eat their lunch, MSP

Why MSPs Need “Fourth-Order Value”

eat their lunch, MSP

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Any MSP who doesn’t see that the IT market is getting more competitive year over year isn’t paying attention. But you’re paying attention, because you’re reading articles written by a guy who is obsessed with leveraging competitive advantages.

One key way to gain an advantage over the MSPs who aren’t paying attention is to focus on delivering fourth-order value to your clients. Like most strategies that actually work, it’s not always easy to execute. The concept is fairly simple, though, and we’re going to discuss some ways MSPs can make it considerably easier.

The YSE team has been working with a few other channel experts on a comprehensive guidebook to starting, running, and scaling an MSP in 2021. We’re not recycling the old tips and techniques that have been kicking around for the last twenty years (that’s not our style), but starting from the ground up to bring you the most actionable and current information you need to gain a competitive edge.

This process has naturally involved a lot of brainstorming sessions. In a recent call, the topic of “Level Four Strategic Value” was mentioned, and it made me remember just how insanely important this little concept is to MSPs right now.

You may recognize this term from Anthony Iannarino’s book, Eat Their Lunch, an all around good read when it comes to positioning a B2B business. Internally, we’ve been referring to the concept as fourth order value for several years. And in 2021, we haven’t talked about it directly very much because the concept is built into the DNA of our REMIX Marketing methodology.

In concept, if not in name, it forms an important pillar in making our brand strategy approach work so well. That said, I knew I had to publish an article reminding MSPs how important this concept really is, how to leverage it, and how to take some of the headache out of figuring it out on your own.

MSPs and Strategic Value

You’re almost certainly familiar with many of the terms from the book. Trusted advisor. Strategic partner. These terms show up on nearly every MSP website we’ve ever looked at.

The issue is that using the term is not enough. There seems to be a common misconception that the words themselves are some kind of magic talisman that converts prospects into signed agreements…but they’re not. These are actually titles that must be earned, and fourth order value is the means by which this is done.

A Crash Course on the Continuum of Value Creation

The reason why this is a “level four” or “fourth order” concept is because it falls on the far right-hand side of a continuum. Iannarino calls this “the Continuum of Value Creation”:

Product

Level I
What you sell. For example, "we offer Office 365, cloud migration, hosting, and backups."

Service

Level II
The service that accompanies the sale. For IT companies, that also means ongoing monitoring and maintenance. For example, "We have good response times and update all of your software remotely."

Benefit

Level III
How the customer benefits from the sale. For example, "We take care of IT so you can focus on your business."

Strategy

Level IV
Giving relevant advice and guidance. This requires working knowledge of the customer's needs, and hinges on anticipating what can help them improve their unique situation. For example, "We've worked with your type of organization before, and you're probably seeing this issue. Good news, we've already developed a process for making that painless."

When you’re selling from any of the first three positions, you’re easily commoditized. Every MSP has the products. Every MSP offers similar service. The benefits are pretty homogenous. (Hence why MSPs should be serious about figuring this out. This is a huge problem.)

Being — not saying that you are, but being — a strategic partner is what gets you out of that swamp.

Moreover, we’re told that selling from the left — as in leading with your products, moving on to service, and then talking about benefits — sets you up immediately as a commodity regardless of whether or not you can follow it with strategic advantages.

You want to sell from the right. Lead with your strategic advantages, then allow the rest to follow. This establishes you as a strategic partner first, rather than forcing you into the perception of being a commodity so that you have to dig your way out later. 

Finding Your Strategic Advantages

Over the years, we’ve determined why so many MSPs are quick to say that they’re trusted advisors or strategic partners, yet fail to actually come across as either. 

It’s hard. 

Rest easy, though. I’m going to share a huge, helpful hint for how we do it in our agency.

The reason it’s so hard for MSPs to define their strategic value is almost always that they’re going too wide with their thinking. Again, this is why targeting and specialization is so very important when positioning a business. Going wide rarely works out well.

If you try to think “how am I strategically superior to all people, in all situations, in everything IT related”, you’re probably going to hit a wall. Most MSPs do, and they stop.

But your fourth order value doesn’t have to be a catch-all. You can have more than one, and you can adapt them to varying situations. Maybe you can offer above-and-beyond strategic value when it comes to changing IT companies. Or maybe you can offer extraordinary strategic value when using technology to improve customer experience at veterinary clinics. 

If you narrow your scope, you’re much more likely to come up with an actual reason that you’re a strategic partner and not just an IT company.

And don’t get trapped in the box of thinking purely like an IT professional. You have to think like a client when you’re working on concepts like this. I can’t tell you how many times we’ve worked with an MSP who was essentially hiding their strategic value from end-users because they didn’t think it was important. This is marketing, and in marketing it doesn’t matter if you think something is important. It only matters that your audience does.

To summarize, every MSP should be thinking very seriously about this concept of fourth-order value. I’m going to use a term I hate, but products and customer service can’t be “your secret sauce”. (Ugh.) Your differentiators, your unique value, your competitiveness, will come from providing that highest level of value to your clients.

And once you do, you can honestly call yourself a strategic partner. 

 

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