Tracking MSP Business Performance with Metrics

Running a managed service provider (MSP) business is no small feat. It’s like balancing multiple spinning plates—efficiency, client satisfaction, employee productivity, and, of course, revenue growth. But how do you really know if your efforts are paying off? The answer lies in tracking the right performance metrics.

Without these metrics, you’re essentially flying blind. Metrics empower MSP owners to understand the health of their business, identify weak spots, and make decisions that lead to growth and profitability. Think of them as your business's dashboard—illuminating how each part is performing and where you need to focus your attention.

This guide will walk you through the essential metrics every MSP business owner needs to track, how to effectively collect and analyze them, and how metrics can transform your business planning and decision-making. By the end, you’ll have actionable insights to take your MSP to the next level.

Key Metrics for Measuring MSP Performance

Not all metrics are created equal. Measuring the wrong ones can waste time and provide little value, but focusing on the right ones? That’s where the magic happens. Here are the core metrics that paint a picture of your MSP’s overall health and performance.

Monthly Recurring Revenue (MRR) and Churn Rate

Why it matters: 

MRR is the backbone of any MSP business. It provides a consistent stream of predictable income that enables better financial planning. On the flip side, churn rate shows how many clients are leaving your service, which directly impacts MRR.

• How to calculate: Add up the revenue earned from all recurring contracts (exclude one-time projects for this metric). 
• Example: If you’re generating $50,000 MRR but facing a 5% monthly churn rate, you’re effectively wiping out $2,500 in gains each month.

Pro Tip: Aim for upselling and cross-selling strategies to increase MRR while maintaining low churn rates. Happy customers rarely leave!

Customer Acquisition Cost (CAC) and Lifetime Value (LTV)

Why it matters: 

How much are you spending to win new clients, and how much revenue does each client bring over their lifetime? Comparing these metrics is crucial to assess whether your marketing and sales strategies are paying off.

• How to calculate CAC: Divide your total marketing and sales expenses by the number of clients acquired in a specific period. 
• How to calculate LTV: Multiply the average revenue per client by the average lifespan of your contracts. 

Example: If your CAC is $3,000 and your LTV is only $2,500, you’re spending more on acquiring clients than you’re earning from them. Time to optimize your sales funnel!

Service Level Agreement (SLA) Metrics and Response Times

Why it matters: 

Clients don’t just pay for IT services—they pay for peace of mind. SLA metrics track whether you’re delivering on your promises, especially response and resolution times.

• Examples of SLA metrics: First response time, mean time to resolution (MTTR), and percentage of SLA breaches. 
• Target: Aim for industry benchmarks like responding within 5 minutes and resolving 80% of issues within the first hour.

Falling behind on SLA commitments can lead to churn and damage your reputation. Track these metrics to maintain high client satisfaction.

Employee Utilization and Customer Satisfaction Score (CSAT)

Why it matters: 

Your employees and clients are your two biggest assets. Employee utilization measures how effectively your technical team’s time is being used, while CSAT reflects customer happiness.

• Employee Utilization Formula: Billable hours divided by total available hours. 
• CSAT Survey: Ask clients to rate their satisfaction on a scale (e.g., 1–5). 

Pro Tip: Strive for a balance—overworked employees lead to burnout, which can affect CSAT scores. Happy employees = happy clients.

How to Collect and Analyze Performance Metrics

Tracking metrics is only half the battle. To truly thrive, you need an effective system for collecting and analyzing data.

Choosing the Right Tools and Software

There’s no shortage of software designed for tracking MSP metrics. Tools like ConnectWise, BrightGauge, and DataBox offer real-time data dashboards that enable better decision-making.

Look for tools that integrate seamlessly with your existing business management software. Bonus points for software that includes customizable reporting features, so you get insights tailored to your unique needs.

Best Practices for Data Collection and Analysis

• Keep it simple: Don’t try to track 50 metrics at once. Focus on the ones that will have the most strategic impact. 
• Use automation: Leverage tools to automate data collection—manual entry can lead to inaccuracies. 
• Set benchmarks: Measure your metrics against industry standards or your past performance to understand where you stand. 
• Schedule regular reviews: Review your data weekly or monthly to ensure you’re on track toward your business goals.

The Role of Metrics in Business Planning and Decision Making

So, you’ve collected your data, but now what? Metrics are much more than numbers on a spreadsheet—they are your blueprint for making informed, strategic decisions.

Identifying Areas for Improvement and Growth

Metrics reveal patterns that you might otherwise miss. For example:

• High churn rate? Time to revisit your onboarding and service delivery processes.
• Low employee utilization? Your team might be overstaffed or lacking direction.
• Falling CSAT scores? Clients could be unhappy with your responsiveness or quality of service.

By identifying these weak spots, you can implement targeted strategies to address them and boost overall performance.

Making Data-Driven Decisions

Forget gut instincts or guesswork—data-driven decisions are proven to yield better results. Whether it's setting pricing strategies, allocating resources, or identifying cross-selling opportunities, your metrics arm you with the insights you need to act confidently.

For example, if your CAC is too high, you might revisit your marketing campaigns to focus on organic growth strategies. Or if your LTV is high, but churn is an issue, you might focus your resources on customer retention strategies like loyalty programs or proactive account management.

Transform Your MSP Business with Expert Guidance

Tracking metrics isn’t a luxury—it’s a necessity for MSP owners who want to remain competitive and profitable. But where do you start if your metrics are all over the place or you’re not sure which ones to prioritize? That’s where Bering McKinley comes in.

Our expert consultants specialize in helping MSPs just like yours make sense of their data, optimize performance, and grow their businesses. With years of experience guiding MSPs through data-driven decision-making, we offer strategies that deliver measurable results.