Customer satisfaction (CSAT) scores and Net Promoter Scores (NPS) have long been the go-to metrics for managed service providers (MSPs) to gauge client sentiment. However, while CSAT and NPS offer a snapshot of customer happiness, they don't tell the full story. In fact, these metrics can be misleading or incomplete – they capture how a customer feels in a survey moment, but not how much value they're truly getting (Gartner: 3 CX Metrics that can outshine NPS and CSAT). For MSP executives, customer success teams, and data analysts, the real challenge is measuring tangible outcomes and business impact. After all, in an ultra-competitive market, simply satisfying customers isn’t enough – delighting them and delivering real value is critical. Consider that 95% of MSP customers have switched to another provider due to poor service (only 5% have never switched) (The Ultimate Guide to Collecting Customer Feedback for all MSPs). To retain clients and grow, MSPs must track deeper performance indicators.
In this post, we’ll explore essential KPIs beyond CSAT and NPS that every MSP should monitor. These metrics help capture true customer value and business impact across different types of MSPs – from cloud service providers to cybersecurity firms and IT support teams. We’ll also discuss current industry challenges and trends in KPI measurement. Each section provides examples, real-world stats, and actionable insights for MSP leaders looking to optimize their performance tracking.
1. The Limitations of CSAT and NPS (and Why to Look Beyond)
CSAT and NPS are popular for a reason – they’re easy to measure and broadly indicative of customer sentiment. But relying on them alone has pitfalls:
- Incomplete Picture:
CSAT/NPS scores focus on customer feelings in a survey, not actual service outcomes. They don’t objectively measure performance or value delivered (Gartner: 3 CX Metrics that can outshine NPS and CSAT). A client might give a good score out of habit or a single friendly interaction, even if their business results aren’t improving. Conversely, a client might be unsatisfied in a survey but still seeing significant value.
- Not Actionable: Traditional satisfaction surveys often fail to explain why a score is high or low. Gartner notes that these metrics by themselves don’t tell you how to improve (Gartner: 3 CX Metrics that can outshine NPS and CSAT). Without deeper metrics, MSPs can struggle to identify concrete areas for service enhancement.
- Lagging Indicator: NPS/CSAT are typically collected periodically and after the fact. They might alert you to discontent when it’s too late. By the time NPS drops, the customer may already be on their way out the door. In an industry where fewer than 7% of customers switch MSPs in a given year, yet almost all will switch eventually (Combating MSP churn - Customer Thermometer), waiting for a bad survey to react isn’t sufficient.
Bottom line: CSAT and NPS are helpful for gauging loyalty and satisfaction, but MSPs need to go further. To truly understand client health, you must measure the actual value and outcomes clients receive. In the following sections, we delve into key metrics that provide a more actionable, 360° view of performance.
2. Customer Retention and Churn – The Ultimate Loyalty Metrics
If there’s one metric that speaks volumes about customer value, it’s whether they stay or leave. Customer retention rate (and its flip side, churn rate) directly reflects how well an MSP is fulfilling client needs over the long term. High CSAT means little if customers quietly churn when contracts expire.
- Customer Retention Rate (CRR):
This measures the percentage of customers you retain over a period (e.g. annually). For MSPs with recurring contracts, renewal rate is critical. A strong renewal rate signals clients continue to see value. Conversely, churn rate (the % of clients who leave) should be as low as possible. Industry statistics suggest that annual MSP churn is relatively low (under 7% switching providers each year) (Combating MSP churn - Customer Thermometer), yet over time churn accumulates – 95% of MSP clients have switched providers at least once due to dissatisfaction (The Ultimate Guide to Collecting Customer Feedback for all MSPs). This shows how crucial it is to continually earn your clients’ business.
- Why it matters: Churn directly impacts revenue and growth. It’s far cheaper to retain a client than acquire a new one. Executives often track monthly recurring revenue (MRR) retention or net revenue retention (NRR) – which includes upsells – as a health indicator. A dip in retention can warn of value gaps even if CSAT scores look fine.
- Actionable insight: Analyze why churn happens. Is it service quality, price, business changes at the client, or lack of certain capabilities? Notably, clients typically leave due to service issues over cost. According to research, MSP customers are nearly 20× more likely to switch providers because of service quality problems than because of price (What Is Customer Success? How to Measure it and 6 Strategies to use). In fact, almost 60% reported service quality as the primary reason for switching (versus only a small fraction citing pricing) (What Is Customer Success? How to Measure it and 6 Strategies to use). This underlines that delivering exceptional service and addressing issues promptly is key to retention.
3. Customer Lifetime Value and Expansion Revenue
While retention tells you if customers stick around, Customer Lifetime Value (CLV) tells you how much value a customer brings over the entirety of your relationship. Higher CLV often means you’re delivering ongoing value that encourages customers to deepen their engagement with your services.
- Customer Lifetime Value (CLV): CLV is a projection of the total revenue a single client will generate during their tenure with your company. It accounts for contract value, renewals, and any upsells/cross-sells. For MSPs, increasing CLV is a sign of a healthy, growing partnership. If a client initially spends $100k/year but over time expands to multiple services (cloud, security, etc.) spending $200k/year, that expansion indicates you’re providing additional value worth paying for.
- Expansion Revenue & Net Revenue Retention: Metrics like upsell rate (percentage of customers who purchase additional services) and net revenue retention (NRR) factor in revenue growth from existing clients minus churn. High NRR (above 100%) means your existing customers are growing their spend with you, offsetting any losses. This is a common goal in subscription-based businesses.
- Why it matters: Focusing only on getting clients to stay (retention) without growth can lead to stagnation. Executives want to see accounts that not only renew but also expand. A strong CLV and upsell trend means your team is successfully demonstrating new value over time, whether it's a cloud MSP convincing a client to add cybersecurity services, or a cybersecurity MSSP expanding into compliance consulting for the same client. Growth within accounts is often more cost-effective than new sales, and it tightens the client partnership.
- Actionable insight: Track CLV by client segment and identify opportunities to increase it. For instance, if you’re an IT support MSP, maybe larger clients have low upsell rates because they’re unaware of your advanced service packages – a signal to improve customer education. Customer success teams can use health scores that include product usage or service adoption metrics to spot clients who could benefit from additional services. Combining these metrics with retention gives a fuller picture of account health: Are we keeping our clients, and are they growing with us?
Example: A cloud services provider noticed some mid-sized clients weren’t adopting new cloud optimization tools on the platform. By assigning customer success managers to proactively show ROI from these tools, within a year 50% of those clients adopted at least one new service, raising average CLV by 20%. This kind of expansion is only visible if you measure it – basic NPS surveys wouldn’t reveal that latent opportunity.
4. Service Quality and SLA Compliance: From Uptime to First-Call Resolution
Quality of service delivery is at the heart of MSP value. To truly measure performance, MSPs must track operational KPIs that go beyond sentiment and capture the reliability and efficiency of service. This is especially critical for cloud MSPs (focused on uptime and performance), cybersecurity MSPs (focused on incident response), and IT support MSPs (focused on support resolution). Key metrics include:
- SLA Compliance: Most MSP agreements include Service Level Agreements (SLAs) – targets for uptime, responsiveness, resolution time, etc. Tracking SLA compliance percentage (how often you meet or exceed SLA targets) is fundamental. For example, a cloud MSP might have an SLA of 99.9% uptime for a client’s infrastructure. Monitoring actual uptime and reporting a compliance rate (e.g. 99.95% achieved this quarter) shows you’re delivering on promises. Response Time SLA (e.g. respond to critical tickets within 1 hour) and Resolution Time SLA are equally important to track. If these slip, customer satisfaction will too, regardless of any survey scores.
- Average Response and Resolution Times: Beyond binary SLA yes/no, it’s useful to track the average first response time (how quickly support or ops teams first respond to an issue) and mean time to resolution (MTTR) for incidents. Shorter times mean less disruption for the client. For instance, one MSP industry guideline suggests a “good” first-call resolution rate of around 70-75% for support teams (Measuring First Call Resolution Stats - Intermedia Blog) – though top performers aim even higher. Monitoring these trends helps MSPs spot when their service desk is slowing down or if complex issues are spiking.
- First Contact Resolution (FCR): This metric measures the percentage of service requests resolved in a single interaction (no follow-up needed). FCR is a major driver of customer experience. A global customer service study by Microsoft found that 28% of customers worldwide say getting their issue resolved in a single interaction is the most important aspect of a good service experience (The Ultimate Guide To First Call Resolution - The CX Lead). In other words, more than a quarter of your customers value quick, one-touch fixes above all else. IT support MSPs live and die by this metric – a high FCR means your technicians are skilled and empowered to handle issues without escalation, which boosts client confidence. If your FCR is low, customers likely grow frustrated repeating information or waiting on callbacks, which can erode trust.
- Incident Response and Resolution (for Security MSPs): Cybersecurity-focused MSPs (MSSPs) should track how swiftly and effectively they handle security incidents. Key measures include Mean Time to Detect (MTTD) and Mean Time to Respond/Recover (MTTR) for security events. The faster a threat is detected and contained, the less damage to the client. These metrics have serious business impact – consider that the average cost of a data breach reached $4.45 million in 2023 (IBM Report: Half of Breached Organizations Unwilling to Increase ...). A strong MSSP will aim to lower response times to reduce breach risk exposure for clients. For example, if industry average MTTR is 7 days, an MSSP might boast they average 2 days – potentially preventing millions in losses by limiting breach scope. Additionally, number of incidents prevented or blocked attacks can be a compelling metric to show value (e.g. “we blocked 500 intrusion attempts this quarter”). While prevention is hard to quantify, some MSPs report on threat intelligence metrics to demonstrate their vigilance.
- Uptime and Reliability (for Cloud MSPs): Cloud service providers should closely track uptime, downtime minutes, and performance metrics for client systems. Network/server uptime as a percentage is a straightforward metric; coupling it with performance KPIs (like page load times, transaction speeds for hosted applications) adds nuance to quality tracking. If an MSP can show they maintained 99.99% uptime for a client’s e-commerce site during the holiday season, that’s a direct business benefit (preventing lost sales from downtime).
In practice: Leading MSPs often include these service quality metrics in regular client reports. For instance, a quarterly report to a client might include: SLA compliance: 100% for P1 incidents, Average response: 15 minutes, Average resolution: 4 hours, First-contact resolution: 82%. This level of transparency builds trust. It’s also a point of differentiation – if your SLA metrics consistently exceed targets, you can bet it will be highlighted in renewal discussions or case studies. On the flip side, if any metric is lagging (say, resolution time creeping up), an MSP should proactively address it before the client raises a concern. As one MSP executive put it: “We treat our SLA metrics as early warning signals. If we’re missing the mark anywhere, we know client satisfaction (and retention) will suffer, so we course-correct immediately.”
5. Customer Effort and Experience Scores (CES and More)
While CSAT and NPS measure overall satisfaction and loyalty, Customer Effort Score (CES) is an increasingly popular metric that zeroes in on how easy it is for customers to get support or achieve what they need. In many cases, reducing customer effort can boost loyalty more than delighting them. Gartner highlighted CES as a key metric, noting that tracking effort helps predict customer disloyalty – customers are more likely to churn if interactions are hard or high-friction (Gartner: 3 CX Metrics that can outshine NPS and CSAT).
- Customer Effort Score (CES): Typically measured by asking customers “How easy was it to get your issue resolved?” (or to use the service, etc.) on a scale, CES captures the friction level in service interactions. A low effort (high CES) experience – e.g. quick support call, straightforward onboarding – leads to happier, more loyal clients. High effort experiences (long forms, multiple calls, confusing processes) are red flags. Tracking CES after key interactions (like support tickets or project deliveries) can uncover pain points that CSAT might not reveal. For example, an IT support MSP might get decent CSAT on tickets that eventually get resolved, but a low CES could reveal that clients found the process cumbersome or had to chase for answers. That insight directs the MSP to streamline its support procedures (maybe better self-service or training staff to provide clearer instructions).
- Value Enhancement & Customer Improvement: Beyond CES, some organizations are exploring metrics like Value Enhancement Score (VES) and Customer Improvement Score (CIS) (Gartner: 3 CX Metrics that can outshine NPS and CSAT). VES, introduced by Gartner, gauges whether the service interaction actually added value to the customer’s ability to succeed – did the MSP not only fix the issue but leave the customer better off? For instance, did the support team teach the client something new or increase their confidence in the product? CIS, similarly, looks at whether the customer’s capabilities improved thanks to the provider. These metrics are not yet widespread, but they signal a trend: MSPs are trying to quantify the qualitative impact on customers.
- User Experience Metrics: For cloud MSPs or software-oriented services, consider metrics like user adoption rates (are users actually utilizing that new collaboration tool your MSP rolled out?), login success rates, or support ticket frequency per user (a proxy for how intuitive the service is). If clients find your solutions easy to use, there will be fewer support tickets and higher adoption. Conversely, if you see a client’s users hardly logging into a portal you provided, that might indicate a training or UX issue – something a pure satisfaction score won’t catch.
Example: A cybersecurity MSP implemented a new client dashboard for reporting threats. Initially, they got some complaints (low CSAT for the tool). By adding a quick CES question (“How easy was it to understand this security report?”) they discovered clients felt it was too technical. The MSP simplified the language and added an executive summary. CES scores improved dramatically, and interestingly, NPS from those clients rose in the next cycle too. The ease-of-use directly influenced overall satisfaction. The lesson: Track and minimize customer effort at every touchpoint – whether it’s using a cloud console, getting a device fixed, or reviewing a quarterly report. Effort scores and related feedback often highlight specific friction points, giving MSPs clear targets for improvement.
6. Value Realization and ROI Metrics
Perhaps the most critical perspective for MSP executives and their clients alike is the actual business value delivered. Beyond maintaining systems and answering calls, how is the MSP impacting the client’s bottom line, efficiency, or growth? Tracking value realization metrics shifts the conversation from “Are you happy?” to “Are you successful because of us?”. Here are key ways to measure this:
- Return on Investment (ROI) for the Client: This can be challenging to quantify, but extremely powerful. Essentially, it asks: for every dollar the client spends on the MSP, how many dollars of benefit do they get in return? Benefits might be hard savings, cost avoidance, productivity gains, revenue uplift, etc. For example, a cloud MSP helping a client optimize infrastructure might reduce the client’s cloud spend by 20% while improving performance. If the client pays the MSP $200k a year, but saves $300k in cloud costs, that’s a strong ROI argument. In fact, companies that adopt managed services experience an average cost savings of 25% and bolster cybersecurity measures by 40% according to recent research (Benefits of Managed Services: Cost Savings, Security, & Expertise). MSPs should capture such data and, when possible, translate it into ROI terms.
- Cost Savings and Efficiency Gains: More concretely, MSPs can track specific value metrics like cost savings achieved, downtime reduced, or productivity gained for clients. A real-world case study: ClearScale, a cloud MSP, helped the Sierra Club (a nonprofit) optimize their AWS cloud usage, resulting in up to 40-44% savings on certain AWS services and a 20% reduction in storage costs (Case Study: Sierra Club Optimizes AWS Costs and Efficiency with ClearScale MSP). Such metrics (percentage cost reduction, dollar savings) resonate hugely with executive stakeholders. Similarly, an IT MSP might measure how much downtime was avoided by proactive maintenance (e.g. “we prevented 10 hours of downtime this quarter by early detection of issues”) or a cybersecurity MSP might show how many threats were blocked that could have led to incidents.
- Business Process Improvements: Some MSP engagements aim to improve the client’s processes (e.g. outsourcing a helpdesk to improve end-user support, or a managed security service to enhance compliance). In these cases, define KPIs that track the outcome. For instance, a helpdesk MSP might measure employee productivity at the client (perhaps through employee surveys or ticket resolution times) to show that with better IT support, employees spend less time waiting and more time working. One MSP metric from industry examples is “Improvement in Business Process” – essentially a qualitative KPI where the client and MSP set targets for process efficiency or outcomes and track progress. This could be as simple as reducing the average onboarding time for new client employees from 5 days to 2 days by taking over the laptop provisioning process.
- Customer Health Score: While not a single metric, many customer success teams use a composite health score that includes several of the above factors (and maybe CSAT/NPS too). This score aims to quantify overall account health, often on a red/yellow/green scale. It can include hard stats like usage volume, support tickets, project status, as well as soft indicators like relationship quality. The value here is in early identification of accounts that are not realizing value. For example, if a client’s usage of a service has dropped (maybe their cloud resource consumption is down, or they haven’t logged into a security portal in weeks), their health score might turn yellow – prompting a proactive reach-out to ensure they’re getting what they need.
Real-world illustration: A midsize enterprise engaged a managed security provider to handle threat monitoring. After one year, the MSP presented a value report: They had detected and remediated 3 serious intrusions that the client’s in-house team might have missed, avoiding an estimated $1M+ in potential damages. They also implemented new email security tools that cut phishing incidents by 70%. Additionally, thanks to the MSP’s guidance, the client achieved a cybersecurity insurance premium reduction (tangible savings) due to improved security posture. By quantifying these outcomes, the MSP not only justified their fees but turned the renewal into a no-brainer. The key takeaway: Always connect your services to the client’s business KPIs – whether it’s cost, revenue, risk, or efficiency. Track those connections over time. Not only does it prove your worth, it also helps you as an MSP to focus on what really matters to clients.
7. Industry Trends and Challenges in KPI Tracking
Measuring and acting on these advanced KPIs isn’t without challenges. As the MSP industry evolves, so do the approaches to tracking performance. Here are some trends and challenges MSP leaders and analysts should keep in mind:
- From SLAs to XLAs (Experience Level Agreements): There’s a growing trend to complement traditional SLAs with experience-focused metrics. Instead of just “we met a 1-hour response SLA,” MSPs are starting to measure how the end-user feels about the service. This might include periodic user sentiment surveys, CES scores, or digital experience scores. The challenge is that experiences are subjective, but MSPs that crack this nut differentiate themselves by delivering outcomes, not just outputs. Expect more MSP contracts to include experience KPIs in the future.
- Data Overload and Siloed Systems: MSP operations generate mountains of data (ticketing systems, monitoring tools, survey platforms, financial systems). Aggregating this data to compute meaningful KPIs can be tough. Many MSPs struggle with siloed tools that don’t talk to each other, making it labor-intensive to produce a holistic dashboard. The trend is moving towards integrated PSA/RMM platforms and business intelligence tools that consolidate data. In fact, the 2022 MSP Benchmark Report highlighted integration of core MSP technologies as a key to boosting efficiency and profitability (2022 MSP Benchmark Survey Report: MSP Industry Trends - Kaseya). Investing in a single pane of glass for metrics is becoming essential.
- Real-Time Reporting and Transparency: Clients are increasingly expecting transparency into MSP performance. It’s no longer sufficient to report metrics annually or only when asked. Real-time client dashboards and monthly business reviews are becoming common. This is a positive trend: by sharing KPIs with clients, MSPs build trust and collaborative problem-solving. However, it also means MSPs must ensure absolute accuracy and timeliness in their metrics – there’s nowhere to hide from a missed SLA that the client can see on a dashboard the next day. The challenge is ensuring data accuracy and explaining context behind metrics to clients (e.g. a spike in resolution time due to a one-off issue).
- Security and Compliance Metrics Take Center Stage: With cyber threats on the rise, clients (especially in regulated industries) are demanding detailed reporting on security posture. MSPs are now tracking metrics like patch compliance rate, vulnerabilities remediated, backup success rate, and even user awareness training completion. The trend is that cybersecurity is not a separate conversation – it’s now a core part of MSP performance. A challenge here is that many MSPs historically focused on IT uptime must expand their KPI repertoire to include risk-oriented metrics that may be new to them.
- AI and Predictive Analytics: Another emerging trend is using AI/ML to predict issues and recommend actions. For instance, some MSPs use machine learning on their ticket data to predict which clients might experience more incidents next quarter or which might be dissatisfied (predictive churn modeling). This allows proactive interventions. AI can also help identify which metrics truly correlate with outcomes (maybe discovering that “patch latency” strongly impacts incident volume, for example). The challenge is that implementing AI analytics requires clean historical data and expertise to interpret the findings. Nevertheless, MSPs that leverage predictive insights can get ahead of problems – a huge competitive advantage.
- Customizing KPIs to Client Needs: No two clients are exactly alike. A challenge MSPs face is tailoring success metrics to what each client values. A healthcare client might care most about uptime and compliance, while a startup client cares about cost optimization and rapid scalability. MSPs have to balance a core set of standard KPIs with flexibility to add client-specific metrics. This trend of customization means MSPs must be agile in their tracking – often using customer success plans that outline which KPIs matter for that client’s goals. It’s extra work, but it secures the partnership by showing you’re invested in their definition of success.
8. Conclusion
In the fast-growing MSP industry – projected to reach $393 billion globally in 2025, up from $348 billion in 2024 (Managed Services Market Size to Worth USD 393.02 Billion by 2025) – staying ahead means proving your value every step of the way. Beyond CSAT and NPS, the metrics we’ve discussed are the keys to understanding and improving that value. By tracking customer retention, lifetime value, service quality, effort, and real-world outcomes, MSPs of all stripes (cloud, security, IT support and more) can get actionable insights to fine-tune their services. These KPIs shine a light on what really matters to customers: Did you solve my problems? Did you make my work easier? Did you help my business thrive?
For MSP executives, adopting these metrics helps in strategic decision-making – from where to invest in improvements, to how to market your success stories. Customer success teams can use them to proactively manage accounts and ensure clients achieve their desired outcomes. And data analysts can correlate and crunch these numbers to uncover trends (for example, which service offerings drive the highest client ROI or which operational metric most impacts renewals).
Ultimately, measuring the right things is empowering. It shifts the MSP-client relationship from one of transactional service provider to strategic partner. When you can clearly demonstrate, with data, that “We didn’t just keep your servers up, we helped increase your sales by 5% and cut your IT costs by 15%,” you move beyond being a vendor. You become a trusted advisor who shares in the client’s success.
So, assess your current dashboard of metrics. Are you still just looking at CSAT and NPS? It’s time to expand your KPI portfolio. Start small if needed – maybe add one new metric in each category – but start now. The MSP leaders who master these deeper metrics will not only satisfy their customers; they will empower and delight them, driving mutual growth in the years ahead.
Sources:
- Gartner (via Boxfusion Consulting) – 3 CX Metrics that can outshine NPS and CSAT (Gartner: 3 CX Metrics that can outshine NPS and CSAT) (Gartner: 3 CX Metrics that can outshine NPS and CSAT)
- 31West – 7 Essential Support Metrics And KPIs For MSPs To Track (7 Essential Support Metrics And KPIs For MSPs To Track - 31West) (7 Essential Support Metrics And KPIs For MSPs To Track - 31West)
- Customer Thermometer – MSP Customer Feedback & Churn Statistics (The Ultimate Guide to Collecting Customer Feedback for all MSPs) (What Is Customer Success? How to Measure it and 6 Strategies to use)
- The CX Lead – The Ultimate Guide To First Call Resolution (The Ultimate Guide To First Call Resolution - The CX Lead)
- UpGuard (citing IBM) – Cost of a Data Breach 2023 (IBM Report: Half of Breached Organizations Unwilling to Increase ...)
- ClearScale – Case Study: AWS Cost Optimization for Sierra Club (Case Study: Sierra Club Optimizes AWS Costs and Efficiency with ClearScale MSP)
- Boyer & Associates – Benefits of Managed Services (Cost Savings stat) (Benefits of Managed Services: Cost Savings, Security, & Expertise)
- Kaseya – 2022 MSP Global Benchmark Survey (industry trends)
