EP166 - Creating a World Class
Service Delivery Culture in your MSP
with Darren Strong & Ian Luckett

INTRO

In this episode of the IT Experts Podcast, we help you workout what world class service delivery looks like.

Welcome to the IT Experts Podcast, the only podcast to help MSP's scale to 1,000,000 in if already there get to 5 and go fast at the end of the day. Isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN

So, good morning, good afternoon, good evening. Welcome to the IT Experts podcast. Today we've got a really special guest and we're going to be helping you work out and understand the intricate details of world class service delivery. And we've got Darren strong on the podcast today. Good afternoon. Darren, how you doing?

DARREN

Hello there. Thank you for having me. It's great to be here.

IAN

No problem at all. Well, we've had some really interesting and deep conversations coming into preparing for this show this. So this is going to be up there with one of those pillar shows, I think because this is a really important issue. You know we spend a lot of time getting you leads in your MSP building, your MSP up and recruiting people and everything like that. And so many times, when we start digging into and lifting the lid on service delivery and what does that look like and what is good and what does bad look like. It's kind of like sometimes it's like opening up a bit of a can of worms, so we've got down on the podcast today and he's going to help us out understand this. But before we get cracking into the detail, Darren, just explain to everyone if they don't know, who you are, what you do, and who you help?

DARREN

Yep. So Darren Strong, skilled MSP, so we help MSPs unlock efficiency ,profitability, and time, we've dedicated consulting services and this has all been born out of demand. So I've been in MSP world for just over 20 years. And very well known for operations, but been a big part of the community and that's basically where the demand was driven.

IAN

Yeah. Darren, we say, Stuart and I say all the time we're just privileged to be working in this Community in this, in this sector, because everyone's so giving everyone so sharing, they listen, take on board and you know, as you probably know as well, you do know as well, as we do when you start supporting some of these techie business owners to achieve things and build a great business, it's great in it, so which, which communities have you been involved in?

DARREN

Yeah, it's been a big part of ConnectWise for the biggest chunk of it, been owning some others as well, but the ConnectWise has been a community that's really helped me. So not just the ConnectWise community but also what used to be called HTG that's now called Evolve. So that peer group is really, where I cut my teeth, I was very fortunate to be in rooms of principles that owned businesses and I was the only technical leader from the business. So I was around 40-ish owners. And not being an honor myself, that was really where you know, really took in.

What does it look like to run a good MSP? And more importantly, what's the data and the financials need to look like to run a good MSP? I think, quite often you said, the beginning that you know we all start these businesses because someone says to you, you're really good at technical and then all of a sudden we now need to be really good at P&L and finances and HR and people management. And nobody told us about those bits. We were just really good at technical.

IAN

Yeah, just as we always do because you don't know what's coming up next. Because it's our podcast we kind of ask any questions we like, let's just talk about community for a minute. We're going to talk about the service delivery, which is what it's about. But one of the missions that Stuart and I have got over this next year and we, you and I have actually spoken about this is. How can we reach and how can we demonstrate the value for people who don't come to events, communities, you know, social platforms, podcasts, whatever, you know, we're getting about 400 at the time of the time recording about 400 downloads. A week to this podcast, which is incredible, and we thank every single listener for making this happen. But you know, we can help many more people, can't we, Darren? But we know that sometimes the MSPs are quite reserved and they don't want to go and share and they sort of think it's a waste of time to go out and learn things. And I'm too busy. I can't do these sort of things. What would your you know if he was standing in front of a load of MSPs I'd never been to an event. And never been to a community, never stepped outside their door. And but are listening to this podcast. What would you say to them about the benefits of getting involved in, you know the growth community, I think.

DARREN

I think you just you just mentioned a few things there aren't you know it's about your introverts. You've not got enough time. You're trying to firefight all day long, but actually, if you want to make a difference here and you want to build an asset, and I think that's the difference. If you want to be a lifestyle business and you're good being technical and you want to deliver, that way there's nothing wrong with that. You set your style right and you run on that. If you're saying to your spouse that I'm building an asset here, and that's the reason why I'm doing 60-70 hours a week, and eventually we will retire on this asset being sold. You're not going to do that. When you're on, that's where the community kicks in. That's where you realize that, you know, the biggest wake up call when you hit a community is you think that your business and your problems are so unique. And when you hit the community, you realize that everybody's got exactly the same issues and everybody's in different parts of that journey through those issues. And that's what you can leverage. People that are far over on in that journey, they can tell you the 20 things that they did wrong and that stops you from doing the same problem.

IAN

And it's funny because you all think that you're doing the same thing. Well, you're providing a similar service, I think is as far as I would kind of caveat now, but the way you're doing it, the flavour of the cake, the way you're cutting it is all different and not everybody.

The thing I love about the clients that we work with is we have some of our smaller guys who are you know like low, low, low 6 figure businesses and actually teaching some of our boardroom our multi-7 figure businesses on how to be personally more productive. How to be kind of healthier, how to actually just say no and make sales in a different way and likewise it kind of all works around the other way. So there's really, you know.

DARREN

Oh, you're running A and also that people think there's a lot of risk, people think, Oh well, that come to this community, you're ging to pinch all my customers, nobody's, there's lots of fish in the sea and we can all just playing them seats together, you know, especially I've worked with a lot of businesses in central London and they're literally on each other's doorsteps, like round the corner from each other and they're shining, financially, figures as though they're miles away because it's just not a problem.

IAN

No, the I think the only people I say this when people join the growth hub, the only people who are your competition are the people not in this community or not, in the growth community, you know the people who are sitting out there. But anyway, I thought I'd just Chuck that one in cause I think it's a really key point and a really valuable one for the listeners as well. Now your business is built on creating helping MSPs to create world class service delivery.

What does that actually look like in terms of tangible things and stuff and bits and bobs. What does world class service delivery look like? And where in the process of the MSP does it focus and sit?

DARREN

Yeah, for us. It's starting with the end in mind, so what data do we want to run this business on? What's the USPs that we want to be known for? And how much money do we want to make, you know, what's the bottom line going to be, you know, no businesses here unless it's making money. So whereabouts do we want to be against those best in class figures when we're looking at net profit, EBITDA, etcetera. And then what are our USPs? What do we want to be known for? So for instance, in one of my MSPs it was all about the fast response and an initial fix, so you would ring our service desk. We would keep you on the phone. We wouldn't put the phone down until it was fixed and we would fix it within 30 minutes and we'd fix roughly 75% of all inbound calls in that manner, that was our USP. People wanted it, you know, you hung up. I need to print something right now. I'm going into a meeting. You don't want a ticket reference and a call back tomorrow. You want the printer to run now, so that's what we built our USP on. So then, that then forms between those two things around what's the data and the profitability and what's our USP that then forms. This is how I'm going to set up my service desk. This is how my socks and my processes, this is, and my PSA is going to work. This is in my reporting tool is going to work this and my arm is going to work my training for many individuals and my structure of the teams. That's going to define all of that. So if, for instance, like us, it was all about response and keeping people on the phone on, well that then it takes. You've got to have a full triangle upside down. So that triangle has got to be least cost resource at the very bottom and as many of them as you can because you need to be able to caught with that demand of phone calls. So then you've got to build a service and a structure that brings on apprenticeships junior people, put structure in a way that the risk doesn't go higher and the customer feels like they know exactly what they're on about, even if they're running from a process that then dictates that type of structure, and then that's what we would help you to build and execute and train and build the processes and the PSA.

IAN

And I think one thing I just want to flick in at this point is, is that whatever we're going to talk about and I'd like to talk about a few metrics in a minute is listen and let what you know down a night saying wash over you. But I don't want anybody because I know what you guys are like all of a sudden I go, Oh my God, how do I get my figures to that. Oh, my God, I'm getting stressed because I need to do this and I've got a shiny ball over here, will that PSA help me and all sort of thing. Trust the process on how to grow an MSP and you know Darren's, we're just talking about this particular piece at the moment. And don't just knee jerk because you heard something that someone else did, you know, and start with the end in mind is exactly what Darren just said. You know, what is it, you've just, what is it you've just tried to achieve? I've just had a growth planning session with one of our clients and I said, well, where, what do you how do you want to increase the business next journey?

Well, let's put half a million on it. It's great. Let's break that down. What do you mean? Well, how much of it's going to, how much do you reckon you can do without any effort at al. How much of it's going to do, we need new marketing. How much it can we do through optimizing our account management process and how much of that profitability can we increase by looking at our operational efficiency, exactly what we're talking about today and before he did it, he needed nine clients. So do you reckon between now and next year we'll be able to put nine clients through your business, I went, I reckon we could do it in six months, I said, well, let's just go in. Let's just go with the year, we'll see how we get from there, but when you break it down it's really not that, you know, you know.

DARREN

So many times people come up with these numbers, especially when you're talking about legacy plan numbers. You know, what do we want this business to be valued at the end of this. You know, people just pluck the number that they've heard because they heard it in the corridor that then you need to start structuring that down. Like you've just said, you know, where is that going to come from. What's the different avenues technical services IT managed services is security. What does the cross selling look like all those different angles have not even been thought about. It's just a number that they've just...

IAN

Yeah. Do you mind sharing what, in terms of best in class numbers around kind of EBITDA revenue per employee, what the metrics that you work with if you don't mind sharing don't get overwhelmed with?

DARREN

Get messed up on these, yeah.

IAN

No, just listen to it, and if you're not. Where it is right now, just don't worry though.

DARREN

Yeah, I mean, we use service leadership which traditionally came from Paul Depot and the very top line figures are you get your revenue and then you want 51% of that is best in class service gross margin. So how much does it cost you to deliver that service, so that's your whole technical team, maybe even other functions. Like if you've got team leaders and technical team, you've got a technical manager. They are a function of that team, so those costs should go against that service cost margin. Then we look at sales, admin and marketing that should come in at 30% of the revenue. So that's your cost of delivery on the back end typically again in a lot of MSPs that's higher because you're doing a lot of manual work to produce billing to do sales to do marketing because what we're not doing is using cookie cutters to redeliver. Same services over and over again. So what we do is we manipulate the service every time we sell it, which then becomes an absolute nightmare when we come to back end systems. Then we'd end up with 20%, 2020, 1% net profit. So that's very top level where we'll be looking at how do we deliver those services and when we dig in into technical, we've got other avenues that as a technical manager, we should be monitoring things like ticket per endpoint. So how many tickets per endpoint do we have? How many tickets per engineer? How many engineers per endpoints do we have those types of metrics? Then will help us to understand the service course margin. So let's say the service course margin is below 51% and let's say it's 40% if our other key KPIs within the service team are at best in class, let's say 240 endpoints. Roughly 4 to 4.5 tickets per endpoint. We then what we can then say is the service gross margin is too low because actually we're delivering the service enterprise. But the salespeople aren't selling it for the right price.

IAN

Right, right.

DARREN

Or we have too much of a costs in the business like we're using expensive tools not very correctly and we've got lots of shiny new tools that we're paying for and we're getting our value out of them. So it's one of those two things then that would become the reason why service cost margin is too low. But if those other KPIs are too low, then actually it's the performance and the structure and the way we're delivering operations. Which is causing the service gross margin to come down.

IAN

Exactly, exactly that. And what you've just, you know, you've just explained how to, you know, to measure, but then it would we're going to talk about measurement in a minute. But then what you do with that is really important. And if there's any vendors listening out here, you know, you've got a we've just imported a new client yesterday. I think he's actually bought every single thing that's on the market.

DARREN

Loves being a good shiny to you today.

IAN

Ohh my word. You wouldn't believe it. And if you're listening, you know who you are. We had a good laugh about it, and it was even to a point. Yeah, I've got that. Well, I say I've got that I've got it, and I've paid for it, but I haven't really optimised it yet so, if you're listening to this podcast and that's you, stop now. Work out where it is, go and fix that, because you've got that's just a hole in your bucket. Either get rid of it or use it cause you wanted to buy it to start. But that's a whole another whole another story. One thing that when we were chatting about putting the show together, you mentioned that I didn't think would come up is USP normally the USP comes up in when you know people moan and say oh, we all do the same thing and you know you know we're not. We're not really that different. But your principles work around that the USP is absolutely critical in service delivery because you're kind of putting a promise out there aren't you saying this is how we do things differently. And then this is how we actually do things differently just run through your kind of thinking around why this is so important, Darren.

DARREN

And that has to go across the whole business as well, you know. We're we need to turn at most MSPs if we want to be successful, we need to be a sales and marketing function business not a technical business. So what we, how we structure ourselves and marketing and the noise we create and the social media, the sales pitches, the services we build those have to be concrete, and salespeople will only deliver that concrete if they have trust and belief in the operations delivering. It so everything has to be joined up and every has to follow that same sequence. And you know, there's lots of MSPs out there. You probably all sat there thinking, yeah, at least no 20, that's in a five mile radius of me. So how do you stand out? You know, when you ring, when you ring a prospect and you say, oh, yeah, we're better than your current IT company. Because of what, what is it and what's that tangible asset that you're going to give them. How does that make their business better and also can you prove that? Who can you put people in front of them that are going to sing that same tune. Because that's actually what you deliver, because that's what they're going to expect. You do that. You show them by other people spreading the word. That's how you're going to go. That's how you're going to bring new customers on rather than the opposite. Which is who's the cheapest? You know, nobody wants to be the cheapest. If you're the cheapest, there's something wrong.

IAN

Let's have some good and bad examples. What's the worst USP that you've kind of heard or the worst collection of USPS that you've ever heard or seen?

DARREN

Well, the three that everyone always says is our response time our partnership, we're here for the long term and you know you've got a dedicated account manager. So I sat there as a prospect. I've had five IT companies and all five of you said the same. I think so, what am I going to do? I'm going to say right. Okay, who's the cheapest, ohh who, was the guy I'd go to the go to the bar with and buy a buy a beer with that as well. So you need to really stand out and you know, for us in our old MSP. It was about response time, but actually we call it first time fix. So you ring us we keep you on the phone within 30 minutes we'll close 75% of your problems. Wherever possible, that's what we aim for and that in your business means XYZ are owned. If your MD rings up and he's got proposal, he needs to print. We're going to do our best to fix that there and then, and if it's not, it's escalated and worked on just as quickly and you dictate the priorities to us. So if you log that as a P1, we're never going to complain, cause you know what it's impacting your business and we just gatekeeper that. But if that's what you're setting your store right as you need to deliver that operationally. Because like I say, salespeople won't sing that tune unless they have confidence, that's what's being delivered.

IAN

How would you recommend that an MSP would start to find or work out what their USP is?

DARREN

Ask your customers. Ask your customers why they’re still with you. Why is it that you've been with us X amount of years? What's the best thing you like about us, you know, USP could be that. Actually, you're just all really friendly. We ring you up, you're all really friendly. You speak English, you know, it could be as simple as that, but yeah, my advice would be let's go out there and let's ask customers, let's ask people why are they still with us? Why did they come with us in the first place? You know, throughout the sales process, what was the reason you came with was what was the thing that meant you picked us and not somebody else.

IAN

Yeah. Yeah. And it's always, it's always, part of our sales and marketing framework that we use is once you think you've worked it out, go and talk to the people who love you and pay you because remember, you haven't got a business until you get money for something and just say to them, you know, doing a bit of market research, can you just can you just verify you know, what is it we do for you and then keep asking. And that does until you get to the bottom bit and the bottom bits, the bit that you then go and put in your marketing, you know this is the business outcome.

DARREN

Yeah, the critical bit is once you've done all of that, get them to do a video testimonial. And write up testimonial to value that and use that because there's nothing better than somebody else singing that tune.

IAN

So once we've got that USP, what's the important, you know, the important element, obviously you know you've got it, the sales guys understand it. Is it a case of really embedding that within the culture of the business and in the operations of the business so everyone lives and breathes it or is there some special source that that enables this to be a critical part of service?

DARREN

Yeah. So for me, the next step is what we call a service catalogue. So it's second from a service catalog says here's the Bible and what we must do in this service. And then here's the other documents across all the other different departments that follow that Bible, and it's written in their language. It's what they need to know, and it's concrete. It's written down in firm, solid words that there's no fluffiness and the whole business is reading those documents delivering those documents and responsible for keeping them living, breathing documents, the main thing we see in a lot of new partners, is when you pull back all the bits of the skin of the onion.

It's actually, no one really knows what we deliver. No one really knows. If I said to you in your IT support, do you go to site to rebuild the workstation or does your customer to send it to you and you'll do it remotely? Or do you not do it at all? And it's project work. I'd probably get 5 different answers across the table so. How do we make that a very firm answer. So when the customer calls they get the same answer every time. You know I talk a lot about McDonald's and Big Macs. How do they deliver the same drive through the same experience to get that Big Mac meal across worldwide? And this is franchises. You know, we've got a service desk, typically 30 people and less and we struggle to deliver that same customer service. They do it globally across franchises with college people that are typically they're one to three. Who's that done? You know that's done because they've got a Bible of how they deliver that service, and it's followed to the clock, because they've even got automated fryers that beep when the chips are ready to make sure that the right colour.

IAN

Yeah. And this is then taking the, you know, taking the vision, the value, the mission, the, the USP, the culture, whatever you want to call it and you know I'm going to continue with your food theme for a minute and marinate it through all through everybody, so that everybody understands what good looks like what bad looks like so that and it, and it's around having that, you know, scalable MSP, what a great name, it's scalable business that's a process that doesn't involve you in it because when you want to go and exit and get a valuation, guess what they're going to ask you. Hey, how much are you involved in the, they’re involved, correct?

DARREN

Yeah. And. And as soon as they find out how involved you are, they're going to take an average salary of someone that doing your role times it by 7 and take that off. The cost of what?

IAN

Business. That's right.

DARREN

They're going to give you.

IAN

Yeah, so be careful when you say no. I'm all hands off. Don't worry about it. And this is what, this is taking you know, the whole growth thing to the complete next level, isn't it? Which is which is right. Finally, let's talk about. I know we talked a little bit about measurements. We talked about some of the metrics at the beginning and KPIs you know, measure what matters. There's some great, great, great books out there, most of the time, what are what a surprise MSPs completely overthink this and measure absolutely every single thing that they need to measure. What are some of the key metrics of you know customer, service delivery, what happens as the businesses you know progress in your how how happy your customers are, what are the key things that you look for in that.

DARREN

Yeah, so also that's at the top again, you know what? We're going to run this business on, what's the revenue need to look like, what's the profitability need to look like EBITDA. And what's our USP, so you know, starting with that and being able to track that firmly and then forecasting that out over the next 5-10 years. So we call that a value creation, so, how does that going to get forecasted out as we grow this business and then that gets to still down into all the different layers around the department heads, the departments team leads the individuals, you know painting. What does good look like for an individual finishing the day, the week, the month? That's how you keep people's wages have got a thing to play in this, but actually it's proven that if an individual leaves your business feeling happy and that they've contributed and they've done their job well, they'll stay with you longer. So you know, bringing that all the way down to the bottom, if your USP is about think for instance first time fix, then that individual on the service test needs to have a first time fixed. But also we need to have a CSAT and a close mechanism, and ultimately also what time have they inputted into the system and we're not looking for time to see whether they've been lazy. You know, we know that from other items that go on in the business. What we want the time for is because we deliver labour, our biggest cost is labour. We need to attribute that labour, that time against every service we deliver individually so we can understand the service cost margin of those service, across all of our customers.

IAN

So I've just got another question. While you were just talking there, Darren, which be interesting to see what the answer to this is. So some people are, you know, now bringing people back into the office. You know everybody in the office and we still got some teams out in hybrid and we've got some, you know, young millennials. And I think you know what, I think millennials now like 40 years old. So they're like to me it's. Like ****, man, this is like getting this is getting off the wall now. So they've got loads of other categories as well for younger people, but I don't want to insult anyone but let's just say how do we, what's the best way for an MSP to ensure that he has an engaged, connected workforce when they're running hybrid, where he got some people who are remote and some people are in the office? How? I mean, that must be a massive challenge but how can we overcome that and help that?

DARREN

Yeah. So for me, the models that I've seen work is when you can actually get people in the office for percentages of time. I think a lot of people are struggling if they're remote full time. It's very hard not to become just a ticket monster and then you can become a ticket monster for anybody you know. There's no buying to the team. There's no culture and structure there. So I think a hybrid and mixing it up is definitely the way to go and for me my 2 advices would be, create KPIs that are all end, youu know, if you start to, for instance, put software on the machines to see what time they logged on, what time they logged off and when did the mice move, that's just not the way to do it, the way to do it is what's, what's the results I want and then how you get that care sort of thing.

And then the other thing is when you're doing meetings, a big mistake. I see is there's five people in the office will sit around the table and the other five people will be on a teams call on a big screen on the wall. That doesn't create for good engagement the way that they tell you to do it. If you read a lot of the books, is as soon as you have one person, we more everybody should act as though the remote, so everybody should join teams. So everybody gets the same experience, because otherwise what you find is the five people in the room go off on a conversation and the other five people can't hear half of it and they're not engaged with it and they feel like. I'm not, of this team. So what you should do is put everybody on teams and everybody should join from the same way.

IAN

That's a really good point and one that Stuart actually practices cause whenever we're in the office together, he always says, I will do this separately because it's a completely different dynamics when we're differently on the call and you're absolutely right that I love that top tip for a long time, that one is. Thank you for that, Darren.

Darren, thank you ever so much. Just starting to wrap up now for the show this afternoon. Absolutely brilliant value. Bombs all over the place. You've helped create a bucket load of content that the channel is probably not going to be able to unsee for many, many months to come. Once this comes out. So thanks ever so much for that. Let's just have a quick summary for you. What's the what's the kind of the the message for 2024 that you've got for, for MSP if they're looking to create that scalable?

DARREN

Profitable asset I think for the thing for me is everyone wants quick win. Anyone wants a new shiny new toy that's going to change the world. We've got to remember here that, it's a journey. So, plan your value creation plan minimum of five years. Keep on that journey, keep it consistent and execution is the key. Too many times I see people veering off different shining utilities take different directions. Nothing works unless you keep that consistency so that consistent message, consistent execution. That's what makes it.

IAN

Fantastic. Been brilliant. Well, thanks again, Darren, do you want to just spend a couple of minutes just letting people know how they can get in contact with you and we'll put all the links and everything that that you give us into the show notes. So they'll be able to find us from there. But if someone wants to continue the conversation and like what they've heard this afternoon, then how do they find you?

DARREN

Yeah. I mean, we spend a lot of time on LinkedIn so you can find out myself down strong on LinkedIn or scalable MSP and obviously we have the website as well scalemsp.co.uk, happy to have any conversations you, know I'm a big goal giver in the community, so even if it's just a conversation you want, this isn't going to be a sales pitch.

IAN

Fantastic. That's brilliant stuff. Well, look, all the luck and success for you guys in 2024. I'm sure this, I've got a funny feeling this might not be our last podcast, or the only podcast of this year so we can I'm sure we can add a load more value and help load more MSPs out, so thanks once again look forward to speaking to you soon and I'll catch up with the rest of you guys on the next podcast. Take care. I'll see you soon.

OUTRO

So I hope you enjoyed the show if you did, I'd love it if you could leave a rating and review on your favorite podcast platform. If you want to know more about how to take your MSP to a million or if you're already there go faster. Then come and join Stuart Warwick and myself in the scale with confidence Facebook group the link is in the show notes. You go enjoy the rest of your day and I look forward to connecting with you soon.