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Striking a Balance Using the Service Leadership Index®

Anonymous

Challenge
To achieve greater business maturity and overcome the challenge of achieving a balance between expenses, gross margin, and revenue.
Solution
Service Leadership tools illuminated challenges up and down the P&L and balance sheet effectively. Overcoming these challenges meant not just meeting but maintaining or exceeding best-in-class performance standards.
Results
By shifting focus from mere revenue growth to improving gross margin and net profit, this [European-based MSP] saw substantial growth. Through an intentional focus and the stewardship of Service Leadership, they grew YOY revenue by 25% and, in some cases, achieved an adjusted EBITDA of roughly 33%.

“A few years ago, our focus [pre-Service Leadership], was on revenue growth. What we learned from Service Leadership is that there are other ways to grow.”

“We grew gross margin and net profit more than we did revenue. And with this focus, our revenue grew by 25%. In some cases, Q1 of 2020, for example [pre-pandemic], we had an adjusted EBITDA of about 33%.”

This European-based MSP manages and optimizes IT infrastructure and facilitates remote working solutions, helping businesses reduce costs, enhance productivity, and maintain a competitive edge.

Established in 2008, they navigated through a tumultuous economic landscape and emerged stronger.

“I thought it was a great time to start a business. Everything in the world seemed to be on a downturn, so the only way for us to go – was up! However, if I’m being honest, we were a bit clueless about how to run our operations and make a profit.”

Partnership with Service Leadership

The company initially struggled to find its footing, lacking a clear direction for nearly a decade. In a bid to turn things around, they engaged with Service Leadership and began utilizing the Service Leadership Index® (S-L Index™) including the dashboards and the full detail report that included an in-depth look at their gross margin, revenue, operating expenses and how they compared to the best-in-class. This gave them a comprehensive business overview, contributing to informed decision-making. Another benefit of the S-L Index was having the ability to review the reports both online and download the PDF reports, which offered quick navigation through the extensive data.

“We used to move our challenges up and down the P&L. When we fixed expenses, we hurt gross margin and revenue. Simply put, our core challenge was achieving ‘balance’, which we are able to achieve with the S-L Index.

This partnership became a cornerstone of their strategy, allowing them to identify areas of improvement. “The S-L Index showed us that we were doing all the right things, wrong. All the wrong things, right. It was an eye-opening experience to say the least. The S-L Index showed us where we were making money and where we were losing money.”

They adopted a 100% Service Leadership product stack and deepened their engagement over time.

“A few years ago, our focus [pre-Service Leadership], was on revenue growth. What we learned from Service Leadership is that there are other ways to grow. We grew gross margin and net profit more than we did revenue. And with this focus, our revenue grew by 25%. In some cases, Q1 of 2020, for example [pre-pandemic], we had an adjusted EBITDA of about 33%.”

Community and Insights

Engagement in Service Leadership peer groups has been a notable aspect of the journey.

“The peer group provide a supportive environment that balances tough love with valuable insights, contributing to our sustained growth and adaptation.”

The journey with the Service Leadership peer group and using the S-L Index highlights the transformative impact of detailed financial insights and strong partnership. The collaboration has been instrumental in navigating challenges, achieving financial growth, and maintaining a competitive advantage in the market.

“It really underscores the importance of having robust financial tools and a dedicated partnership in driving business success and resilience.”

Competitive Advantage

This [European-based MSP] found that through the benchmarks and insights provided by Service Leadership, they could confidently manage their margins, knowing exactly where to cut costs and
where to enhance profits.

“When we feel comfortable in our margins and know how to cut, when to cut and where to cut, we can achieve more margin and more profit. We needed to get back to a place where we were more financially resilient.”

This detailed financial insight provided a significant competitive edge, setting them apart from competitors who lacked such precise tools.

“Our competitors don’t have this, and as a result, they have lower margins, spending more money on product and talent than we do. Undoubtedly, our lives are made easier with Service Leadership. We are a Service Leadership House. We’ve always been aligned to Service Leadership. And --- the S-L Index has stood the test of time.”