A practical playbook for MSPs to hit 51% Service Gross Margin
Growth doesn’t come from gut feel.
The highest-performing MSPs don’t win because they’re lucky, or because they stare at flashy dashboards.
They win because they track the right numbers, the ones that drive profit, focus teams, and de-risk the business.
Most MSPs fall into “KPI chaos.” They measure too much, the wrong things, or numbers no one acts on. The result: noise instead of clarity.
This guide shows you how to cut through that chaos. Inside you’ll learn:
- Why data-driven MSPs grow faster and avoid costly mistakes
- Which benchmarks separate “average” from “best-in-class”
- How to build KPIs that create accountability without killing culture
- Simple roadmap for turning data into decisions, and then into growth
By the end, you’ll know exactly what to measure, why it matters, and how to build a business that scales.
Contents:
FREE Download: KPIs That Drive Profit
Why Data-Driven MSPs Win
The top-performing MSPs don’t run on gut feel, they run on numbers that actually matter. Data answers the most important question:
Are we on track to hit our long-term goals?
But data alone is useless unless you turn it into action. To make it valuable, you must:
- Keep It Visible: Numbers should live across the whole business, not buried in board packs.
- What Good Looks Like: Every role should know the target that defines success for them.
- Make It Meaningful: KPIs only work when people see how their daily effort moves the business forward.
When numbers are accurate, simple, and linked to strategy, decision-making speeds up, people stay engaged, and growth compounds.
Less Is More: Escaping KPI Chaos
The #1 mistake MSPs make? Measuring everything. Dashboards crammed with 30+ metrics don’t give clarity – they create noise.
Remember this rule: fewer, better KPIs.
- Actionable: If no one can influence it, don’t measure it.
- Limit: 12–15 key KPIs max at leadership level. Beyond that, clarity dies.
- Don’t Overload: Share numbers with teams, but don’t drown frontline staff in endless stats.
Clarity beats complexity. With fewer, better KPIs, leaders can spot problems faster, teams know what to focus on, and MSPs scale without chaos.
Processes That Actually Drive Profit
Not every process moves the needle. The MSPs that scale focus on three financial levers that reveal how efficient and profitable they really are:
- Revenue: Recurring MRR, project revenue, and the split between recurring vs. non-recurring.
- Cost: Direct labour, tools, licences, and delivery overheads.
- Service Gross Margin: The most important: how profitable your core services are after all hard costs & labour.
Get these wrong and no KPI system will save you. Get them right and everything else compounds.
What “Best-in-Class” Really Looks Like
Wondering if your numbers are good enough? Stop guessing. Service Leadership’s global dataset shows the benchmarks that the top MSPs hit consistently:
- 21% Net Profit: Not theory. Not opinion. Real-world MSPs are hitting this and you can too.
- 51% SGM: This is the critical benchmark. It bakes in revenue, tool costs, and fully-burdened labour.
- Revenue + Operations: Best-in-class MSPs don’t sacrifice one for the other. They grow both, while keeping processes tight.
Most MSPs never hit 21% net profit. Dovetail did by fixing their KPIs.
Want the playbook? Read it here.
Bad Data Will Bankrupt You
You can’t scale on bad numbers. In fact, flawed data is worse than no data at all. Accuracy comes down to three things:
- Processes: Time, costs, and tickets must be allocated to the right service line, no exceptions.
- Systems: Your PSA, RMM, and finance tools only help if they’re used consistently and in sync.
- Discipline: Teams log correctly. Leaders review regularly. Every time.
Only when this foundation is solid can leaders see whether inefficiencies come from training gaps, bloated tool costs, broken processes, or misaligned pricing.
One MSP discovered their PSA had been lying to them for years. After fixing the data, they clawed back 40+ hours every month. The full story will make you rethink your reports. Read it here.
The CSAT Illusion
CSAT is the most overrated KPI in MSPs. Why? Because it’s easy to fake and often meaningless.
The reality:
- Customers only respond when they’re very happy or very angry, everything else is silent.
- Engineers “coach” clients to press green before closing a ticket.
- High CSAT doesn’t equal loyalty, growth, or retention.
- A better metric: Response Rate. The more clients that answer, the clearer the truth. Stop chasing vanity metrics. Track what’s useful, not what looks good.
How KPIs Make or Break Your Culture
Every KPI drives behaviour – whether you mean it to or not.
- Speed Over Quality: Chasing ticket volume pushes engineers to rush jobs.
- Discounting Risks: Measuring only sales volume fuels low-margin, price- cut deals.
- False Utilisation: Over- emphasising utilisation makes staff fill time instead of adding value.
To avoid these behaviours, do this:
- Explain the “Why”: People don’t buy into numbers, they buy into purpose. Show them the bigger picture.
- Align with Value: Every metric must link to customer impact and business goals.
- Aggregate Wisely: Don’t obsess over raw stats that distort reality. Use measures that reveal the whole picture.
Patrick Lencioni’s book ‘The Three Signs of a Miserable Job’ nails it: people need autonomy, purpose, and to know what a good day looks like.
Your KPIs should provide that clarity – not kill it.
Focus on the Few That Drive Growth
Every department has a hundred things it could measure, but only a handful that truly move profit, efficiency, and scale. These are the KPIs that matter for Finance, Operations, Sales, and Marketing.
Finance
- MRR: Predictability is survival. Recurring revenue funds growth.
- Debtor Days: Cash locked in receivables = risk. The shorter, the stronger.
- Cash Flow & Liquidity: Cash is king. Without it, scale stalls.
Operations
- SLA Compliance: Keeps promises, builds trust.
- First-Time Fix %: Fewer callbacks = happier clients + lower costs.
- Average Resolution Time: Every hour saved is productivity gained. SLA compliance rates.
Sales
- Pipeline Coverage (3x quota): The oxygen for hitting targets.
- Win Rates: Proves you’re positioned right in the market.
- Churn Rate: Growth doesn’t matter if you can’t keep what you sell.
Marketing
- Lead Volume: No leads = no pipeline.
- Conversion Rates: Vanity is volume; reality is conversion.
- Cost per Lead: Growth only works if it scales profitably.
Think Cloud doubled their MRR (50k → 100k). Same team. Same tools. Different KPIs. How? Read it here.
Not Every Client is Worth Keeping
- Tier A: Profitable, low-risk clients with strong margins.
- Tier B: Steady, manageable clients. They pay on time, margins are average.
- Tier C: Unprofitable, high- maintenance clients. They burn resources and stall growth.
The key isn’t to fire every Tier C. It’s to fix them proactively, through tighter processes, tech upgrades, or small incremental price increases.
Done consistently, this avoids the pain of massive once-a-year hikes and creates steady, controlled improvement.
Making KPIs Actionable
KPIs are useless if they sit on a dashboard.
A good KPI must:
- Be owned by someone who can influence it.
- Trigger action when thresholds are crossed.
- Be reviewed regularly (if it’s always green, drop it).
Example: One MSP solved debtor days by automating direct debit + reminders. The KPI became irrelevant, so they replaced it with a new one that drove the next improvement.
KPIs aren’t permanent. They’re stepping stones. When one problem is solved, move to the next.
Dashboards Don’t Grow MSPs
Complexity kills clarity.
Too many MSPs waste hours creating board packs bloated with 30+ metrics. The result? More noise, slower decisions, less action.
The fix:
- Keep it simple. “Manage-to-zero” dashboards (green/yellow/red) make it easy to spot issues at a glance.
- Don’t obsess over arbitrary numbers — track variance from a baseline (zero). That way, changes jump out and demand action.
Dashboards should speed decisions, not slow them.
To succeed, build a culture where data is:
- Visible: Shared with the teams who can act on it
- Meaningful: Tied to purpose, growth, and career progression
- Aligned: Cascaded from strategy down to frontline actions
When people understand the why, they don’t just track numbers, they own them.
From Data to Growth
MSP growth doesn’t come from endless dashboards or vanity metrics. It comes from focus, discipline, and execution. To turn numbers into results:
- Set long-term goals – (5–10 years) and align KPIs to them.
- Measure less, but measure better – no more than 15 KPIs at leadership level.
- Ensure accuracy in both processes and data capture.
- Benchmark against best-in-class to set realistic, ambitious targets.
- Explain the why, so teams buy in and engage.
- Act on data because measurement without action is wasted effort.
When MSPs stop chasing dashboards and start acting on the right numbers, they grow stronger, leaner, and more profitable.
The ones who do it well don’t just scale, they become impossible to ignore.
The Million Pound MSP Playbook
Want the exact roadmap? This is it.
Inside, you’ll find the frameworks and financial levers we use with MSPs every day to grow past £1M profitably:
- Diagnose your real bottlenecks
- Build a profit-first model that funds growth
- Align your team around the right KPIs
- Step-by-step plan to hit (and pass) the £1M mark.
Start now with the Playbook here.
FREE Download: KPIs That Drive Profit. A practical playbook for MSPs to hit 51% Service Gross Margin
-
Cut Through KPI Chaos
Learn which numbers matter and stop drowning in data that doesn’t drive action. -
Benchmark Like the Best
See how top-performing MSPs grow faster, avoid costly mistakes, and fix unprofitable clients. -
Turn Data into Growth
Use a simple roadmap to build accountability, focus your team, scale with clarity.
scaleUP Podcast: Measure What Matters: How MSPs hit £5M+.
Most MSPs get stuck. They grind to £1–2M revenue and stall.
This podcast below breaks down why and exactly how to break through. You’ll learn:
- Why most MSPs plateau
- The 1 metric that predicts if you’ll scale
- Why chasing revenue without profit kills growth
- Leadership moves that unlock scale
- What makes or breaks your next level
Watch the full episode here:
