Benchmarking Your MSP: Where Do You Stand Among Industry Leaders?

In the competitive managed service provider (MSP) industry, benchmarking your performance is essential. Whether you’re a cloud service provider, a cybersecurity-focused MSSP, or an IT support MSP, understanding where you stand against industry standards can guide strategic decisions. This post provides MSP executives, customer success teams, and operations managers a framework to gauge performance across critical areas and identify gaps between your MSP and industry leaders. By using data-driven benchmarks, you can pinpoint where to improve and ensure you remain competitive in a rapidly evolving market. 

Benchmarking is about measuring your MSP’s metrics against industry norms and best-in-class performers. For leadership, it offers clarity on questions like: Are we growing as fast as our peers? Are our profit margins and service quality on par with top MSPs? For customer success teams, benchmarks reveal if client retention and satisfaction are keeping up with industry expectations. Operations managers can see if service delivery metrics (like response times or SLA compliance) meet the high standards set by market leaders. In short, benchmarking shines a light on where your MSP excels and where it lags, enabling informed strategy and continuous improvement. It’s not just about bragging rights – it’s about identifying concrete areas to enhance efficiency, customer experience, and profitability. 

2. Key Industry Trends and Benchmarks 

The MSP industry overall is robust and growing, but also facing new challenges. Here are some big-picture trends and benchmarks that provide context for your performance: 

• Steady Market Growth: Demand for managed services keeps rising. Analysts project the global MSP market will double by 2031, reaching about $520 billion (up from ~$262B in 2023) (Managed services market expected to double by 2031). That’s a healthy ~7.9% compound annual growth rate – a sign that opportunities for growth exist even as competition increases. 

• Shift to Recurring Revenue: Successful MSPs have moved towards subscription models and recurring revenue streams. In a recent industry survey, over 50% of MSPs reported that more than half of their revenue comes from recurring managed services (Revenue Trends by the Numbers for MSPs). In fact, 26% said over 75% of revenue is recurring, and a few (2%) are at 100% managed services. This trend underlines the importance of monthly recurring revenue (MRR) as a metric – the more predictable recurring income, the better you can plan and grow. 

• Moderate Revenue Growth (Post-Pandemic): After a surge in IT spending during the pandemic, MSP revenue growth has normalized. Industry data shows managed service revenue growth has slowed back to pre-COVID levels recently (Service Leadership Q2 Data Report Reveals Slowing Managed Service Revenue Growth Worldwide, but MSP Profitability Remains Strong). Many MSPs still report solid growth: roughly 42% of MSPs were seeing annual revenue increases in the mid-single to low-double digits (6–20% per year) in recent years. Top performers continue to aim for double-digit yearly growth, even as the global market growth is in the high single digits. If your growth rate is trailing the mid-single-digit range, it may be time to examine your service offerings or sales strategy. 

• Service Expansion and Specialization: Industry leaders are diversifying services – cloud MSPs adding cybersecurity offerings, security-focused MSPs expanding into compliance consulting, etc. The benchmark here is strategic: how many service lines or value-added services do top MSPs offer, and how does your portfolio compare? While there’s no single metric for service breadth, keep an eye on market demand trends (e.g. cloud migration, zero-trust security, data analytics) to ensure you’re not falling behind in offerings. 

By keeping these trends in mind, you set the stage for meaningful benchmarking. Now, let’s outline a framework to compare your MSP against the competition. 

3. A Framework for Benchmarking MSP Performance 

Benchmarking your MSP involves a systematic approach. Here’s a simple framework to get started: 

1. Define Key Performance Indicators (KPIs): Begin by identifying the metrics that matter most for your business. These should cover financial health, customer success, and operational efficiency. For example, revenue growth, customer retention rate, SLA compliance percentage, etc., which we will detail below. Clear definition of KPIs is crucial – you can’t benchmark what you haven’t measured. 
   
   
2. Gather Your Data: Collect your MSP’s data for each KPI over a relevant period (monthly, quarterly, annually). Ensure accuracy and consistency in how metrics are calculated. This might involve pulling reports from your PSA tools, financial systems, and customer surveys. For instance, determine your annual revenue growth rate, calculate your average customer retention over the last year, measure your average ticket resolution time, and so on. 
   
   
3. Research Industry Benchmarks: Find reliable industry benchmark data for those same KPIs. This could come from MSP industry reports, vendor benchmark surveys, or publications by analyst firms. We’ve compiled several benchmark figures in the next section for reference. Make sure to use up-to-date, apples-to-apples comparisons (e.g., compare annual growth to annual growth, SMB-focused MSPs to similar peers). Industry associations and annual surveys are great sources for benchmarks on MSP financials and service metrics. 
   
   
4. Compare and Identify Gaps: Line up your MSP’s metrics against the industry benchmarks. Determine where you are above, at, or below the standards. For example, is your customer retention of 85% lagging the industry average ~90%? Is your EBITDA margin higher than the norm or below it? Identify performance gaps for each key metric. This step may reveal, for instance, that your revenue per employee is lower than top-tier MSPs, signalling an efficiency issue. 
   
5. Analyse Root Causes: For any gap where you underperform, dig into the why. Low customer retention might point to service issues or lack of customer success engagement. Below-average SLA compliance could indicate resource constraints or processes that need improvement. Conversely, areas where you outperform are strengths to maintain and possibly leverage as competitive differentiators.
   
   
6. Set Improvement Targets and Action Plans: Using the insight from the comparison, set specific goals (e.g., “Improve customer retention from 85% to 90% by next year” or “Increase gross margin by 5 points”). Develop an action plan for each goal: this could include staff training, process changes, new tools, or strategic initiatives. For example, if SLA compliance is behind, you might invest in better monitoring or automate certain support tasks to speed up response.
   
   
7. Monitor Continuously: Benchmarking isn’t a one-time exercise. Track your KPIs on an ongoing basis and periodically revisit how you stack up against the latest industry data. Continuous monitoring allows you to see if changes you’ve made are closing the gap. It also keeps you alert to new trends – for instance, if industry standards rise (say, average customer NPS improves industry-wide), you’ll know to raise your own targets accordingly. 

By following this cycle of measure – compare – improve, your MSP can create a culture of continuous improvement. Next, let’s look at the essential KPIs and metrics you should be benchmarking, along with current industry benchmarks for each. 

Below are the key performance metrics every MSP should assess, spanning financial health, customer satisfaction, and operational efficiency. For each KPI, we outline what it measures and how industry leaders typically perform: 

1. Financial & Growth Metrics 

• • Annual Revenue Growth Rate: This measures how fast your MSP’s revenue is growing year-over-year. It’s a core indicator of business momentum. Industry benchmark data shows many MSPs experienced high single-digit to low double-digit annual growth in recent years. For example, about 42% of MSPs grew between 6% and 20% annually in the pre-pandemic period. Top quartile performers often push beyond 15-20% growth. Compare your growth rate to these ranges. If you’re growing, say, only 2% annually while peers average ~8%, you may need to ramp up sales efforts or expand service offerings. Conversely, if you’re outpacing the market, that’s a sign of strong competitive positioning. 

• • Recurring Revenue Percentage (MRR Mix): Recurring revenue (subscription or contract-based income) is the lifeblood of an MSP’s stability. A higher portion of revenue from managed services contracts (vs. one-time projects) generally indicates a more mature and resilient business model. According to industry surveys, over half of MSPs get 50%+ of revenue from recurring services, and a quarter exceed 75% recurring revenue. Benchmark your mix: if a large percentage of your revenue is still coming from ad-hoc projects, consider transitioning clients to managed contracts or subscription models. Increasing your MRR not only smooths cash flow but also boosts company valuation and predictability. 

• • Profit Margins (Gross & Net/EBITDA): Profitability metrics tell you how efficiently your MSP turns revenue into profit. Two levels to watch: gross margin (revenue minus direct service costs) and net margin or EBITDA margin (after all expenses). Industry averages provide a baseline: a gross profit margin around 50–60% and net profit (EBITDA) around 20–30% are considered healthy for MSPs. 

• • Revenue per Employee (Operational Leverage): This efficiency metric calculates how much revenue you generate per full-time employee. It’s a proxy for productivity and scale. An average MSP generates roughly $100,000 in annual revenue per employee, while a world-class MSP of similar size can generate around $150,000 per employee. That gap indicates the leverage top 10% MSPs achieve through optimized processes and automation. Compare your own revenue-per-employee figure to these numbers. If you’re significantly below $100K/employee, you may have overstaffing, under-utilization, or process inefficiencies. If you’re closer to the $150K/employee benchmark, you’re managing resources very effectively. Improving this metric can involve training your team to handle more clients, investing in tools that automate routine tasks (so each employee can manage more), or trimming unnecessary roles – all without sacrificing service quality. High revenue per employee translates into better profit and scalability.
    
    
  • EBITDA & EBITDA Growth: In addition to margin percentage, consider your absolute EBITDA and its growth. Top MSPs not only maintain strong margins but also grow their absolute earnings year over year. The industry’s profitability trend has been positive – e.g., global average MSP EBITDA recently hit a multi-year high (14.1%) even as growth slowed. If your EBITDA dollars are flat or shrinking, investigate whether expenses are climbing faster than revenue, or if certain contracts are dragging down profitability. The goal is to ensure profitable growth, not just growth for its own sake.
    

2. Customer Success Metrics

• • Customer Retention Rate: Retention (sometimes measured as the inverse, annual churn rate) is critical for any MSP’s long-term success. It reflects how well you satisfy and continually deliver value to clients. The average MSP retention rate is about 90% annually, according to industry benchmarks, though there’s wide variability (many MSPs fall below this, some even around 70% retention in extreme cases). Generally, a retention rate of 90% or higher is desired, meaning aim for less than 10% yearly churn. Leading MSPs often boast retention in the mid-90s percent. If your customer retention is, say, 80%, that’s a red flag – losing 20% of clients a year will seriously hinder growth (as you’ll spend a lot just to replace them). Such a gap calls for examining customer satisfaction, support quality, and account management practices. Remember, keeping customers is far more cost-effective than acquiring new ones. In fact, studies show that even a 5% improvement in retention can boost profits by 25–95%, thanks to the increased lifetime value of clients (Top 5 Service Level KPIs Your MSP Needs to Track to Retain Clients). Use that as motivation to benchmark and improve your retention. If you’re already at ~95% retention, you’re in excellent territory – focus on maintaining that by continuing to delight customers and proactively addressing issues. 

• • Customer Satisfaction (CSAT) and NPS: While retention tells you if clients stay, satisfaction metrics like CSAT scores or Net Promoter Score (NPS) reveal how happy they are with your services. Many top MSPs track NPS (asking clients how likely they are to recommend your services) as a benchmark of relationship health. For reference, an average first-year NPS in the tech services sector might fall in the 30–50 range, whereas top performers push NPS to 70+ (world-class level in many industries). If you have survey data, compare your scores to such benchmarks. A lower-than-average NPS or CSAT could foreshadow future churn, even if current retention looks okay. Use feedback to identify pain points. High satisfaction scores, on the other hand, often correlate with high retention and upsell opportunities. While industry-wide CSAT/NPS figures vary, the key is year-over-year improvement and outperforming the “average MSP” scores. 

• • Customer Lifetime Value (CLV) and CAC: For a more advanced benchmark, some MSPs calculate average customer lifetime value and customer acquisition cost. A healthy ratio of LTV:CAC (for instance, aiming for 3:1 or higher) indicates you’re gaining clients that stay profitable over time. If you know these numbers, compare them against known benchmarks or targets used in the SaaS/MSP space (e.g., many consider LTV at least 3 times CAC as a sign of a sustainable model). While not all MSPs track this rigorously, it’s worth considering as you grow, especially for executives focusing on scalable growth. 

• • Upsell/Cross-sell Rate: Another aspect of customer success is the ability to expand existing accounts. How many of your clients purchase additional services or upgrades each year? Industry leaders often have strategies to steadily increase wallet share per client (for example, bundling cybersecurity services into existing IT contracts). There may not be a universal percentage benchmark for upsells, but you can benchmark against your own history and peers anecdotally – e.g., if top firms in your peer group grow existing account revenue by 10% annually, how do you compare? A high upsell rate can indicate strong customer trust and a broad solution set, whereas low or zero upsell might suggest missed opportunities or satisfaction issues. 

3. Service Delivery & Operational Metrics

• • SLA Compliance Rate: Service Level Agreement compliance measures the percentage of time you meet or exceed the service commitments in your contracts. This is a critical operational KPI, as it directly impacts client satisfaction and penalties. High-performing MSPs treat SLA compliance as sacred – many manage to achieve 99%+ compliance on key metrics. For example, a cloud service provider might guarantee 99.9% uptime in contracts; a security MSP might promise to respond to critical alerts within 15 minutes. Your goal should be near-perfect compliance with such promises. If your SLA compliance is, say, 95% and industry leaders are at 99%, analyze where breaches occur. Are response times slipping at certain hours? Is a particular service (like backup restores or on-site support) missing its SLA occasionally? Benchmark each element of your SLA (uptime, response time, resolution time, etc.) against typical values in the industry. For instance, an SLA of 99% uptime is common for cloud services (Top 5 Service Level KPIs Your MSP Needs to Track to Retain Clients). If you promise that, are you delivering it? Any significant SLA misses need immediate attention – chronic SLA failures will erode client trust and retention fast. 

• • Average Response Time: This measures how quickly your team responds to customer issues or requests (e.g. the first response to a support ticket). Fast response is a hallmark of good service. Many MSPs target response times in minutes for urgent issues and just a few hours for non-critical tickets. As a benchmark, consider that clients usually expect rapid acknowledgement. While specific averages vary, you should measure yours and compare to peers or any SLA commitments you’ve made (such as “we respond to all critical tickets within 15 minutes”). If your average first response is, say, 4 hours, and you learn that competitors boast a 1-hour average, that’s a competitive gap to close. Quickening response may involve better alerting, more support staff, or smarter ticket triage. The best MSPs use automation and 24/7 monitoring to keep response times low even after hours. 

• • Average Resolution Time: This KPI tracks how long it takes on average to fully resolve an issue or ticket. It speaks to efficiency and expertise of your support team. According to service desk benchmarks, the average ticket resolution time is roughly 3 days, while the top 20% of providers resolve issues in under 2. That gives a ballpark for comparison. If your average resolution is a week, that’s far behind industry norms and likely frustrating clients. You’d want to drill down into what causes delays – is it waiting on vendor support? Complexity of issues? Resource shortages? On the other hand, if you’re resolving most issues within 24-48 hours, you’re in elite territory that can be marketed as a strength. Monitoring resolution times by severity (e.g., critical incidents vs minor requests) is also useful. The key is to ensure your team’s speed to resolve aligns with (or exceeds) client expectations and competitive standards. 

• • First Contact Resolution (FCR) Rate: FCR measures the percentage of issues resolved in a single interaction (no follow-up needed). It’s a great indicator of support effectiveness and knowledge. In IT support industries, an FCR around 70-75% is considered a solid benchmark (many help desks land in this range). High performers push above 80% FCR, meaning most problems get fixed on the first call or reply. If your FCR is low (say Fifty percent), clients likely have to reach out multiple times for the same issue – a dissatisfier that also consumes more resources. Compare your FCR to industry averages (~70%); if it’s lower, consider additional training for support staff, better documentation, or tools that empower level-1 technicians to handle more without escalation. Improving FCR not only makes customers happier (fewer back-and-forth interactions) but also reduces overall workload on your team. 

• • Resource Utilization & Efficiency: Efficient use of technical staff is key to profitability and service quality. Metrics like technician utilization rate (the percentage of their available hours that are spent on billable or productive work) and tickets closed per technician per month can serve as benchmarks. For instance, an MSP might find that top firms have their technicians bill or productively utilize 80%+ of their time, while keeping ~20% for training and admin. If your techs are only 60% utilized on billable tasks, you might be able to take on more business with the same staff or identify why there’s excess downtime. Similarly, revenue per engineer can be a useful benchmark (related to revenue per employee discussed earlier). Use these internal efficiency metrics to gauge if your operations are lean. A high revenue or ticket output per tech is often achieved by standardizing processes and leveraging automation for routine tasks. Compare your ratios to any published benchmarks or peer data you can find (MSP peer groups often informally share this). The goal is not to overwork staff, but to eliminate waste and ensure each team member can manage as much as a top-tier counterpart at another MSP. 

• • Service Quality Indexes (CSAT for support, etc.): Aside from speed metrics, track quality indicators from operations. Post-ticket customer satisfaction (CSAT) scores, if you collect them, can be averaged and benchmarked. For example, if your help desk CSAT averages 94%, that’s excellent – if it’s 85% and the industry norm is ~90%, you have room to improve in service quality or communication. Some MSPs also monitor things like repeat ticket rates (how often the same issue recurs) or percentage of proactive vs reactive tickets, as part of their operational excellence benchmarking. High-performing MSPs tend to resolve issues right the first time and do more proactive maintenance (resulting in fewer break-fix tickets over time). Consider what metrics best reflect your service quality and compare those trends with known high performers. 

By evaluating these KPIs, you create a comprehensive picture of your MSP’s performance. It’s important to use
multiple metrics together rather than any single number in isolation. For instance, a very high utilization rate might look good financially, but if it comes at the cost of slower response (because techs are overloaded), your customer satisfaction might suffer. Industry leaders usually excel in balancing these metrics – achieving high service quality and high efficiency, growing revenue and maintaining high retention. 

Strive for Continuous Improvement 

Benchmarking against industry leaders is not a one-time task but an ongoing discipline. The MSP industry is dynamic – client expectations rise, new technologies emerge, and competitors adapt. By regularly comparing your MSP’s key metrics to industry benchmarks, you can quickly identify where you are falling behind or pulling ahead. Use those insights to set improvement initiatives: maybe it’s adopting a new RMM tool to boost SLA compliance, refining your customer onboarding to improve retention, or rethinking your pricing to lift profit margins closer to the 20%+ elite range. 

Remember, the goal isn’t to achieve perfection overnight. It’s to establish a culture of continuous improvement. Even industry leaders monitor themselves and aim higher each year. Start with the framework and KPIs outlined above. Engage your team in the process – share benchmark findings with department heads so they understand how their area stacks up. For example, show your support manager the industry average resolution time and collaborate on ways to beat that benchmark. 

Ultimately, consistent benchmarking will help your MSP make data-driven decisions and strategic adjustments. It ensures you’re not flying blind or settling for “good enough” performance. Instead, you’ll be actively steering your company toward best-in-class status. By knowing where you stand among MSP industry leaders, you can chart a clear path to reach and exceed those standards, delivering greater value to customers and stronger results to your business. In the fast-evolving MSP landscape, that is what will set you apart from the pack.