GrowthChapter 5
Client acquisition and growth
High costs and competition push MSPs toward stronger client experience.
Client acquisition and growth:
High costs and competition plague industry, forcing MSPs to lean into the client experience in 2025
MSPs say that a competitive market, increasing costs, and shrinking client budgets are a challenge to their operations in the year ahead. Despite these headwinds, MSPs plan to focus on service delivery, strategic planning, upskilling employees, and becoming a more consultative partner to clients to drive success.
Large sales teams can drive more revenue—but they may not impact client retention efforts
Number of dedicated sales staff
2-5 staff
6-10 staff
10+ staff
When it comes to sales staff, the majority of MSPs have either 2-5 (37%) or 6-10 (36%) dedicated sales staff. About a fifth (19%) have a sales team of 10+ members.
Small MSPs are more likely to have 1-5 sales staff members. Medium are slightly more likely to have between 2-10 sales staff, while large are much more likely to have 10+ sales team members. MSPs with the highest revenue are more likely to have more sales team members overall than their lower-earning counterparts of the same size—which implies that more sales team members can bring in more business.
MSPs with the highest projected growth rates are much more likely to have a larger sales team of 10+ team members—suggesting that MSPs who invest in sales expect to bring in more clients (and, ultimately, revenue). Interestingly, those with the highest ARPU are more evenly split across sales team sizes, suggesting that MSPs don’t necessarily need a large sales function to charge top prices and be efficient.
High-performing MSPs bet big on marketing investments
Marketing budget investment
Most MSPs dedicate anywhere from 10-35% of their total budget to their marketing efforts. Small MSPs are more likely to only allocate 1-10% of their budget toward marketing.
However, when looking at top revenue earners, we found that investing more in marketing is likely driving financial performance. Small, high-revenue MSPs are slightly more likely to use 35- 50% of their budget for marketing, while large high-earners are slightly more likely to set their marketing budget at 50%. Those with high projected growth rates are also much more likely to allocate 35-50%+ towards marketing.
Quality marketing may also have an impact on customer success and churn, since MSPs with the highest CSAT and client retention rates are much more likely to devote 50%+ of their budget to marketing.
Interestingly, those with high staff utilization rates are much more likely to have marketing budgets in the 50%+ range. While it’s difficult to see a clear connection between marketing spend and staff productivity, it may be that MSPs who prioritize investing in different areas of their business—from the sales experience to service delivery—are more efficient and performant overall.
10-35%
The most common percentage of total budget MSPs spend on marketing
“25-30% sounds high. I would say closer to the lower end of 10% up to 25% seems right. We have two people on the marketing team: one working on the digital side and the other doing follow-ups, calls, and invitations to webinars. We're trying to be disciplined and consistently have activities going on in sales and marketing.”
Client referrals still the top growth channel for MSPs in 2025
Top client growth channels
Client referrals / word of mouth
Social media and PR
Paid advertising and sponsorships
SEO and content marketing
A little over half of MSPs (53%) say that client referrals and word of mouth is their top growth channel. This was followed by social media and PR (at 46%) and paid advertising and sponsorships (at 39%). Only about a quarter (26%) of MSPs have mastered using SEO and content marketing (the least popular response) to acquire new customers.
Small MSPs are much more likely to rely on referrals and word of mouth, and they’re much less likely to be successfully using paid advertising to grow. Large MSPs are slightly more likely to say paid advertising is a top channel. Interestingly, when we look at high-earning MSPs by size, small MSPs are likely to say paid advertising is a top channel, while larger high-revenue earners are more likely to say SEO, content marketing, and partnerships are their top levers. This suggests that, regardless of the size of your organization, you can still effectively invest in any marketing channel to drive growth.
Those with the highest projected growth rates and staff utilization rates are more likely to say direct/cold outreach was a key growth tactic, suggesting that some MSPs still feel that traditional human outreach is the best way to acquire new clients.
MSPs with the highest customer retention rates are more likely to rely on client referrals and less likely to rely on paid advertising to grow—showcasing how increasing word of mouth can reduce spend on other areas of marketing.
MSPs rely on referrals—but don’t track their clients’ willingness to refer
Referral reliance versus NPS tracking
Client referrals are top growth channel
Track Net Promoter Score
53% of MSPs say client referrals are their top growth channel—but only 34% track Net Promoter Score (NPS), which is a measure of a client’s willingness to refer your business to peers. MSPs who rely on referrals for growth should send NPS surveys to customers and then proactively reach out to their high scorers (9s and 10s) to ask for a referral.
“Referral partners are a huge opportunity for MSPs, and I think that client referrals is our top growth channel. But we definitely get leads from marketing too. We’ve gotten leads from our logo being on the boards at Edmonton Oilers’ games.”
“Referrals are always important, but to grow, you have to go beyond them. We’ve been doing content marketing. It drives traffic and folks often want to check us out online to see if we offer helpful information. It shows we know what we're talking about.”
Competition and pricing are top obstacles to client growth
Obstacles to client growth
Too many competitors
Shrinking client budgets
Underpriced by competitors
Lack of upsell/cross-sell initiatives
Lack of dedicated sales staff
The biggest challenges MSPs say they face when it comes to acquiring new customers are too many competitors in the market (41%), shrinking client budgets (39%), and being underpriced by competing solutions or firms (38%).
Less than a quarter felt that a lack of upsell/cross-sell initiatives (17%) or lack of dedicated sales (12%) staff are impeding client growth. Since this report found that having formal client expansion tactics and more sales staff can drive revenue—on both the existing and new customer fronts, respectively—MSPs should explore whether these initiatives could help them overcome competitors or tight budgets.
Smaller MSPs are more likely to say not having sales staff is hindering growth. Since small MSPs with high annual revenue are more likely to invest in marketing, other small businesses may want to explore if certain marketing channels can drive growth better than outreach from additional sales staff. Large MSPs are slightly more likely to say being underpriced and too much competition are their top issues. This suggests that small firms could win accounts from bigger MSPs based on price—if their service offering is right. Since top-earning small MSPs are more likely to say they struggle to find specialized/skilled staff to offer new services, they may need to shore up their technical capabilities first.
Those with the highest projected growth rates are more likely to say client churn is an issue. Since these MSPs are also more likely to have larger sales teams and marketing budgets, they may want to redistribute their resources to help with customer retention (not just earning new business).
“There are a million clients out there that wish they didn't have to spend money on IT—so that's a constant problem. And it probably won’t go away. They see it as a cost instead of an investment in their own growth—and the challenge is we need to make them see it otherwise.”
”I think one growth challenge is there's a lot of noise in the industry. Also, the complexity of keeping up with technology is tough because things are moving so fast. People are looking for us to be technology advisors who can give advice on a broad range of things. It’s hard to do well.”
MSPs bet on improving the client experience and increasing operational efficiency to get an edge in 2025
Expected 2025 advantage
Client experience + operational efficiency
Controlling costs
Expanding service offerings
Improving reporting
Updating business model
Acquiring other businesses
32% of MSPs feel they’ll gain the best advantage in the year ahead by focusing on both the client experience and their operational efficiency. The next two top advantages are controlling costs and expanding service offerings, at 27% each. Toward the bottom of the list are improving reporting (18%), updating the business model (17%), or acquiring other businesses (13%). Since MSPs who track more metrics tend to outperform their peers in a number of areas, developing better reports should be a higher priority for MSPs.
Small MSPs are slightly more likely to say expanding service offerings would let them pull ahead, but they are also less likely to say upskilling current employees would help them. Since training current employees would likely be required to offer new services effectively, small MSPs shouldn’t discount how employee growth and development can influence the client experience.
Executives should make service expansion decisions with employee feedback in mind
Executives are more likely to say expanding services will give them the best advantage in 2025 while technical and customer-facing roles are more likely to say upskilling employees would. Managers are more likely to feel that more strategic consulting services and better business planning should be priorities. Leaders should ensure they invest in team training and strategic frameworks before adding new services so their employees can effectively deliver them to clients.
“I think what's going to set us apart from other MSPs is our care for our clients’ businesses. We want to be involved and know if they're making big changes, we can bring valuable insights from our own experiences to our clients.”
“One advantage we have is that we've planted a lot of seeds over the past year in terms of creating some long-form content. This has generated pretty good visibility for us on places like LinkedIn, and we’ve had quite a few people reach out to us at the beginning of this year.”
Financial worries and compliance top list of concerns for 2025
Biggest 2025 challenges
Increasing costs
Shrinking client budgets
Compliance and regulatory demands
Access to capital
When asked what their biggest challenges were for the year ahead, MSPs said increasing costs (55%), shrinking client budgets (39%), access to capital (30%), and compliance and regulatory demands (34%). Client engagement and employee retention are the least concerning areas. Since client satisfaction has been tied to staff utilization and training, MSPS shouldn’t overlook how retaining experienced staff contributes to client success and service delivery.
The top revenue-earning small MSPs are more likely to view a lack of reporting and inefficient tech stack management as their top challenges for the year ahead. Large high earners are more likely to see shrinking client budgets as their biggest obstacle. All MSPs should explore how they can improve technical efficiency to lower their costs and better serve their customers, especially during potentially lean times for client spending.
