MSP Marketing Guide Part 4 of 4: Calculating Your Marketing Costs and ROI
If you are just now joining in on our MSP Marketing covererstion make sure you check out our previous posts: "MSP Marketing Guide Part 1 of 4: Your Marketing Budget", "MSP Marketing Guide Part 2 of 4: The Bare Essentials" and "MSP Marketing Guide Part 3 of 4: Launching IT Marketing Campaigns"!
We’ve talked about how much an MSP should spend on marketing, and what to do when there isn’t a marketing budget. Then we discussed all the pieces of the bare-minimal marketing infrastructure an MSP needs to grow beyond just being a referral-based IT company. Last time, we went over how to budget and launch an aggressive, targeted campaign. Now we’re going to go over how to plan and justify the costs of marketing and get a return on investment.
We purposely avoided talking about the time investments and costs up until this point because it’s hard to see the pot of gold when you are staring at a distant rainbow that needs to be climbed. The goal is the return on investment; when all of the marketing gets you some appointments, and then you end up closing a portion of those appointments, turning them into new managed services clients.
Please note that the hours I’m using represent a rough estimate. I’m also not getting into some of the more variable costs such as your Chamber of Commerce membership dues, or other events that you should be networking at.
Your Bare-Minimum Marketing
AKA: The Background Noise, The Constant Touches, The Inbound Marketing
Building a website in-house can take anywhere from 30 hours to 300 hours. Most of the time, expect the higher number, and multiply the timeline by four. Building a website in-house for your own company always seems like an easy task, but you are your hardest client. Plus, projects like this are notoriously put on the back burner for client-related work.
That said, there are plenty of options ranging from custom website design to starting with pre-built MSP website templates. To keep the numbers rounded, we’re going to use our Ultimate MSP Website as part of the equation, and utilize JoomConnect as well. This checks off a lot of requirements as far as having good offerings and lead capture capabilities.
Here’s the thing: your website is important, but it doesn’t need to be groundbreaking. It needs to be user-friendly, mobile-responsive, and offer plenty of conveniences for your visitors. It doesn’t need to be flashy or have an overly-complex look for the sake of being unique. Good websites have similar layouts because, well, that’s what the end-user wants. You aren’t targeting an audience that wants to try to play a guessing game just to get around your site. Keep your pages in the top menu, drive traffic around the site naturally, and avoid doing anything that will confuse a typical visitor.
Establishing your social media accounts isn’t going to break the bank, but you definitely need them set up, documented, and consistent. Your address and phone number should be consistent throughout, and you need to brand your profile images and cover images for Facebook, Twitter, LinkedIn, YouTube, and Instagram. Typically, this whole process takes a few hours, but it can be more complicated if you already have rogue accounts floating around that you need to deal with. Capturing everything and setting things up correctly can take time.
Once you have your accounts, you’ll need to nourish them with content and encourage people to follow you. Sending emails to your clients, your staff, and your prospects will help, but establishing a social media boost budget will do you the most good. Typically a good budget to start with is around $100 per month. You’ll boost your social media posts with this budget. A $5 or $10 boost will go a long way, and you can also run Facebook Like campaigns to build your initial follower count.
Fresh Inbound Content
Content is tough. Not everyone is confident enough in their abilities to write to stick with the discipline. Some people write faster than others, and some people definitely need a second set of eyes for proofing. For a seasoned writer, a good blog post might take 2-3 hours for a topic they are very familiar with, and 4-5 hours for something new.
You should be trying to keep the content flowing from your blog. Use your blog posts on social media, in your newsletter, to help reduce your sales cycle, and to educate existing clients/prospects, so it has a lot of uses over time.
Let’s tally up the amount of content you should be building:
- At least a blog post every week, but 2-4 is ideal. Even prebuilt blogs (provided that the content is good) will help satisfy this.
- At least 1-2 email blasts per month, but more when you are running a campaign. This depends on how you segregate your lists. Sending separate emails to clients vs prospects is a great idea.
- A case study, whenever you wrap up a great project. Try to build at least 3-4 of these a year if you can. A case study should have a blog post, a landing page, and a few emails to help promote it.
- Press releases whenever applicable. Hiring or promoting internal staff, taking part in the community, partnering with other businesses, and receiving awards are all great reasons to push a press release.
- Service pages and landing pages for specific industries you target, and for specific services you offer.
- Monthly newsletter content.
- Social media posts, including images and other media.
- Drip campaigns and touchpoints (automated communication for the sales process, onboarding, scheduling QBRs, etc.).
- Additional content pertaining to the campaigns you are running and service highlights (emails, landing pages, CTAs, social media posts, postcards, blog posts, etc.).
All of this content takes time to build, and good writers will work at slightly different speeds. Some writers can whip up a few email blasts in an hour or so, while two weeks of social media posts might take them longer. Content can nearly be a full-time position for an MSP, and you can’t just hire any writer. Your content needs to show that you have an understanding of your clients’ pain points, while still showing strong technical competency. If your writers don’t have a background in IT, it can be very difficult to help them tread that line. If your writers don’t also have the foundational skills of writing, the quality of the content will suffer.
Let’s talk about the role of this employee for a moment.
If they are writing content, that is going to take up a pretty decent chunk of their time. They could have other responsibilities - perhaps sales call downs and follow ups, or campaign fulfillment. It will depend on what they are good at.
Keep in mind that if this person is spread too thin, the content will suffer, and you need them for the content. If they get stuck for a week building a monthly newsletter or putting presentations together, the rest of your content will stop flowing. This isn’t going to be a big deal if it happens occasionally, but it’s easy for things to snowball.
The point is, if you have a writer, they need to focus on that. They may need some additional assistance with other elements of marketing, such as campaign fulfillment, social media management, or graphic design.
The same goes if you have a salesperson; they might be able to handle a portion of your marketing tasks, they might have time for a blog post or two each month, or they might be able to schedule a little time each day to work on a campaign or webinar. That said, they should be doing sales, and once the marketing is doing its job, they will be too busy to keep the marketing going effectively.
That doesn’t mean you won’t find those rare gems who can jump between tasks. We have writers on staff who are also great at building marketing plans, or have a strong SEO background. We have sales people who are great at building presentations and can make adjustments to websites. At the end of the day though, we want our sales team to handle sales, our SEO team to handle SEO, and our writers to write.
Calculating Your Marketing Investment
You aren’t doing all of this marketing work because it’s fun (I mean, some of it is fun, but it’s also very time consuming, stressful, and can get in the way of running your business). No, the point of marketing is to grow your business. It’s to increase your revenue over time.
For the one-or-two-person IT shop, the point of marketing is to get you to the point where you can put down the screwdriver and never replace another power supply ever again.
For the larger MSPs, the point of marketing is to give your employees bonuses, hire more technicians, or get to the point where you can acquire other nearby MSPs.
It’s always a climb, and your marketing plan is the sherpa.
Let’s take a look at what an average client agreement can look like:
Average Monthly Amount
Average Yearly Amount
Let’s set a reasonable goal of closing nine clients in a year. For this example, we’ll say that five new clients are smaller agreements, three of them are mid-sized, and one large agreement established.
Your monthly recurring revenue will look like this:
# of New Clients
Total Yearly MMR Increase: $354,000
That’s a pretty significant growth. Considering you did well to keep your existing agreements intact (which your marketing can also assist with), you’d be seeing a very positive amount of growth by just adding on nine clients.
Obviously these numbers can vary depending on your service offering, your location, and your prices. On top of that, your average close ratio is going to vary based on the diligence and even charisma of your sales team.
Well, wait a minute, aren’t you working backwards?
Technically, I just came up with a number of theoretical new agreements I’d like to get signed and paid for over the next 12 months, but I made sure it was something entirely obtainable in most markets. If you wanted to play it safe, you could come up with your numbers based on fewer agreements, but if you have someone handling sales in your organization, getting in front of enough potential clients to convert nine is pretty reasonable.
The point is, I want to show you just how easy it is to budget your marketing with only a handful of new agreements each year.
Let’s say you have a low close ratio of only about 1.64%. For every prospect you get in front of, correspond with, and soft call, only a handful let you set up a sales meeting, and only 1 or 2 out of every hundred prospects actually signs a contract.
With that close rate, you’d statistically need to get in front of around 550 leads to get your 9 new agreements. That’s it.
If your marketing content is good, and your sales team (or salesperson) is diligent, your close ratio is likely a little higher.
If you want to get in front of those 550 leads, you’ll need the basic marketing infrastructure (the website, social media, content, etc.), a few campaigns, follow up drips, the lead list, and time.
If your yearly marketing budget was a third of the total yearly MMR increase, getting in front of 550 leads so you could convert nine of them into agreements is pretty reasonable.
That does mean that you aren’t skipping steps or adding steps you don’t really need. Far too often we see MSPs get caught up on a particular piece of their marketing or their web presence that doesn’t really matter in the long run. We also occasionally see MSPs run entire campaigns except one critical piece (like the soft call at the end) and wonder why they had zero conversions.
How We Track the Return on Investment
It’s very simple - we take the cost of building and running the campaign and add it all up. Then we track the specific opportunities we get from that campaign and add them up.
We use ConnectWise Manage for all of this, and automate everything through JoomConnect. Honestly, this is where the investment of JoomConnect really pays for itself. Every form we build for a particular campaign builds the opportunity and attaches it to the campaign in ConnectWise. That way, when we are done running it, we can see everything in one place.
If you aren’t using JoomConnect we urge you to get in touch with our sales team to help you get this added to your subscription.
It Takes Time and Effort (and Money) to Grow
In a competitive environment, especially today where more and more businesses are facing additional stress due to the global pandemic, it takes more than just hanging a sign to get traffic into your business.
Marketing simply isn’t a set-it-and-forget-it rotisserie chicken oven. Instead, you need to actively engage your audience until they are ready to buy. That takes effort and it takes spending money. Worth-of-mouth will only get you so far, and unless you are constantly present in front of prospects, they won’t consider changing what they have now, to come to you.
You need to show them that it’s worth the time, money, and hassle to switch IT providers, or to sign an MSP agreement in the first place.
It’s practically an equivalent exchange - you need to spend money to get in front of a prospect, impress them, wine and dine them, and then they might choose to sign an agreement with you.
We’re here for you, for every step of the marketing process. We can fulfill all or any piece of it, and we have molded our services around the fact that some MSPs are small one or two person shops, and others have a hundred-plus technicians. We can help either scenario, and anyone in between.
Want to learn more? Get started with a free demo and consultation and tell us about your marketing pain points, and we’ll help come up with a game plan for your MSP.