Episode 31 - Reactive to Intentional: How MSP Leaders Actually Level Up (w/ Guest: Chris Day)

Isn't it so refreshing when you are the dumbest person in a conversation? For me, I just absolutely love it. I just open my ears and I ask people questions and I kind of let them cook. And I feel like that is 100% what happened to me today. I interviewed Chris Day, uh, from Scalepad. He's been around a really long time. You have probably used a tool that he has either invested in or invented. You probably have talked to a leader that he has had a direct impact on. But what I liked so much about today's conversation is that he talked about what he feels like is the sort of biggest epidemic in the channel, which is a sort of fundamental misunderstanding of client management. But he did so in a way that was like actually tangible and tactical. He gave us some super great ideas about how to segment your clients and using quadrants so that you know how to relate to your clients and how much energy to give each one. It's just good stuff. Yeah, if you don't listen to this and get inspired, I don't know how to help you, my friend, but I'm going to get out of the way. Let's get into it. Here I am, the legendary Chris Day. Chris, I've read your name way more than I've said your name, which which means I've known of you way before I, I knew you, but it's great to meet you and thanks for joining the podcast.

Yeah, thanks for having me on, Brian. Really excited to see, see where this goes.

Yeah, we have a couple of mutual contacts. You know, your name came up in a conversation with Kevin Kloon the other day. We were talking about some of the cool stuff you guys are thinking about and some of the new like resources you're trying to make for free for MSPs. But I think we'll get into that stuff later. Just in case anybody doesn't know who you are, tell us a little bit about like what your current role is and just sort of how you got into the channel, if you don't mind.

Yeah, yeah, no problem. I mean, I've been— so I've been, uh, in the MSP industry for more than 20 years at this point. I started my first MSP in 2002, uh, which is, you know, probably back before it was called MSP. And, uh, and then, yeah, grew that thing, uh, and went, went through everything that Everybody goes through growing, growing an MSP, every aspect of the business being very difficult. And, you know, went from 1 to 2 to 10. And then eventually we sold the last bit of that a few years ago to Canadian telco called TELUS. And that at that time we were around 500 employees. So I was able to see all of the things that can go right and all the things that can go wrong. We did a ton of M&A during that time as well. So Got to also directly experience the differences in what you see between different MSPs as well and in different approaches that folks have. And then started in 2013. Most people probably know me best from IT Glue and obviously created that platform when we launched it in 2013. Eventually sold that about 5 years later to Tikaseya, and then Scalepad, which was at that time called WarrantyMaster, that had started just 2 years after IT Glue. And so that was, you know, I think we're coming up on 10 years for that business, changed it from WarrantyMaster to Scalepad. Then Scalepad went and did a bunch of M&A, so we had a bunch of exciting times through that process, picking up a bunch of really cool companies, Backup Radar, ControlMap, Quoter, more recently Lifecycle Insights, Cognition360. So yeah, we, we've had, and so I've had a lot of experience in the SaaS side. And then last thing I'll say is we also have a venture capital fund. And so we invest in, I've got Joel, my partner in that, and Mark Scott. Mark Scott was the founder of Enable, and Joel actually ran fully managed RMSP through the, through the, the final acquisition. And so we all work together as GPs in that fund and we're investing investing in early-stage SaaS companies in the MSP ecosystem as well. So definitely have my hands in a few pies, uh, in the space. But today, uh, my primary life, uh, is, is completely obsessed with Scalepad and what we're doing, uh, doing there to elevate customer success for MSPs. Did you know all that?

So yeah, I got all that. Hang on, you know what, your mic was off. Say all that again. No, I'm just kidding. Um, you've got a great pedigree, obviously. I mean, um, it's helpful just for, uh, everyday kind of bozos like me to remember that people, uh, like you are out there who have gone through all of those evolutions on the MSP side and now on the vendor side and now the VC side, you know, kind of in the same space. So you've kind of gone through all the three, like, Pokémon evolutions, you know, in a way.

Exactly right.

But I want to ask you some questions first. Can I ask you a little bit about growing the MSP to getting that big?

Absolutely.

So, pardon the, pardon the inelegance of this question, but what did you find in general to be the cheaper way of getting a customer? Buying customers through M&A? Or building through your organic growth engine?

That's a, that's a really good question. I mean, I think in some ways things haven't really changed. So I'll start with that. I think, I think organic was always the dream and it is really, really hard. Like, I think it remains difficult, but, but it was an important part of our growth. I think we saw maybe half of our growth over those years was organic and roughly half was organic and roughly half was from M&A. I don't know which one's easier. I think they can both be really hard. The, you know, having a unique sales process was kind of what we had and I felt like it was a good way to grow, but it was also very, very slow. And so some of the biggest gains we got were when we did M&A, and the earlier stuff that we did was really painful. Like, you know, we did like, we tried to do the overnight integration kind of approach where we, starting tomorrow, you guys can all call into our different help desk. And that did not go very well. And then, but the organic side, I think, you know, as the brand grew, it became better. Like it became easier, it became cheaper. I never had a lot of success with traditional, like what we do in SaaS, like traditional outbound sales, BDRs, any of that. Everything was pretty much in person, at least like in the early days there when we did it. And so I think that's mostly the same now. So, you know, I wouldn't say one's easier than the other. I think that the advantage of doing organic is obviously that you're bringing in, you know, hopefully closer to perfect clientele if you're good at it. And through M&A, you know, someone always feels dejected by, you know, having a new owner. And so there was advantages there. I think we had better retention from organic than we did from M&A for sure.

Hmm. I see. So it's harder to get organic. You probably have a longer hold rate and they're probably overall easier to manage culturally and tech-wise because again, you get to be a little bit more picky, right? Because you pick that customer versus you inherit that customer as a part of acquisition. But M&A is like was somebody else spent all those slimy, sweaty nights at chamber dinners meeting all those clients for you, and then you just write them a check and now it's your client.

Yeah.

So it's interesting to hear you say that you were half and half. I think hopefully it's motivating to the small guys who are going, well, M&A is like not on my radar or it's so intimidating or it's millions of dollars away or they don't have a capital partner or they don't, they don't feel like they have the operational maturity to do that. That organic was still important for you in the early days.

Yeah, absolutely. And I think that there's, there's a pattern emerging that I think people have gotten a little more steady, like a lot of the platform MSP players that are out there now have also obviously learned a lot of these lessons that I had, that I've had to go through. But in the case of M&A, I feel like people are a bit more conscientious towards the clients than they maybe were in the past. And so people are slowing it down a bit. You've even got some of the players that aren't even, they just leave it alone. Yeah, maybe do some back-end optimization, but almost, you know, a little of that either. So I think the biggest thing, the reason I'm most passionate about our space is what was like being client-centric. And I think that's sort of been absent. It's this, even the kind of the word channel sometimes, it's interesting to me because it's like, it makes, it feels a bit transactional. Like vendor and customer, and it feel like there's room for that to feel more like a partnership than a customer relationship. I think that's, you know, a lot of where we've fallen down as MSPs is like not making the customer the hero of the story. And, you know, like sending a quote for a new antivirus essentially, and like wondering why the CFO is not really interested, right? It's like we were just— do we just haven't been good at having those conversations and bringing, like, bringing meaningful topics forward that are actually interesting to someone to experience? And so hopefully I think we're getting better. I think we've got some more interesting things that we can start to discuss. Like, finally there's something more than cloud, right? And cybersecurity. Which are pretty well snooze fest for a lot of companies. And now, you know, having a conversation around AI is a really, a much more fun topic. And I think easier to have a conversation with the CEO about AI because they're like, there's something in it for them. And guess what? You want to do AI, you need to have better IT. Oh, okay, well, let's do better IT then. Um, so I think it's very exciting from that, from that front, because in our case, it was like, your computers are slow and shitty, can I get you new computers? I mean, that's the essentially what was going on for the first 10 years in that business. And, um, you know, cloud brought something interesting, cybersecurity brought something more interesting, compliance brings something more interesting. Um, but AI is like, way more fun.

Sure. Well, even, even before we open the AI rabbit hole, I want to go back to something you were talking about, like that in— you're saying in your MSP you'd never had success, or you didn't have the same success or build the same motion that you do now with traditional outbound the way you do in SaaS. Is that related to this same topic we're discussing here that, um, like The faux pas or the big mistake of an MSP is to transactionalize their relationships is what I'm hearing you say.

And yeah, I think, I think that is it. Okay. And I think also versus most SaaS companies, you know, the, the MSP business has a higher ARPA. And so, you know, if your average contract is $5,000 or $10,000 or $20,000 a month, you know, is it like what, what are you hoping to accomplish? Like, like book a meeting? Like you can almost afford to, at those prices, you could fly around the country for sales calls. And I think sometimes we forget that. So like a lot of our best deals were, you know, it sounds stupid, but through referral and, you know, making, you know, creating some sort of a great impact for an SMB that's well known in the city and then just leveraging the heck out of that and like, asking for an intro. And like, it sounds so stupid, but it's like, if a contract is $20K or $30K a month, you know, like put that care and feeding into those customers and it will pay off quickly, especially because most MSPs are fairly localized. Not, you know, not the platform players or the multi-regional, but the average MSP is operating in a single or two cities, right?

So, Yeah, right. And the platform is just a big network of all those local players, right? That they just string together oftentimes. Um, uh, I just had a thought I wanted to ask you about. Uh, oh, about referrals. I was just talking to Dave Sagers about this the other day too, about like, Dave was like, I was like, hey, how do you get clients? He's like, I ask for a referral every day. And you're right, it might feel silly and everybody says like, well, every MSP is 80 to 100% referral driven that I meet. Like every single one of them, even the really fast growing ones are still referral driven because nobody knows how to sell it and it's hard to sell and it's a relationship driven, it's a high trust relationship. So, but it's crazy, isn't it? How like we're literally just asking people, you know, if they know anybody who would want to work with you. Like, I wonder how many people are just not even doing that at all.

Yeah, that is one of the things we had. We— it sounds like you had a similar conversation. We've formalized that, like that was a KPI. Yeah, like ask, literally asking, and we would actually write it down. Like we've asked this X many times this month for a referral and we know it's the highest close rate on a referral of anything else by probably an order of magnitude almost.

Yes.

And so yeah, like that's a really simple unlock, especially if you're actually you know, like many folks have really, you know, you haven't tried to grow too fast and you do have very solid relationships with your customers. Like they would love to give you a lead and we just don't ask.

Right. So were you asking for those? Did you have, were you asking for those primarily in QBRs or like what was your vehicle to ask for that?

Yeah, mostly in the QBRs and we had a really interesting QBR process and not like I wouldn't say like particularly scalable. But again, we were in, you know, we were in, in, in two cities at the beginning and we would always do the QBRs at our office, like not at, at their office. So we would pull the executive team or whoever was going to be involved in that and obviously try to get them, you know, the best people we could to that meeting. I think a lot of folks don't put a lot of effort into, you know, the office manager wants to take the QBR and they're okay, well, let's do it anyways. And so we were pretty particular about Hey, we're going to do this at our office. It's going to be around lunchtime. And, you know, we do a little tour, very similar thing that we did in the new sales process. We say we don't take on a new customer unless we— unless you come and visit us first, because we like to show you kind of how we operate. And that increased our close rates on, on new business as well, because people got to meet the team and it wasn't such a, you know, such a transaction. But yeah, the QBR, come by, we'll walk through, you know, what's been going on and more importantly, what we think is next for you guys as part of this QBR. We'll talk through some risk scenarios and then at the end, if all's going well, is there anyone else you think we should be talking to? And we would get a ton from that. And it was like almost like, like they felt obliged to make some kind of an intro because of the effort that was being put in. So I think that works really well if you don't have a super transactional relationship. And we certainly had a whole bunch of clients that would fall in the, in the transactional bucket. Like, you know, they really don't want to come to talk about anything. They just want you to do the tickets and they want your price to go, the price to go down over time. And so like those ones we didn't, we know we didn't get necessarily referrals from, but, you know, I talk a lot about this idea of segmentation and you have, you know, you have a 2x2 quadrant and you have upper right quadrant is your, you know, highest maturity and highest appetite to spend clients, those are the ones, like, put effort in there. You'll get massive referrals from those folks and go, you know, go a little above and beyond. Put more time into those QBRs than you do in the other opposite quadrant. And so I think that's kind of a big part of what we're aiming to solve, you know, with Scalepad is this, this basic idea of like how do you deliver customer success at scale? And it's basically that you can't aim to provide everybody with the same service. You can charge a similar amount, but like what's included needs to be centered on what the client needs. And if the client does not want to talk to you, then there's nothing you can do to change that.

So I have two questions. First of all, can a client be a good client like, does it mean that it can be a good client, but they're like, hey, I'm not going to take meetings with you and I don't want to like sit around and talk about our feelings every 90 days. I just need you to be an amazing IT partner and I am managing my costs. They're willing to pay for what they need, but does that automatically qualify them, disqualify them for being a quote unquote good client?

No. My, my view of that is that, that this is, you know, meet, meet the, meet them where they're at. And if that's where they're at, then deliver exactly what they expect. And you don't have to deliver more than they expect. And if QBR is more than they expect or want, then it's not only not necessary, it's probably like a detractor for them. Like, we don't legitimately want to do that. Now, it doesn't mean that they're right, and it doesn't mean that, that doing a QBR might not help move their business forward and talk more strategically, but At the end of the day, if that's the culture of that business and that's, that's where it sits, then who am I to try to, try to change, try to change it? Now, there's things you can, you can do to try to move them out of that quadrant. You can bring them something exciting. Maybe that, maybe that client perks up when they hear about AI as an example. And that was the thing that got them to move to be more strategic. But unless you have something to discuss with them that's interesting, then it's, you know, it's not going to happen. Hmm. Similarly, you know, they're in an industry that's got some regulatory pressure and you previously haven't spoken to them about that, but you just say, hey, you know, we have a compliance service where we can actually get you guys audit ready. You may find that one that was not interested in talking strategy around IT is all of a sudden like, oh, that I am interested in. 'cause I do need to go land bigger clients and government clients. In order for me to do that, I need to, you know, get this designation and so on and so forth. So there's, it's not to say you have to write them off permanently. It's just to say right now, this is what they want and then measure and your service accordingly. Like if all they care about is speed, speeds and feeds and just like, reliable support, then you better be really good at that for them. And you can free up some of the budget you would have spent on, on strategy somewhere else. So that's a great answer.

I like that a lot because for two reasons. And then I want to go back. It's a good segue into talking about different levels of care for different clients. I think we need to dig into that more because that's an interesting topic. But the idea of like giving a client what they want can sometimes be a double-edged sword because sometimes I feel like you gotta— a client is like, ah, I don't want to talk about that, and you got to push back and be like, um, no, you're breaking a compliance, like you're, you're unlawful, or you're not— you're outside of regulation. Like, this isn't something you can pretend isn't real. We have to do this. There's those times, right, when, uh, that looks like being their partner kind of looks that way, but sort of being all things to all people in another way. There's so much rhetoric in, especially in like MSP forums and stuff where a lot of MSPs who grow all organic and they're small, you know, 20 clients they've had for 18 years apiece. They're so particular about even the temperament of their clients that they think in their mind, I have to be like friends. Or it has to be somebody who I like in order for them to be a quote unquote good client. And I, I kind of take issue with that personally. And it sounds like you're agreeing, like, if their temperament doesn't align with yours, or even if they, if they see your value through a specific lens, but they still see the value, it doesn't necessarily mean you shouldn't do business with them, right?

Yeah. Yeah, no, I agree. I think instinctively, I mean, you've probably been through this too, like, uh, instinctively you, you kind of want to fix everything. And I remember, uh, like a large number of clients where I felt that way. Like, we don't, you know, we don't get along. I don't even like— I don't like the way they talk to me. I don't like their attitude. I don't like the snarky late-night emails and so on. And we just— we were able to kind of say, all right, well then, understood. And what we're going to do is adjust the service style. And in that case, it would be like we would have a different owner of that account. And I'd be like, I don't— need to ever go to one of those QBRs. And if they're coming to the office, I don't need to be there. And so like there's a lot of things you can be flexible and just retain the revenue. And some of those were also high margin. They're like annoying, but the margins are great, right? So maybe just like—

think about even high performers. Sorry, I didn't mean to cut you off, but think about even— I've never met like a top performer account exec at a SaaS company who was like a super chill dude. You know what I mean? They're always really high maintenance. They're like, they make a lot of enemies oftentimes. Like, they're not always a great—

they're not—

that doesn't mean they have to be toxic, but like, there's something wrong with you if you're the best. You're only the best because there's something wrong with you, you know what I mean? And sometimes you have this like high-performing executives who run successful high-margin businesses who have— who are willing to pay high dollar for great service. They're not always going to be like lifelong pals, but that's You're not, I think you have to manage your own expectation of like, what am I really building here? Am I building a circle of friends? Am I building a community? Well, no, I can get community from my clients, but my clients are not my friends. This is a contractual obligation. This is conditional, you know, I do my job, they do their job. But I like your idea of just letting those, there's that old proverb that says, let boundaries lie in pleasant places. Like let it, let your, protect your own self from like, hey, Obviously, if somebody's like speaking to your staff in a way that's unacceptable, that's different, right? You could set boundaries like, hey, you can't be using words like that towards my team and you need to use a professional tone when you speak with us. But then if you don't love them, like, okay, you don't have to, you don't have to hold their hand and take them to dinner, but you can still be their IT partner.

Yeah, that's why I love this, this, this concept of like segmentation. If you ask most MSPs how they would segment First of all, most don't know the term, but it's obviously huge in SaaS. Segmentation is the heart of like how you grow, expand, and retain revenue. But most people would say it's about like, oh yeah, you know, A, B, C, D clients. And then my D clients are like, you know, $1,000 to $2,000 a month. And they basically just do it by revenue. And if you do the exercise of just taking your clients and divide them into 4 by maturity and by appetite. That is such a better way. It'll have all different revenue numbers. So you'll have like mature small and immature large and that is such a better way because if they're like, they have an appetite to spend, but they have low maturity, it's like, okay, well, let's do like an educational thing with them. And those are the people that get the invite. And it actually becomes pretty logical what to do if you think of them in that context, that low, you know, it's like, and don't think of the lower left as like bottom feeders, just they want something different. And so, you know, maybe there's a chance that there'll be something exciting that you do an educational thing with them and they get excited and immediately jump up and then there'll be ones that just don't or Or they're in that quadrant, but there's something going on in the industry and, you know, we've mandated JMMC. And so now they're probably going to be interested. So I think you don't have to write them off. You just sort of treat them differently. Like all they want is a report once a quarter of something. Well, just send them that. If they're not coming to your office, they're not doing the Teams, They want to know that you're still there, et cetera. But I think, you know, the other consistent pattern that I've seen since the beginning of time is just, and there's a great book called The Effortless Experience, and it's like really around what do customers actually want? And what they want, what, this is a huge scientific study, like I think it was a million businesses or something, and to get this data set, and it turns out that there's no correlation between loyalty and exceptional service. The loyal, like, on the actual data, like retention as an example, all the only thing that drives loyalty is the concept that expectations are met, not exceeded. So the exceeded cohort didn't make any difference. And so I think the most interesting thing for me about this industry is that like, to me, there's really two sides of the business, maybe three. There's, there's like the managed services side, which is like, let's, let's manage what's there, let's provide a good level of service reactively and all that. Let's try to be proactive as much as we can. Let's do— if we're, if we're given projects, let's do those well. And then strategy. And that's the one where every managed services contract contains I'm sort of form of strategy that I'm supposed to provide you as part of being your partner. And I've experienced it even recently, uh, where I was talking to a private equity firm that works with an MSP partner and asked them, like, they're, they're pretty big MSP as well, like 300+ people. And I was like, oh, how's it going with your MSP? And, um, you know, I think we're going to make a change. And I go, why? You know, well, we just like We literally just have like no plan. Like, we have no idea what's going on. Like, they do tickets and stuff, but like, we can't get a meeting. We have like no idea where we're headed. We need to do all this like compliance stuff and we can't get a good answer. Can't send emails, we can't receive emails. Like, we submitted these tickets over the course of like 4 or 5 months. So I was like, is this still happening? Like, and so I think it's like, So you guys, I was like, you guys don't have any kind of like a roadmap or any sort of direction of like where you're headed over the next year or so? They're like, no. I'm like, wow. So I think to me, just to bring it back to that concept, it's like the promise of managed services has always been that, like service and then some strategy.

Yeah.

So I think if we can get that last part dialed in, you know, and one customer's version of what strategy means could be very different from another's too.

Sure, sure. Uh, so I— this is okay. This is what we're going to move into because I think this is the important stuff that I got to tease out of you. But first, I want to punctuate something that you said about using the quadrant for segmenting your clients, because I, I want to make sure nobody missed that. If you've got maturity, like tech maturity or operational maturity, on one axis, you've got like appetite, meaning like they're interested in the topic they have, they want to spend money on it, even they're budgeting money for next year on it, that kind of thing, right? Exactly. So if you've, obviously everybody wants like top right quadrant, high appetite, high maturity, but your point that you made is that, look, if you've got upper left quadrant, then you don't, you don't have to fix every problem. You just have to figure out how to pull them horizontally. And if you've got lower right, you just have to figure out how to pull them vertically. And if you've got lower left, meaning they're the low on both sides, maybe don't try to just take them in a diagonal line straight up, but like maybe we solve one problem first.

Yep.

And get them into one of the warmer quadrants, upper left or lower right. Like, hey, which of these is more likely a good fit for them? And remembering that, what is the average client lifespan? It's like 10 years.

Yep.

10 years, dude. That's how long it'd take them to make every one of those Avengers movies. Like, Yeah, a lot can happen in 10 years. Yeah.

Yeah, it's, you know, that's a long time. Definitely. Yeah. You got time. Like, don't rush it.

That's so great, man.

Like, crazy. The upper right quadrant. This is the crazy part too, is like, you kind of think like instinctively, yeah, I want those ones. The problem with those ones actually is if your operational maturity is not quite there, those are the customers that will push you beyond your capabilities too. And so sometimes you're actually better off, like, you know, upper left or lower right. Yeah, it's more comfortable. And I think we're all pretty comfortable in the like, okay, we'll be the plumber in the, in the sort of lower left. Like, we're all good at that. Sure. We get a little more comfortable or less comfortable as we move out.

Right. So the best upper right customers are actually the ones that you develop. Not the ones you acquire who are hot and ready and the prettiest girl in the ball where everybody wants them all automatically because they might actually be trying to pull your whole matrix that way because they might have super high expectations. Yeah, to your point. So anyway, I just think that—

I remember some of those.

Good, good.

I remember some of those too. They were the ones that were asking like, we want you to guide this ERP project and we want you to run the point on the whole thing. And we're like, oh sure, yeah, we can do that. And we're like, we had no practice for that. So it's like, you know, we weren't good enough for some of those things. And, but I think that's where like, you know, knowing the wheelhouse, and it's becoming increasingly important, like what are the extra things that we're really good at? If it's security-related stuff or it's compliance, let's get really freaking good at that. And even more specifically, like we're really good at that in one industry, and then you can really go like, I can take the highest maturity legal client because I'm really good in all those areas that, that for them. So, but yeah, we didn't have the luxury of, of having like one vertical. I know a lot of MSPs have done really, really well, particularly if you're in a huge market, then you can, you can just focus on one or two verticals. But, uh, yeah, we kind of had to be a little more general.

Right, right. I love that, man. Okay, so let's talk, let's pivot to, let's talk about strategy a little bit because this is something, you know, we've had a couple of conversations and I've had some cool conversations with other Scalepad folks that you guys are really on a mission to sort of address this problem that you describe as like the biggest, I think the biggest, uh, growth opportunity for MSPs today is in this sort of the way that they're managing clients. Yeah, in the QBR sort of VCIO space. And I don't want to necessarily get into the like, I don't care about the tools. Like, I don't want to talk about tools of what they used to do it. I want to— I want you to just tell me more about that. Why is that such a big deal to you guys at Scalepad? And what do you see happening? And what do you like, what do you think is the problem? What do you think is the fix?

Yeah, I mean, if you, if you look at it, so, you know, the, so obviously the majority of the industry is primarily or predominantly recurring revenue. And it has, it has a lot of the same like financial profile as software companies, SaaS companies. And so it's all about like, okay, I gotta bring in new customers and then I've gotta retain customers and then I've gotta hopefully grow and not shrink customers. And our industry has been so focused. I mean, there's a ton of focus on, on bringing new customers in the door, And there's a ton of focus on, on like trying to prevent churn. But I think if you zoom right out where there's been a complete lack of focus is, is how do I grow? I mean, we talked about it for years. How do I grow accounts? How do I cross-sell and upsell into accounts? Because we all know those are the easiest sales you can make. And like SaaS figured this out like 15 years ago. So there was the rise of the customer success platform players, which although they made tech that helped with this, it was really more around the mindset of like, you need a system if you want to take an account from $1,000 to $2,000 a month. It's not like sending quotes, it's like an engine that goes behind that, that orchestrates, you know, your approach to this. And that segmentation that we talked about is super important because the the motion or the journey's different depending on where they're at. This is why we've been debating what is it that QBR, TVR, XVR, nobody knows, is it quarterly or is it not? And the answer is it doesn't matter. What matters is what is it supposed to be, what works for the client and what's the, you know, if we're talking cadence only, like the cadence is irrelevant, it's like the content is what matters. So, yeah, that's a long way of saying that our industry is not good at what I call the right side of the bow tie. So everything post-close, everything that happens from, you know, post-acquisition of the logo until the eventual churn happens. Like, what have we been doing in that area? Like, have we put a lot of time into that or are we just like working on better ways to capture tickets or better ways to respond to tickets or like, or how do we actually, you know, create that growth? And so QBR is not a new concept that's been happening in SaaS, but like a SaaS QBR is very different. It's like, are you adopting the service, you know, the software? Are you engaged with the software? It's so much harder in the MSP space because you've got, these pesky things called humans you gotta deal with and that are part of the product. And so figuring out how to get in front of the customer at the right time with the right message and the right recommendations and then, you know, tying that to revenue in some way. We've been trying to solve it with like an acronym instead of like, hey, we need an entire methodology to this.

Yeah, right.

Yeah.

Right. We need it. So the fir— I think you're, you break, you've broken this down into several different rungs that we can grab onto to kind of climb out of the problem, which is that accounts shrink over time or accounts kind of atrophy over time. And frankly, that wasn't as big of a deal 15 years ago when like there weren't as many MSPs.

Yep.

I think it's fair to say. You know, like it's becoming a lot of people come to me and they're like, yeah, man, we've been doing a great job. We've bent over backwards for our clients. We've been in business 20 years. We don't lose clients. I'm like, oh, how many do you have? They're like 11. I'm like, okay, well, first of all, you don't really gain clients either. But second of all, you've got, you've got nothing else to do. So like, of course you don't lose any clients, you know, but when you start, I feel like this problem becomes, um, existential. For people who I meet, because oftentimes people who I meet, we are— I am like a— maybe you call it the left side of the bowtie or whatever you call it. Like, I'm okay, pre-sales, net new logo, get strangers to start hiring you for managed services.

Yep.

And when a stranger comes in that's not referred, you don't have any borrowed trust for your referral. They're looking for things to go wrong right away. They're sort of expecting mistakes right away. And your trust takes a lot longer to build over time and your margin for error is just way smaller, you know? And frankly, it's like harder. A lot of people want to be price competitive because they don't know how else to, to communicate value in a lineup in presales. So they just like underbid themselves and they're like, well, I'll get my foot in the door and then I'll, I'll land and expand later. But then they have no clue or no system to land and expand later. So they just get them in and then they think of it like a plumber is like, I got 20 more toilets to unclog now instead of now I've got to really go to work and manage the relationship. So the— it sounds like the mindset, and maybe it's just ignorance or it's just a blind spot, but mindset of thinking of these accounts as the most valuable thing you have and growing the accounts. It's like, if you're not growing the account, then it's going to atrophy over time.

Totally. Yeah. And I think it's, it's really interesting because I think MSPs don't often think in like a, like a product, like this is a product. And so it actually is pretty fun to, to think of, think of the MSP business as a product. And it's a, it's an offering with a bunch of features and, you know, people are part of those features, but then there's also a bunch of things that, that come with them. And then, you know, what is your product look like over time, like it shouldn't look the same 10 years from now as it does today. So what's included in your product will change over time. You can version that, and by versioning your product, you can change the price over time. And then you can add new products, like, you know, cybersecurity came along and we were able to do like advanced cybersecurity packages. And then there's another way of getting another $30 a user. And if you're good at communicating the value of why someone might want to buy 100 users at $30 a user, you know, you just add in $3,000 in upsell to your contract or cross-sell if it's a different product. And so I think when we start to think about it like SaaS, you start to get excited and think, well, I need some new services, man. I got to have something else to sell here. So let's, let's spin up a a vCISO service, and let's build a practice around that. That may only take one or, you know, one person part-time to prepare it. And then pick your segment, probably the ones that are, that have an appetite, and say, hey, we've got a really new security offering where we'll become your chief information security officer, virtual, and we'll make sure we move you guys towards the compliance promised land and you know, that package is $5,000 a month. And I mean, you've probably talked to some of these guys that like, they turn this on and that they're like, oh my God, people are buying this. You know, because it's something different. Like, and it's how you get away from the race to the bottom with like, how much per user is it for me to do tickets? Which is like extremely boring. To do. And, and yeah, you're gonna have somebody calling on your client every day, uh, saying we could do it for $20 less, right? And there's no way for them to assess.

It's boring. It's more competitive. It's commoditized. And frankly, it's borderline antiquated. Yeah, we're not that far away from help desk being automated, not a human thing. Yeah, you know what I mean?

Thankfully. Thankfully. Yeah.

Yeah. Because nobody wants to do it anyway. You're right. I mean, I love the, the, the fact that you're using the word product. Um, because I agree. I think like, what is a product? It's something that you interact with that solves a specific problem and gives you a specific outcome. And then depending on the complexity of the product, you have to learn how to, you have to like adopt it, integrate it into your life, and then you have to interact with it. And so instead of just clickable buttons or chatbots, you have human beings that are on a pre-programmed BLF on the phone that you also manage. And, uh, if nothing else, like, if you can't describe the, how you interact with your MSP and the outcomes your MSP provides as if it was a product, that's probably one of the major reasons nobody's buying from you. Totally. Yeah.

I mean, how long has that VCIO checkmark been on a managed services contract? Like, it's been there for a while, right? Like, We provide BCIO services. And then if you go ask, like this is where I guess back to the earlier part of the convo, you go ask, go ask your customers like, hey, do you think you're getting this thing that we have in our contract? Like you would not like most of the answers. Like it's going to be like 95% are like, no, I'm not getting that. And so you want to talk about like how to retain and grow, like the only mechanism I know to grow business with a client, an existing client, is to get in front of them in the boardroom and have a really good conversation. That's the only one. It's not going to be sending a quote. It's not going to— the quote comes after. It's going to be getting buy-in on some form of strategy that you put in front of them that they found interesting. And so like, that's the thing. That's like the next chasm to cross is like, Hey, we've got an— and like, imagine someone calling on one of your clients and saying, I can offer you $20 less per user. And they would be thinking, I just like walked through like a 3-year vision for our IT. I've got everything plotted for the next several years. We've got all our vendors are under control. Like, that's what makes people sticky. If they're just like, tickets, tickets, tickets, tickets, tickets, then they're going to be like, well, yeah, I might as well do it cheaper. So, um, I think that's the biggest unlock is like any— and like as we said at the beginning, it doesn't need to look the same for everybody. What one person considers strategy is going to be very different than another. And so as long as they feel it, then they're not gonna— they're not gonna leave you and they'll probably grow. If they don't feel the love, um, not so much.

That's— I love this, man. I, I know we need to wrap in a minute. I've kept you for a while, but you said this is the last chasm to cross. So here's my kind my closing question for you is, how does an MSP cross that chasm? They're listening to this. They don't, they don't have their clients segmented. They could probably do it, a simple exercise and a glass of wine. They could go through and rank all their clients, but there may be, maybe they have a haphazard QBR process or whatever, but you know, they're just hearing this and they're motivated and inspired. Where do they start, you know, to actually like build towards what you're describing?

So I would say, you know, at least this was my experience. I could name, like if I thought in the context of those quadrants, I could probably name at least 1 or 2 clients in each quadrant, like just innately, I just know the name. It'll be like so-and-so manufacturing, like that's those guys. And so again, I would look at it as can I prove a win? Can I get excited about, not the lower left quadrant and not the upper right quadrant, because let's leave those alone. Let's take the ones that are either high maturity or high appetite and let's see if we can like push them in a direction just by putting something really interesting for them in front of them. And, and it should be something that, you know, costs thousands a month, like not, not something like quote for a new desktop. It should be some service that is gonna like dramatically increase your, your security posture, or it's gonna increase productivity in a major way, or it's gonna like prep you for AI. Something interesting where they're like, you know what, I would, I would do that. Like, can you guys send me a business case for that? And then use like AI tools to help generate the business case. Like, this is not hard anymore. Yeah, but like, show up in the boardroom, use Gamma to make a deck and see what happens. You'll be like, holy smokes, they actually bought on this. You're like, now I need to go build a system to go do this at scale. And I need to like have a bunch of different people in my business that can orchestrate this stuff, not just me. So yeah, I think it's like, let's make IT sexy again.

Yes. Oh my gosh, Chris, this is so fantastic. Listen, if anybody wants to learn more about you or what you guys are doing at Scalepad, how should they— like, where should they go?

Yeah, hit me up on LinkedIn. Chris Day on LinkedIn. You'll find me. I'm always posting unhinged customer success related topics.

So perfect.

Thanks.

Thanks so much, man. This was epic. I appreciate your time. Awesome.

Thanks Fine.