At this year’s ConnectWise IT Nation Connect ANZ conference, the keynote pulled no punches: most Managed Service Providers (MSPs) are falling well short of the growth benchmarks needed to stay competitive.
According to Service Leadership data, top-quartile MSPs are delivering average recurring revenue growth of 15.3%, with EBITDA margins north of 22%. In contrast, median MSPs are closer to 12% recurring revenue growth with EBITDA at 8.7%, and the bottom quartile are barely breaking even, with some dipping into negative territory. In fact, 23% of MSPs are unprofitable.
When you stack those numbers against the benchmark that most MSPs should be closing six new MSAs each year, the gap becomes glaring. Too many providers simply aren’t adding enough new contracts to build resilience, leaving them exposed to significant risks.
The Hidden Risk: Over-Reliance on Anchor Clients
For many MSPs, the bulk of their revenue comes from one or two “anchor” clients. That’s fine while things are stable, but what happens if one of those clients decides to switch providers, merge with another business, or cut IT spend?
Without a healthy pipeline of opportunities, losing a single key customer can create a massive revenue cliff – one that most businesses can’t climb back from quickly enough. It’s not just about profitability in the moment, but sustainability in the future.
The Plateau Effect: Growth, Stall, Decline
Another theme from the keynote was the idea of curve jumping. MSPs often experience early growth, then hit a plateau. The choices at that point are stark:
- Stay still and watch revenue stagnate.
- Slide into decline as costs rise and margins compress.
- Or deliberately make a curve jump by reinventing how the business grows.
Right now, the market is shifting into an “automate first” mindset, with AI tools embedding into PSA, RMM, and broader business functions. The MSPs who make the jump are already thinking about how to evolve contracts, streamline operations, and create new value propositions. But none of that matters without one critical piece: a marketing engine that ensures there are new customers to take advantage of these innovations.
Why Marketing Is the Missing Growth Engine
Here’s the uncomfortable truth: most MSPs don’t have a marketing problem because they’re “bad” at marketing – they have a marketing problem because they aren’t doing enough of it, or doing it consistently.
Marketing isn’t just about logos, brochures, or social media posts. Done right, it’s about building a repeatable, predictable engine that:
- Generates a steady flow of leads.
- Positions the MSP as a trusted expert (not just another IT provider).
- Reduces dependency on a handful of clients.
- Ensures the business can hit that six-MSA benchmark every year.
The top-quartile MSPs are not only leveraging automation and operational efficiencies — they’re also investing in professional, data-driven marketing strategies that fill their funnel with qualified opportunities. That’s why their revenue and profitability numbers look so different from those in the bottom quartile.
What Happens If You Don’t Address the Gap
Think back to that startling stat: 23% of MSPs are unprofitable. Many of these providers are great at technical delivery. Their customer service may even be outstanding. But when growth depends on a few anchor clients, or on word-of-mouth referrals alone, the business becomes fragile.
It’s not a question of if a major client will churn, it’s a matter of when. And when it happens, the lack of a strong marketing-driven pipeline means there’s no safety net. That’s why marketing isn’t just about growth, it’s about resilience.
The Next Curve Jump Belongs to the Marketers
We’re entering a period where MSPs will need to redefine their value through automation, AI, and new service models. But none of those innovations will matter without customers ready to buy. That’s where marketing steps in.
- Marketing is how you educate prospects about your differentiation.
- Marketing is how you build a reliable funnel of opportunities.
- Marketing is how you protect your margins and avoid the cliff edge when a client leaves.
If the benchmark is six new MSAs a year, the only way to consistently achieve it is with a deliberate, well-executed marketing strategy.
The Provocative Question
So here’s the challenge every MSP leader needs to face:
If one of your top clients churned tomorrow, would your pipeline protect you or expose you?
If the answer makes you uneasy, it’s time to look at marketing not as an optional extra, but as the medicine your business needs to stay profitable, resilient, and ready for the next curve jump.
