MSPs operate in a highly competitive environment. To stay ahead, the right metrics need to be tracked for scalable, sustainable growth. Below are five key performance indicators that MSP owners should keep track of to fuel growth, drive profitability, and maintain a competitive edge. These metrics provide a data-driven foundation for decision-making, aligning operational strategies with long-term goals.
1. Customer Satisfaction and Retention Rates
Value to customers, translates into direct customer satisfaction. A satisfied client to MSPs means they will come back to the same vendor. Moreover, it will lead to referrals of the business. The statistics in a research study from HubSpot revealed that increasing customer retention by 5% could boost profit between 25% and 95%. Typically, retaining customers is less expensive than finding new clients. The measure of growth that matters to every MSP must therefore include tracking the rate of retention.
- What to Monitor: client contract renewal percentage, Net Promoter Score, and customer survey results
- Practical Scenario: Evolve IP, an MSP based in the United States, had managed to retain 98% of its clients through focusing on customer satisfaction and proactive support.
2. Revenue Growth Rate
Revenue growth represents one of the most direct measures of your business's potential for financial health and scalability. For instance, Statista has estimated the US IT services industry, of which MSPs are a part, to grow up to $425 billion by 2026, growing at a rate of 6.2% annually. Regularly monitoring revenue growth, including this against the industries that should typically be averaged, will help MSP owners realize whether their business strategies are in line with market demand.
- What to Track: Monthly or quarterly revenue, year-over-year revenue growth.
- Real-life Example: Mediavine, a rapidly growing MSP in the US, increased by 35 percent year-over-year through diversification in service offerings and focus on serving small to medium businesses.
3. Average Revenue Per User (ARPU)
It is only by knowing how much revenue each client contributes on average that profitability can be maximized. ARPU, in fact, allows MSPs to understand how much they are earning per customer and identify upselling and cross-selling opportunities of other services. Deloitte states that the average ARPU in the US tech services industry has increased 4.5% year-over-year, which indicates that MSPs are discovering new ways to extract revenue from existing clients.
- What to Monitor: Monthly or annual revenue per client, segmented by service.
- Actual Example: VirtuIT Systems, a US MSP, grew its ARPU by 20% in one year through the addition of cloud services and advanced cybersecurity packages for mid-market businesses.
4. Churn Rate
A high churn rate is a critical signal that something is wrong—whether it’s service quality, pricing, or client communication. According to Gartner, the average churn rate for MSPs in the US is about 10-15% annually. While low churn is ideal, understanding why clients leave is crucial for addressing underlying issues and improving retention.
- What to Track: Percentage of clients leaving or failing to renew their contracts within a set period
- Real-life Example: Atlantic.Net is an MSP operating in the United States to service SMBs. It improved the churn rate by 40% by upgrading the onboarding processes and more touchpoints to engage with the client, with proactive support, hence preventing the chances of dissatisfaction.
5. Operational Efficiency
This measures the capacity of an MSP to maximize use of available resources in rendering services. The Harvard Business Review indicates that operational efficiency improvement can be paralleled to increased profitability in terms of 15-20%. Operational efficiency allows the tracking of bottlenecks, to streamline workflows, reduce overhead costs on operations and generally pass the benefits toward delivery of faster, reliable services, which positively impact client satisfaction and retention.
- What to Monitor: Ticket resolution time, downtime per client, and employee productivity.
- Real-life Example: Dataprise, a top MSP, increased operational efficiency by 30% through AI-powered automation for ticket management and proactive system monitoring, resulting in faster response times and reduced manual effort.
Why These Metrics Matter
These five metrics are crucial for maintaining profitability, improving service delivery, and scaling your MSP business. With the industry in constant evolution, MSPs embracing data-driven decision-making and tracking key metrics will be better equipped to adapt to changing market dynamics. These KPIs do not only help guide operational improvements but also build a culture of accountability and customer-centric growth.
Take Action Today
As an MSP owner, monitoring these key metrics allows you to make informed, data-backed decisions that drive growth. By actively assessing customer satisfaction, revenue growth, ARPU, churn, and operational efficiency, you’ll build a robust foundation for long-term success.
Don’t wait for growth to happen—start tracking these metrics today and take your MSP business to the next level.