The Top MSP KPIs and Metrics You Should Measure as a Managed Service Provider

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When you’re running an MSP, it’s easy to lose sight of the bigger picture. You’re fighting fires, managing people, dealing with clients, and the million-and-one other things a business owner does. This means that weeks or even months can go by, without taking the time to really assess the health of your business.

And this is why MSP KPIs are so valuable. By selecting a handful of appropriate key performance indicators (KPIs), you can quickly understand how your company is really doing.

Let’s learn more about MSP KPIs, what they can (and can’t do), and how to choose the right ones for you.

What Are MSP KPIs?

Key performance indicators are metrics that any business can use to measure its performance. They provide an objective and repeatable benchmark of business activity and, over time, let you measure progress.

Some KPIs are universally valuable (for example, any company will want to measure gross profit margin), but others are much more relevant to specific industries. or instance, FCRC (first contact resolution rate) is a valuable MSP KPI – it shows you how quickly tickets are being solved. On the other hand, inventory KPIs – which are widely used in retail or manufacturing businesses – would usually be less relevant to a managed service business.

The ‘Art’ of Choosing MSP KPIs

There are literally hundreds of recognised KPIs that businesses could use to measure their performance. So, how do you select the right ones for you?

According to PwC research, “between four and ten measures are likely to be ‘key’ for most types of company”. This is a good rule of thumb. Every business is different, but a number of KPIs in this range gives you plenty of insight, but without becoming overwhelming.

When choosing KPIs for your MSP, there are other issues to consider too:

Data overload: Choose too many MSP KPIs, and you end up ‘drowning in data’. You can have dozens of metrics, but it quickly becomes difficult to understand what they’re telling you.

For example: An MSP tracks 30 KPIs and produces a weekly report showing large amounts of data and points. This leads to information overload, where people can’t ‘see the wood for the trees’.

The metrics mirage: Many measures tell you very little about the health of your business. But counting them can give people a sense of security. Nevertheless, they can easily confuse analysts, breed complacency, and block out more important signals.

For example: An MSP has dozens of KPIs showing it resolves tickets extremely fast, so feels it must be doing well. However, if they looked at customer satisfaction data, they might discover that this focus on speed means clients feel they are getting a very basic service – and are more likely to go elsewhere.

Management by spreadsheet: An overreliance on KPIs means that employees are managed in an entirely data-driven way. This is often helpful, but can mean important information gets missed.

For example: The data may show an employee spends too long answering customer emails. But if she is fostering deep customer relationships that ultimately means customers trust your business more, then she’s actually doing something very beneficial.

Irrelevant KPIs: It is very easy to select KPIs that are irrelevant to what your business really does. This means you won’t be tracking the information that matters.

For example: An MSP start-up with 10 employees decides to track ‘time to close’ on deals – even though they don’t yet have a sales team. This might be a valuable metric for some MSPs. But for a tiny start-up, other KPIs such as ‘cost per ticket’ are usually much more meaningful.

Writing on the Tech Tribe portal, contributor Felicia King points out that while KPIs are invaluable, it’s very important to choose the right ones for your context:

I caution against becoming a spreadsheet driven company. I’ve seen plenty of orgs dig their graves with that approach. In each of those instances, the KPIs they selected were just wrong. It’s not [because] they were trying to be driven by KPIs [that things went wrong], but that they picked the wrong KPIs.

Felicia King, President and CISO, QPC Security

Top MSP KPIs You Should Consider Tracking

As mentioned above, there are dozens of potential key performance indicators that an MSP could track. Deciding on which is right for you will, ultimately, depend on your business strategy, niche, values and management style.

Here, we’ve listed some of the most important MSP KPIs, divided into categories.

MSP Operational KPIs

The following MSP KPIs help you to monitor the health of your operations. This is, after all, an essential part of what a managed service provider offers.

SLA Compliance

This is a measure of how many cases you’ve solved in relation to the metrics in your Service Level Agreements.

Network KPIs

There are several KPIs related to the networks you monitor, including:

Network uptime percentage
Issues prevented
Devices monitored

Cybersecurity KPIs

There are also numerous KPIs that MSPs who offer cybersecurity services might want to monitor:

Number of security breaches on client systems
Time to detect and respond
Number of data compliance issues discovered

Ticketing KPIs

Similarly, there are several ticketing-related KPIs an MSP could measure:

First contact resolution rate (how many tickets are solved the first time a customer gets in touch)
First level resolution rate (how many tickets are solved by the first level of MSP support staff)
Mean time to ticket resolution

MSP KPIs for Customer Satisfaction and Retention

A business can only grow if its customers are satisfied. It’s therefore useful to track at least one customer satisfaction or onboarding KPI.

Net Promoter Score (NPS)

NPS is a simple but effective metric used to measure customer satisfaction. You send customers a survey asking how likely they are to recommend you.

Churn Rate

This refers to the percentage of customers that stop subscribing to your service over the course of a year.

Return On Investment (ROI)

ROI can be a little tricky to measure, but if you can demonstrate the cost savings you make for customers (e.g. by not hiring their own IT staff, cybersecurity breaches avoided, IT vendor contracts renegotiated etc.), it can serve as a valuable tool.

Financial MSP KPIs

There are many financial KPIs that MSPs can really benefit from measuring.

Gross Margin

This is perhaps the most important of all KPIs. This is your revenue after all costs (overheads, staff, hardware, office lease, etc.) are removed. It tells you how profitable your business really is.

Cash Flow

A steady cash flow is vital to the health of any business. What percentage of your invoices are being paid on time? And are you able to pay your own bills? Without proper cash flow management, even successful businesses can fail.

Monthly Recurring Revenue (MRR)

Most MSPs offer their services on either a monthly or annual retainer. So, tracking monthly recurring revenue is vital. Whether it’s going up, down, or staying the same, it gives a very good insight into business health.

Related: MSP Pricing Considerations

MSP Marketing and Sales KPIs

If you want your business to grow, it’s vital to measure how your MSP marketing and sales teams are doing. Here are some of the most effective KPIs in this domain.

Cost Per Lead

This tracks how much you spend on marketing to generate qualified leads. How much do you have to spend on ads, events, content or webinars to generate a single lead?

Sales KPIs

Depending on the size of your sales team, there are many measures of sales effectiveness:

Time to close deals
Close ratio
Monthly sales growth
Calls per rep
Etc.

MSP Employee KPIs

It’s also very valuable for an MSP to track its people and staff morale. Here are some of the most valuable employee-related KPIs for MSPs.

Employee Satisfaction

Are your technicians (and other staff) happy at work? Burnout is a real issue in the tech industry, so a short (and anonymised) weekly/monthly employee satisfaction survey can be very valuable.

Technician Productivity Rate

What percentage of time are your employees working on billable activities?

MSP KPI Pitfalls to Avoid

If you’re planning to introduce KPIs to your managed service provider business, there are a few important pitfalls to avoid.

Being Unrealistic About Metrics And Expectations

Every business owner wants to see their company improve against KPIs. But it’s important to be realistic here too.

For example, you may set a ‘mean time to ticket resolution’ KPI of 60 minutes. However, this may simply be untenable if there just aren’t enough resources.

It’s therefore important to do your research on what’s viewed as ‘standard’. For example, discussions on Reddit’s MSP board, as well as industry blogs, suggest that resolution time of between two and 24 hours is typical. Unless you have an innovative new process, it’s unrealistic to demand faster resolutions.

Being Fair About KPIs

On a related note, it’s essential to be fair when introducing KPIs. If a new KPI would significantly change an employee’s responsibilities or job description, then this needs to be recognised (i.e. through a new job title, updated contract, or compensation).

Similarly, it’s important to choose reasonable KPIs. For example, an MSP marketing professional cannot be blamed for a high cost per lead if the business lacks experienced sales staff.

Track Data Properly

MSP KPIs only have value if the data you’re tracking is accurate and consistent. Discussing this very issue on Paul Green’s MSP Marketing Edge podcast, Paul explains:

You’ve got to make sure the information is good quality because of the phrase: ‘crap in, crap out’. If you’re going to be tracking things like billable hours, or tickets opened and closed…there’s got to be a culture within the business of your technicians tracking data properly. Because if they’re not tracking data properly, they’re not billing the hours properly. If they’re not managing the tickets properly, then you’re going to get a skewed picture from your KPIs.

Paul Green

Learn more: Top MSP Challenges

Get The MSP KPIs You Need With Heimdal®

If you run an MSP business, it’s easy to get so caught up in the day-to-day management of the business that you forget to consider the bigger picture. And this is why MSP KPIs can be incredibly helpful. By selecting, measuring and monitoring suitable KPIs, you can get a reliable view of how your business is really performing.

heimdal platform

If your MSP provides cybersecurity or compliance services, then Heimdal® can help. Our platform provides our partners with easy to read dashboards and insights into a wide variety of metrics. At the click of a button, you can generate reports that summarise many common KPIs, such as:

Intrusion attempts
Unidentified network devices
Security incidents
Mean Time to Detect
Mean Time to Resolve
Mean Time to Contain
Secure score
Vulnerabilities patched
…and much more

Our Unified Security Platform is a reliable solution that allows you to easily monitor threats and solve issues in record time. Packed with top-notch features, you will have at your disposal 24/7, from anywhere in the world, tools such as:

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Frequently Asked Questions About MSP KPIs

We’ve answered some of your most common questions about KPIs for managed service providers:

How many KPIs should my MSP be tracking?

It really depends on the size of your business, your strategy and your niche. But, as a rule of thumb, it’s optimal to track somewhere between four and 10 KPIs. This will give you plenty of detail about business health, but without overwhelming you with data that can be hard to draw insights from.

How should I choose KPIs for an MSP?

Many MSPs, understandably, focus primarily on KPIs related to their managed services. And it definitely makes sense to track things like ‘mean time to respond’ to tickets. That said, it’s also useful to measure business health by tracking ‘signals’ from across all parts of the company – including financials, customer satisfaction, sales and marketing.

Say you decide to track eight KPIs. Four of these could be related directly to MSP operations, but the rest could track equally important things like staff satisfaction, cash flow, or marketing productivity.

Another tip is to track ‘weak’ areas. If, for instance, you’ve noticed you don’t get much repeat business, then it would definitely make sense to track churn.

How often should I check my MSP’s KPIs?

While it depends on the size and specifics of your business, it’s most common to review KPIs on a quarterly basis. This gives you enough information to identify clear trends, without being distracted by data from the usual ups and downs of business.

Who is responsible for compiling MSP KPI data?

It depends on the company and its size. At smaller MSPs, the head of operations or an office manager may take responsibility. At larger MSPs, departmental heads generally compile data from their own domains and present it to the board.

How should I react to negative KPI data?

If your MSP’s KPI data shows a negative trend – such as a drop in sales, an increase in security incidents, or unhappy customers – it’s vital to investigate and respond.

Remember that it’s important to take the time to understand why something is happening first. For example, a short term drop in sales might not necessarily be a problem if you’re currently going through a change in business strategy.

But it’s important to discuss with employees, customers and external contractors to understand the underlying causes of unexpected negative trends – and rectify the underlying causes.

Cristian Neagu

CONTENT EDITOR

Cristian is a Content Editor & Creator at Heimdal®, where he developed a deep understanding of the digital threat landscape. His style resonates with both technical and non-technical readers, proof being in his skill of communicating cybersecurity norms effectively, in an easy-to-understand manner.