How To Counter MDF Decreases For Your MSP Business

Financial cutbacks can have a negative multiplying effect on the channel. When things are going well, many vendors provide their partners with a steady stream of incentives to essential “prime the sales pump” and keep the good times rolling. However, those activities tend to diminish, if not disappear completely, when continuing issues like the COVID-19 pandemic create economic concerns for the greater business community.

Suppliers often get hit when things go wrong and usually respond by cutting expenses such as overtime and marketing budgets. In the channel, that can affect the various areas of support that MSPs have come to rely on in their business operations, including MDF, as well as a multitude of sales and engineering resources. Without access to those types of programs and tools, providers may have a harder time attracting the attention of prospective customers and land new business.

A recent decline in MDF is a real concern. A growing number of MSPs are reporting a pullback of partner-focused marketing funds from long-established vendor programs over the past couple of months. Coupled with the economic uncertainty caused by the pandemic, anxiety among the IT services community is sure to rise in the coming months.

Costly incentives

The fall of MDF precedes COVID-19. The decade-long transition to cloud computing and the resulting move from product and software sales to monthly billable services are more to blame than any virus. Marketing funds continue to dry up as vendors move from single transactions to recurring revenue.

Though some cloud suppliers do offer MDF for cloud sales, including MSP-friendly companies that formerly offered only software and products (i.e., Microsoft, IBM, HP), there are no guarantees. The requirements for obtaining those funds tend to increase or otherwise change continually, and it can be difficult for IT services companies to keep up with and meet all those modifications.

Those constraints are moving targets and often end up costing MSPs more time and money than if they were to expand marketing budgets on their own. When the cost of obtaining something is more than the cash value, it is time to reevaluate your options.

Make MRR a priority

Stop walking past dollars to pick up nickels. With today’s resource limitations, MSPs need to focus their efforts on strengthening revenue streams rather than managing programs with diminishing returns. Marketing incentives often require hours to manage each month, and the amount of margin derived from new business can be relatively small when compared to other available options.

Increasing customers and adding services have associated costs. Both usually require more work and bring more risk to an MSP business, as well as headaches for the owners. Onboarding can be complicated, and rising support needs can tax existing resources or require new hiring and training programs to meet growing demand.

What if there was a way to grow wallet share and MRR without significantly impacting your team’s workload or the company’s expenses? Better yet, imagine that there was such a solution, and it meets a unique need that helps clients meet vital objectives, including strengthening their cash flow and scaling their businesses?

Nearly every service company struggles with collections. Those time-sucking calls and messages every month to follow up on delayed payments increase payroll costs that weaken profit margins and cash flow. Few employees want those responsibilities or the headaches from trying to balance customer service etiquette with their company’s financial needs.

Earn MRR without extra work

Fortunately, like many business problems, there is a technology solution to these issues that MSPs can bring to the table while increasing their own monthly revenue streams. That same ConnectBooster platform that takes away IT services business owners’ headaches is now available for your clients.

The Rev Program allows MSPs to improve profit margins by 7-10% just by offering solutions that help your clients manage and scale their operations. Those who use ConnectBooster understand the value of these secure payment platforms. Why not share the “love” with other professional services businesses that need a tool to manage collections and bolster cash flow while increasing your own MRR?

As those organizations scale their customer base and increase monthly revenue, payments to account-holding MSP increase, too. No extra hassles or leg work. ConnectBooster handles the support calls and can work together to close new deals with your sales and account managers.

Joining the Rev program allows you and your customers to boost collections and improve cash flow. What a great way to align business objectives with your clients while lessening your dependency on MDF and other time-consuming incentive options. Grow your MSP’s monthly recurring revenue without the extra headaches.


MSPS Guide to Predictable Cash Flow in Uncertain Times

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