The Ansoff Matrix For MSP Marketing Strategies
In the competitive world of Managed Service Providers, standing out and reaching the right audience is crucial so the Ansoff Matrix, which is a strategic planning tool, offers a structured approach to explore growth opportunities.
Basically, the amount of money you make can be expressed as Value x Volume. Value is the amount of money you make per client from all your products and services and Volume is the number of customers you have. So, to make more money, either increase the value or the volume … although typically it’s easier to increase value than volume – that’s a basic law of marketing.
Here’s how MSP owners can apply the Ansoff Matrix to their marketing efforts to increase both value and volume.
Understanding the Ansoff Matrix
The Ansoff Matrix is divided into four quadrants, each representing a different growth strategy. You can draw it easily enough by drawing a horizontal line which bisects a vertical line – in much the same way as you’d have an X and Y axis on a graph. What we’re looking to do is to put the relevant opportunities into the relevant quadrants and look for where the opportunities are.
I like to remember the Ansoff Matrix simply as a ready reckoner for People and Products. People are existing customers or new customers while products are either existing products or new products.
So, this means that you can sell existing products to existing clients – i.e. your safest bet.
Your next safest bet is to sell new products to existing clients.
The next safest bet is to sell existing products to new customers.
And lastly, the riskiest option is to sell new products to new customers.
These don’t quite go “around the board” in a clockwise way and I’ve seen different representations of how to do it, so I’ll stick with the following way but you can do whichever you want.
Obviously, each of these quadrants will have their own strengths and weaknesses, with risk and reward being the driver for attempting to maximise sales in each quadrant.
So, to map it out, along the Y axis – i.e. the line that goes vertically, we have the dimension of people in terms of markets, with existing markets at the bottom and new markets at the top.
Along the X axis, we have the dimension of products, with existing products on the left-hand side and new products on the right-hand side
Each of the four quadrants just mentioned has a label in the Ansoff Matrix.
- Market Penetration: Selling existing services to existing customers.
- Market Development: Selling existing services to new markets or customer segments.
- Product Development: Offering new services to existing customers.
- Diversification: Introducing new services to new markets.
Applying the Ansoff Matrix to MSPs
1. Market Penetration
For MSPs, market penetration involves increasing sales to current clients by offering more services (i.e. Up-Selling).
Strategies for Market Penetration.
The obvious place to start is by enhancing customer relationships through personalised service, regular security audits and technology health-checks.
Basically, this means increasing time spent client-side (or at least on the phone) and looking where the “daylight” is within your client sales matrix – i.e. stuff you could sell and stuff you should sell and stuff that you actually do sell.
- These regular audits can be augmented by implementing regular performance reviews and customer feedback loops – i.e. reviews and testimonials, leading towards more referrals.
- Investing in staff training to enhance service delivery.
- Upgrading technology such as your PSA and other tools to ensure top-notch service and therefore enable you to charge premium pricing.
2. Market Development : Selling Existing Services To New Clients.
Market development focuses on identifying new segments or geographical areas where the existing services can be offered. New geographical area can be uncovered for example if you start targeting your marketing from Gloucestershire to Oxfordshire and aiming further away from your base.
You could open up another office in a different location. Or you could buy a company in another region. Or you can joint-venture with a complementary business partner in another location – perhaps a digital printing company or an Epos provider that covers different areas. There are plenty of options here – you’re certainly not just restricted to marketing your own geographical area and (smart) marketing to other areas is just a case of piggy-backing on other peoples’ marketing.
New segments could mean target-marketing a particular vertical such as recruitment companies or law-firms and then trying to be a bigger fish in a smaller pond. The only trouble with that of course is that very often, these ponds can still become quite congested so researching niches that are underserved will be time well spent here.
On that note, there are of course entirely novel industries that are emerging all the time and these may well have everything to play for because there are no incumbents to get in your way. Have a think about what’s happening on the horizon – autonomous vehicle companies, agri-tech companies, sustainable-energy providers or educational-technology startups – these are just a few ideas just off the top of my head.
3. Product Development.
Product development involves creating new services (or enhancing existing ones) to meet the evolving needs of current customers. In other words, Cross-Selling. These could be your own products and services or other companies products and services.
Remember, it’s almost always easier to sell to your existing clients than new ones (often by a factor of around 10) so selling your existing clients anything and everything that is relevant, helpful, affordable and ethical is not only good business but is actually your duty towards them as a trusted supplier and also your duty towards your shareholders – even if the shareholder is only you!
I’ll not dwell on selling new products to existing clients because it’s beyond the scope of this insight, other than to say that it obviously involves keeping abreast of new technologies and trends in the MSP world and once again having regular meetings with your clients to communicate with them.
Diversification is the most ambitious growth strategy, involving both new markets and new services and for that reason, I’d only embark upon this if you’re sure that the other three quadrants are being well met and that you’ve stagnated with your existing products or hit a plateau with selling to your existing clients. Diversification requires careful planning, investment, and a willingness to venture into unfamiliar territory.
Remember, unless you’re Elon Musk, Always Start Off With Existing Customers and Work Outwards.
The Ansoff Matrix provides a clear framework for MSP owners to evaluate and pursue growth opportunities and by looking at each quadrant you can see where the so-called red oceans and blue oceans are in terms of competition and opportunity and associated risk.
In short, it can you develop short, medium and long-term strategies accordingly for whichever quadrant you wish to focus on and develop a miniature strategy for each – which will give you clarity, focus and direction.
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