Most MSPs want to build a sales pipeline, but are stuck with just a drizzle of inbound referral leads. This is the definitive guide for MSPs to build a pipeline of inbound leads, so you can stand out from the competition without needing to outspend them.

Why building your first sales pipeline so hard

The common origin story for MSPs is, a great technician gets inbound requests for a technician consultant, enough to justify leaving their salary job and being a full-time consultant.

This is an amazing feat in itself. Technicians who are great with not just tech, but also business, are rewarded for their diverse skillset with being the founder of a sustainable book of business.

Here's the catch: the founder is still treading water. The founder is keeping the lights on, but there's not enough gas in the tank for the founder to play offense instead of defense.

It's hard to find new clients when all your time is spent on existing clients. You're treading water.

You don't have the time or money to build a sales pipeline. Each customer right now is so damn important to keep the lights on. It's scary to think about raising prices on them. You're worried they'd just fire you and go to your competitors.

Treading water is misery. We want to swim to land and proceed to a life where we have more control. We want to work "on" the MSP, not "in" the MSP. We want to scale.

If you're a finance nerd like me, are you into market sizing case studies? By my calculation, at least 20,000 MSPs in America are "treating water" and frustrated about not having a sales pipeline. Over 20k MSPs!

Here's how I calculated it. I'll define "treading water" as earning less than $300,000 net profit on 20% net profit margin, which infers $1,500,000 revenue. Over 34,000 MSPs earn less than $3 million revenue: there are over 40,000 MSPs in America, and 85% of them are earning less than $3 million revenue. I believe a conservative estimate of the division MSPs earning revenue either a) less than $1.5 million or b) between $1.5 and $3 million, would be a 60/40 division, 60% to under $1.5mm and 40% to over $1.5mm. So the conservative estimate of MSPs in America "treading water" is 60% * 34,000 MSPs = 20,400 MSPs.

Every MSP started out by treading water. Even the big ones.

Why you should start building your sales pipeline today

Building your sales pipeline takes time. You build your business brick by brick. There are no get-rich-quick schemes.

But if you want to get rich as an MSP, there is one get-rich-slow scheme. And this post is that get-rich-slow scheme.

Slow growth for MSPs is inevitable. The competition is fiercer than ever, with a new MSP starting up in your market every week. Your inbox is full of sales and marketing agencies, promising you X new leads a month, but they aren't guaranteeing it, so they want you to still pay them full price even if you close none of their leads.

When you're treading water, wasting money like this is too frustrating to risk. That was money you could have paid your debts, or put in your own pocket.

Very few founders start up their MSPs and sell it at a good profit less than four years later. There are very few quick exits. Yes, I know the M&A market for MSPs is hot. But most MSPs have been in business for over a decade.

If the get-rich-quick schemes don't work, and building your MSP is a long-term project, why not adopt the get-rich-slow mentality instead?

This is the catch to building a sales pipeline and breaking your dependency on referrals. This is the key to swimming to land.

You need to be willing to get-rich-slow and build your sales pipeline the old fashioned way: by earning an audience by creating free value for them, then converting that audience into paying customers.

The best time to start building your sales pipeline is four years ago. The second best time is today.

5 reasons your sales pipeline is worth the hard work (beyond more sales)

It could take years to build a sales pipeline? Yikes!

Even despite the risk of upfront investment, building a sales pipeline is still worth it. There's a lot on the line for MSPs to swim to land.

The most important benefit is freedom of your time. When you have a sufficient pipeline, you can hire out your daily responsibilities, freeing you up to work "on" your MSP instead of "in" it. You can have a healthier work/life balance. You can focus on leading and scaling, instead of putting out fires and burning the midnight oil.

You'll have more power in your client relationships. You'll have more of an abundance of clients, meaning you're less afraid to lose any one of them. Most MSPs start up with only inbound referrals, but their network runs dry and they're stuck treading water. With a sales pipeline, you can fire your least favorite clients. You can raise your rates and require upfront payment instead of payment in arrears. You have extra cashflow to invest in scale and growth. You can write service agreements to require your new clients to adhere to your tech stack of choice, which all your technicians are specialized in, instead of them requiring your technician to learn esoteric tools chosen by their previous technician that no other clients are using.

Your referral leads will increase in lockstep with your sales pipeline. More customers means more people who can refer you. If you are a vertical MSP, it's easier for your clients to refer you to their friends because you all operate in the same vertical. I'll touch on being a vertical MSP below.

MSPs will sell for more money with a sales pipeline. You'll expand your pool of potential buyers with a sales pipeline, meaning more optionality and negotiating leverage for you. Selling while only treading water is certainly possible, but market conditions will affect your sales price and terms more heavily than if you have a sales pipeline. If you're interested in selling your MSP one day, I wrote 21 M&A hacks to sell your MSP.

If you are buying MSPs, building a sales pipeline means your ROIC will be higher, and you're a better manager of money. If you're an MSP investor, your performance is usually measured by return on invested capital, i.e. seeing how much you grow your money on a time-weighted basis. If you can only grow your net worth by inorganic growth, because organic growth is inaccessible and you're unable to build a sales pipeline, then you're relying on multiple expansion and market sentiment to generate returns, and I’m not confident you’ll qualify for more strategic sources of capital, like private credit or family offices. If you’re buying an MSP, I wrote about the mistake MSPs make when acquiring other MSPs.

The case for brand-driven growth over direct response

I'll spoil my own guide and tell you right now: I am recommending you to build a vertical MSP and build your pipeline with inbound content marketing. This is a brand-driven approach to growth. We build a brand, attract an audience who trusts the brand, and convert them to paying customers.

The natural rebuttal to my brand-driven growth recommendation is direct response marketing and sales. You do cold email, cold calls, paid ads for your offering. Maybe you're even sending handwritten letters. But you're reaching out to leads and asking them to be your customer.

The shortest distance between two points is a straight line. Direct response is the straight line, the rebuttal should be.

However, direct response distribution channels are all saturated. The MSP market is years past the point where direct response is cheap CAC. It's never been harder to stand out. If you're treading water, you're struggling to find profitable direct response.

Direct response is an illusion of a straight line. CPMs are at all-time high prices. Consumers are so tone-deaf to direct response marketing that the shortest distance, from prospect, to happy paying customer, is a brand-driven growth strategy. In a market as competitive as the MSP market, the straight line is the brand-approach to growth.

How to swim to land when you're currently treading water

Here it is – the definitive guide for MSPs to build a sales pipeline, so you can have organic inbound leads that convert to high quality customers.

I recommend 9 steps to building your brand-driven growth pipeline:

1. Implement cashflow reporting

2. Choose a vertical

3. Gross profit analysis

4. Regular business review meetings with existing clients

5. Build buyer profiles to guide content engine

6. Build content engine

7. Test distribution channels for your content

8. Manage your email list

9. Draw people to your sales call-to-action

Each of these will be its own newsletter post here.

1. Implement cashflow forecasting

Most MSPs are stuck treading water instead of building a sales pipeline because of the chicken-and-egg problem: you need cash to get more customers, but you need more customers to get more cash.

Cashflow forecasting is the way for you to break that chicken-and-egg problem. You make what you measure. How are you supposed to get more cashflow without measuring cashflow?

I can't stress enough how strongly I believe in cashflow forecasting being your first step. It makes all the other steps harder to mess up. It makes it easier to sleep at night. I previously wrote about how to implement cashflow forecasting.

2. Choose a vertical

Sales pipelines are so difficult to build because direct outreach is expensive, and it's hard to stand out from the competition. Choosing to specialize in a vertical allows you to stand out from the competition without outspending them.

I previously wrote about how to become a vertical MSP.

3. Gross profit analysis

It's hard to build a sales pipeline if you're starting from scratch. But if you already have some clients from previous referrals, then doing a gross profit analysis will help you get a huge head start on building your pipeline. It will show you the most and least profitable parts of your MSP.

For instance:

• Some customers pay higher prices on time and are pretty self-sufficient; other customers are a pain with each invoice, and they're always creating new support tickets

• Some products and services are easier to sell and maintain than others

• Some sources of leads give higher quality leads than others

• Some markets or industries yield higher quality clients than others

If you're committed to being a vertical MSP, your gross profit analysis will help guide your decision. One of the best ways to choose a vertical is to pick the vertical that your favorite current clients are in.

I'll release a newsletter about how to do your gross profit analysis in the future. Email me at [email protected] if you want a draft of my gross profit analysis guide.

4. Regular business review meetings with existing clients

Ah yes, the part that many MSP founders dread the most… talking with their clients.

Not every MSP has the natural desire to have personable relationships with their clients. However, most MSPs already understand that talking with their customers is one of the best ways to find more customers.

Regular business review meetings are a practice that separate the growing MSPs from the ones treading water. Your client starts to see that you are their partner. They trust you to drive business results with technology. Your clients pay higher rates happily.

Regular business meetings are also the best way to make more money today, without adding new clients. You'll have opportunities to upsell and cross-sell to your existing clients.

I'll release a newsletter about how to do business review meetings in the future. Email me at [email protected] if you want a draft of my business review meeting guide.

5. Build buyer profiles to guide content engine

Most MSPs don't know how to stand out from the competition. When you're a vertical MSP, you can build buyer profiles down to the individual job descriptions, making your brand-driven growth strategy more targeted and cost-effective than direct response.

I'll release a newsletter about how to build buyer profiles in the future. Email me at [email protected] if you want a draft of my buyer profile guide.

6. Build content engine

This is the step that most people consider to be "marketing."

See all the steps above, which we should do before this one? That's laying the foundation.

Abraham Lincoln said if you give him 6 hours to chop down a tree, he'd spend the first 4 hours sharpening his ax. By doing all the above steps before starting the "marketing" step, we're being like Lincoln.

Your content engine will benefit from your earlier work to choose a vertical and build buyer profiles. Now you can create marketing materials that are cost-effective, but they also convert prospects into inbound leads.

I'll release a newsletter about how to build content engines in the future. Email me at [email protected] if you want a draft of my content engine guide.

7. Test distribution channels for your content

One of the scary parts of building a sales pipeline is the risk of spending lots of time and money before you see results. My guide on distribution channel testing will help you see results sooner, preventing you from wasting months of marketing work.

I'll release a newsletter about how to test distribution channels in the future. Email me at [email protected] if you want a draft of my distribution channel testing guide.

8. Manage your email list

The first major milestone for a prospect is joining your email list. When a prospect joins your list, they give you permission to deepen the relationship with them. They're also starting to get interested in receiving your sales pitch.

Managing your email list is all about helping prospects get more comfortable with having conversations with your sales team.

I'll release a newsletter about how to manage your email list in the future. Email me at [email protected] if you want a draft of my email list guide.

9. Draw people to your sales call-to-action

Your call to action, commonly CTA. When your leads meet your sales CTA, they reach the official handoff from marketing to sales. This is the second major milestone for a prospect.

How do we get these strangers to knock on our doors to give us the keys to their technology and thousands of dollars a month? My word choice's intent with the previous sentence is to remind you how crazy the buying process is for your prospective clients. A relationship with an MSP requires so much trust. Your sales CTA is when you can tell if you've earned that trust from a prospect.

I'll release a newsletter about how to optimize your sales CTA in the future. Email me at [email protected] if you want a draft of my sales CTA guide.

Summary

1. Most MSPs struggle to build a sales pipeline because they're treading water

2. You should start building your sales pipeline today, because growth will require time

3. Despite the huge upfront investment, the benefits of a sales pipeline are so huge that the upfront investment is worth the risk

4. Most people will pursue growth with direct response marketing and sales, but I recommend being a vertical MSP with a brand-driven growth strategy

5. I recommend 9 steps to building your pipeline, starting with implementing cashflow forecasting