage IT Services’ accolades could fill an entire notebook, but here are a few highlights:

  • Recognized by MSP Mentor as the no. 43 managed service provider in the world (2015)
  • Ranked “Best Places to Work” by The Austin Business Journal in 2005, 2006, 2007 (no. 1), 2008, 2009, 2010, 2011 (no. 1) and 2012 (no. 1)
  • Earned the highest year-over-year revenue growth award in 2017 from Ingram Micro for 865.95% growth
  • The first MSP awarded a cloud services contract in the state of Texas
  • More than 100 active customers and a 94% customer retention rate
  • An employee retention rate of 85%
  • Earns 40% profit margins on cloud services

Recently, we spoke with Steve Hanes, vice president, and Sandra Antoun, director of sales and marketing at Vintage IT Services to see if they’d be willing to share some insights into the company’s success, and they gladly agreed. Here are four secrets other MSPs should pay attention to: 

Don’t try to hold customers hostage to your IT services. The prevailing school of thought among IT services companies promotes locking customers in to 1-, 2- or even 3-year service contracts. “Our managed services contracts are month-to-month,” says Hanes. “Either party can quit or negotiate pricing or services at any time.”

Besides making customers feel empowered, Vintage IT’s approach offers a few benefits for the MSP, too. “Sometimes we’ll add new solutions or need to make a price change on a service,” says Antoun. “If you’re in a long-term contract with a customer, you lose some of that flexibility.”

“Plus, every MSP gets a bad customer now and then," adds Hanes. "With a month-by-month contract, it's a little easier to approach a client that's not a good fit and end the relationship."

Recognize the revenue potential of small businesses. One of the keys to Vintage IT's success comes from working with a wide variety of companies — not only from various industries, but also companies ranging in size from 10 employees to Fortune 500 enterprises. “We’ve had several customers start out doing only $200 per month in services that have grown over the years to $10,000 a month,” says Antoun. “We continue looking for new ways to provide solutions and services that improve productivity; increase security, compliance, and business continuity; lower capital expenses, and provide business continuity while eliminating customers’ IT management burdens."

Become part of a business peer group. Shortly after starting the company during a recession in 2001, Hanes joined Ingram Micro’s Trust X Alliance forerunner, VentureTech Network (VTN). “From the beginning, Ingram Micro made us feel like we were a priority, and they treated us like we were a much larger company,” recalls Hanes. “They also enabled us to pursue deals we could have never competed f

or on our own. In 2002, the state of Texas would have never awarded a statewide managed services contract to a small start-up vendor like we were at the time. However, we were able to put the power of Trust X Alliance (formerly VentureTech) in our bid response and we won a contract. One of the deals we won as a result of that statewide contract was a 30,000-seat managed services contract. We continue to hold a managed services contract with the state of Texas, and have added a cloud services provider contract.

The Trust X group is like a fraternity or sorority for MSPs. We’ve developed close relationships with several other MSPs, and in addition to sharing business tips and challenges with one another, we’ll call on those MSPs to help us configure a server or firewall at a customer’s satellite office outside our region, which saves us a ton of driving or flying time and cost.”

The Trust X events have also been invaluable resources for connecting Vintage IT with IT vendors like Cisco, Dell, Microsoft and HP, says 

Hanes. “Any small MSP who’s ever tried working with these big vendors can attest to just how challenging it can be compared to working through a partner like Ingram Micro and the Trust X Alliance, which make it easy to get in touch with the right person and get a quick response every time.” 

Antoun, who’s been with Vintage IT for more than nine years, is also part of a Think Tank group within Trust X Alliance. “I’m actively involved in a Sales Think Tank group, which has monthly conference calls and meets twice a year at Trust X Alliance events,” she says. “I listen to other sales and marketing professionals share tips and best practices, and I share IT and business tips I’ve learned as well. It’s helpful hearing insights from other professionals who understand the challenges of selling IT services. We also discuss new products and services from Ingram Micro and IT vendors, which saves a lot of time compared to trying to evaluate new products on our own."

Bring your own cloud (BYOC). Much of the conventional wisdom of the day advises MSPs not to build their own cloud offerings. Instead, they're encouraged to partner with big-name cloud providers (i.e., AWS, Azure or Google Cloud). Vintage IT didn't take the "experts'" advice on this one; it followed its instincts.

"We didn’t just invest $1 million in cloud infrastructure and hope we’d attract enough clients to pay for it,” quips Hanes. “We started small — literally in a small server room that contained equipment backed by generators purchased from The Home Depot. And as more customers joined, we made upgrades and improvements along the way. There were times we had to make capital investments of a few hundred thousand dollars, but we already had a lot of momentum at that point. Today, we have a $1 million-plus data center running in a world-class Data Foundry facility that features immediate

 failover to a mirrored data center in a different geographical region along with the latest in physical security, data security and power protection.”

Selling cloud services from its own data center has become a key differentiator for the MSP, says Antoun. “We have control over the environment and can more easily meet our SLA requirements. Plus, most of our clients don't have internal IT departments, so we remove the challenge they would face trying to work directly with a big-name cloud provider. And we offer 24/7 help desk support right here in Austin, which is another major selling point compared to cloud providers that use offshore call centers or make it difficult for customers to connect with another human being to get technical help.”

Being able to offer customers a cloud experience with a personal touch is financially rewarding, too, adds Hanes. “When an MSP white-labels another cloud provider's services, it typically earns single-digit profit margins. When you own the cloud service, you can make 40% gross margins.”