Back in 2006, Barry Schwartz threw a curveball at the conventional wisdom of satisfying customers by giving them exactly what they want. In his Paradox of Choice, Schwartz argues convincingly that less is actually more. Surprisingly, an abundance of choices confuses consumers and depresses sales.
This dilemma isn't unique to consumer products; it's a hurdle that many in the fast growing Managed Service Provider (MSP) sector face as well. It's all too easy to fall into the trap of offering a vast array of services to meet diverse customer requirements. While this might seem customer-centric, it results in a complex service portfolio that becomes challenging and unwieldy to manage.
The consequences of this complexity are threefold:
1. Damaged Customer Experience (CX): Customer success teams struggle to support multiple variations of an offer leading to a decline in overall satisfaction.
2. Higher Costs: Managing multiple offerings increases costs as streamlining support and other key activities becomes a difficult, if not impossible,task.
3. Scale Ceiling: Successful scaling relies on streamlined processes and standardization. Customization, which drives offer complexity, stands in stark contrast to standardization and hinders growth.
So, why do MSPs find themselves in this complexity quagmire? Several reasons standout:
· Expansion without Focus: In the pursuit of top-line growth, MSPs expand offerings without a clear strategic focus, prioritizing sales at all cost.
· Failure to Standardize: Complexity management requires intent and tough choices. Treating each customer as an edge case makes it nearly impossible to scale operations efficiently.
· Unmanaged M&A: Mergers and acquisitions can lead to a mix of offers, systems, and processes, creating a web of complexity when not integrated seamlessly.
How can MSPs navigate this complexity minefield? The key is to simplify the complex. Here are three impactful steps to start:
1. Customer Profitability Analysis: Determine which customers are profitable and which are not through a well-executed cost-to-service analysis.
2. Customer Segment Prioritization: Assess the profitability of customer segments based on their distinct needs, service requirements, and growth potential prioritizing those that align best with your offering capabilities.
3. Complexity Creep Management: Regularly review the offer portfolio to adapt to evolving customer requirements and competitive pressures, maintaining ongoing standardization.
Ironically, the pursuit of"customer delight" often leads MSPs into a realm of too much choice and complexity. The solution? Simplicity itself.
