SMB Community Podcast

Employee recognition structures and their risk-reduction implications received primary focus in this discussion. Both Amy Babinchak and James Kernan outlined verification-based strategies, such as leveraging Microsoft Teams' Praise app and Bonusly, a peer-to-peer micro-bonus platform, as cost-neutral or low-cost starting points. They emphasized that implementing structured recognition—either verbally, digitally, or via peer-nomination systems—directly supports workforce engagement and mitigates retention risk. James Kernan described anonymized in-house recognition systems, where peer acknowledgements are aggregated and rewarded via a monthly raffle, which included prizes typically sourced from vendor swag.

Specifics included integration of recognition apps within established workflows and processes—such as Microsoft Teams for informal praise, and Bonusly for monetary or non-monetary peer-based rewards. Amy Babinchak noted that client compliments of staff are internally broadcast for transparency and morale. Both speakers advocated for public, peer-inclusive recognition in the workplace, with an explicit focus on acknowledging day-to-day contributions rather than relying solely on annual reviews or monetary raises.

Further, operational and vendor management challenges were covered: Amy Babinchak articulated concerns that help desk KPIs often measure unproductive metrics and stressed the importance of incentivizing conversational and advisory staff interactions over ticket speed. Discussions also addressed the evolving Microsoft Partner Program, noting its complexity, shifting incentive structure, and the administration required. Alternative licensing approaches—such as MSPs enabling clients to purchase directly from Microsoft or using different distributors—were analyzed for cost and administrative impact. Additionally, strategies for navigating hardware supply chain volatility, including the use of white box solutions and refurbishments, were discussed in the context of margin preservation and client-specific risk management.

The episode underscores for MSPs and IT leaders that systematic and visible employee recognition is a quantifiable retention and engagement strategy with minimal operational risk when thoughtfully implemented. Tactical decisions around help desk KPI selection, distributor choice, and hardware sourcing require ongoing evaluation to balance cost control, performance, and administrative overhead. Transparent data-driven management, especially concerning staff performance and licensing economics, can both reduce operational risk and foster a more resilient service provider organization.

1. How do you motivate your employees –ways to reward employees

https://bonusly.com/pricing

https://learn.microsoft.com/en-us/microsoftteams/manage-praise-app

2. Helpdesk KPIs 

https://www.dropbox.com/scl/fi/84v9ri236n5ck1x8mgf2w/KERNAN-Financial-Goals-and-KPI-s.doc?rlkey=e1qugzgn8x6lzqgesfqjeawew&st=1ma7g8hq&dl=0

3. Is the Microsoft partner program worth it? And how should I buy Microsoft  licenses?

4. Supply Chain challenges and price increases – whitebox or refurbs?

5. What does an AI MSP look like?   https://www.thirdtier.net/2026/05/01/deep-thoughts-on-msps-in-the-ai-age/

UPCOMING CHANNEL EVENTS:

In-Person MSP and Channel Partner Events

Reinvent Telecom – May 12-14th, 2026   

Zero Trust Workshop -  May 28th- 3 weeks 3 part series   https://www.thirdtier.net/product/zero-trust-workshop/

Mastermind Event – July 30-31st, 2026     FREE PASS LINK: http://bit.ly/kernanmastermind

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Compensation models for technical staff in MSPs require careful alignment with business objectives and operational capacity. Both James Kernan and Amy Babinchak emphasized that financial incentives such as commissions or bonuses can be appropriate when technicians are directly responsible for generating additional monthly recurring revenue (MRR) or securing new accounts. However, they noted that proper monitoring tools are essential to track productivity and ensure fairness—without adequate systems, variable compensation based on efficiency or project profitability can introduce operational risk and potential inequities.

Supporting this, Amy Babinchak described implementing a tiered productivity incentive where technicians received additional pay for surpassing utilization rates above 80%, but expressed concern over excessive overtime. Both speakers underscored the necessity of clear job role definitions; rewarding sales activities for technical staff may be appropriate if it aligns with broader company goals and does not compromise core technical duties. Non-monetary recognition, such as trophies or gift cards for ticket resolution or utilization, was also mentioned as an effective, low-cost incentive.

The episode expanded to analyze current challenges in industry education and vendor-driven events. Citing a survey from the "All Things MSP" group, Amy Babinchak reported that 86% of respondents believe MSP conferences are now allocating too much budget to entertainment at the expense of substantive educational content. Comments from participants indicated skepticism toward vendor-led sessions, noting that paid speaking slots are typically used for product promotion rather than useful training, raising questions about increasing conference costs and the dilution of actionable takeaways.

Key operational topics included shifting preferences among AI tools, with both speakers confirming recent moves toward Claude and Copilot, and persistent debate over MSP documentation practices—ranging from ad-hoc tools like OneNote to industry solutions. The discussion concluded with an observation about payment processing costs: James Kernan highlighted a case where $24,000 in annual credit card fees significantly reduced firm profitability, stressing the importance of passing such costs on to customers or utilizing ACH to preserve margins. MSP leaders are encouraged to assess compensation structures, conference participation ROI, and vendor relationships in order to minimize risk, align incentives, and ensure operational resilience.

 Question of the week:  Should I pay my tech commissions?

Rod Trent Substack: learning to talk to our apps https://rodtrent.substack.com/p/the-new-normal-talking-to-your-apps?r=h2641&utm_medium=ios&utm_source=notes-share-action

 

Do you think that MSP conferences are spending too much on entertainment and not enough on education?  All Things MSP survey

 

What is your favorite AI tool right now?

Blog post: AI Image Generators Can Now Spell: https://www.thirdtier.net/2026/03/20/breaking-news-ai-image-generators-can-spell/

 

What tool do you use for Documentation? This is more for the smaller MSPs or internal IT folks not running something like IT Glue or Hudu. GitHub: https://github.com/   

 

 TALES FROM THE FIELD: Payment processing fees of 24K reviewing financials during valuation.  Alternative Payments and other payment automation firms help reduce/eliminate these fees by giving customers options for EFT or passing fees to them.
https://www.alternativepayments.io/

 

UPCOMING CHANNEL EVENTS:

Reinvent Telecom – May 12-14th, 2026

Mastermind Event – July 30-31st,2026

Amy’s Podcast Appearance Book Tour happening! Learn more about the book here: https://www.thirdtier.net/20-questions-every-msp-owner-asks-before-selling-their-business/

 

                     Do you have a story from the field that you’d like to share? Or a question you’d like us to answer? Email it or send it as a voice memo or video to [email protected], and we just might use it in an upcoming show.

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A central theme of the episode is the challenge of communicating and defending pricing for managed services. Amy Babinchak and James Kernan described frequent client objections regarding cost, focusing on the importance of articulating clear value propositions. They noted that most client resistance either stems from an inadequate understanding of the provider’s value, or from attempts to negotiate lower pricing. Responding effectively requires MSPs to explain differentiators and to consciously decide whether a prospect aligns with their value-based approach.

Supporting this discussion, Amy Babinchak argued that many MSPs risk commoditization by relying on standardized, transactional service offerings. She highlighted a shift toward consultative selling, emphasizing the need to focus on unique solutions—such as AI guidance and security enhancements—instead of basic recurring services. Both speakers remarked that as automation and AI become more prevalent, differentiation and consultation will increase in relevance and provide a pathway to sustained business models.

Additional topics included emerging security threats related to USB drives. Amy Babinchak reported that widespread vulnerabilities, particularly in devices manufactured in China, have exposed businesses to high risks of malware via unencrypted firmware. She recommended MSPs phase out low-cost, unbranded memory sticks in favor of hardware with encrypted firmware, noting associated costs can be in the $100–200 range. The episode also addressed the responsibility for user security awareness training, with both hosts asserting that the MSP must ensure not only provision but active client engagement and outcome tracking, rather than relying solely on offering the service.

The practical implications for MSPs and IT service providers lie in proactively managing client expectations, emphasizing measurable value, and maintaining vigilance regarding hardware supply chain risk. Providers are encouraged to improve governance by reviewing service portfolios, confirming active usage of bundled offerings, and conducting regular business reviews. Regarding security, due diligence in vendor management and sound end-user education policies are highlighted as essential components of operational risk reduction.

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Managed Service Providers (MSPs) face measurable hurdles when scaling businesses past certain revenue thresholds, particularly the $10 million annual mark. The episode’s primary focus is the operational and sales methodologies implemented by Brian Strong, who reported helping lead an MSP from $2.2 million to $19 million in annual revenues over five years. This growth was attributed to instituting systematic sales processes, prioritizing revenue generation, and building organizational redundancy, which Strong identified as essential for sustaining and supporting large-scale managed services operations.

Supporting this central narrative, Strong detailed specific challenges encountered, such as a company operating at a $300,000 monthly loss after an acquisition, with survival requiring accelerated sales volumes rather than cost-cutting alone. Growth strategies were based on methodical sales enablement, including tracking KPIs, transparent open-book management, and aligning hiring practices with the organization’s long-term scaling goals. Notably, Strong emphasized targeting larger accounts and developing specialized technical talent to build resilience and capabilities across departments.

The conversation also addressed industry-wide patterns, noting that many MSPs remain “stuck” below the $10 million revenue band. According to Strong and Speaker B, a key obstacle is the lack of systems and staffing that enable owners to delegate daily operations and sales functions. Both speakers noted that relying solely on owner-operators impedes scale, and emphasized the need for targeted recruitment, standardized processes, and deployment of appropriate technologies to enable sustainable growth and improved customer service delivery.

For MSPs and IT leaders, these discussions underscore the necessity of robust, replicable sales processes, transparent operational metrics, and talent strategies designed for organizational redundancy and scalability. Risks of stagnating at lower revenue levels include limited service capacity, inability to serve mid-market clients, and heightened vulnerability to market or talent disruptions. Organizations seeking to grow beyond these barriers must invest in their people, formalize their processes, and ensure leadership is accountable for both revenue generation and operational sustainability.

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NinjaOne’s reported growth and positioning within the MSP software landscape presents a notable development for service providers evaluating vendor ecosystems. According to statements reviewed by Ryan Morris and Dave Sobel, NinjaOne claims an annual recurring revenue (ARR) exceeding $500 million, a valuation above $5 billion, and a customer base of more than 35,000. This self-reported data, while not independently verified due to NinjaOne’s private ownership, places the company within the top tier of platform providers for endpoint management, alongside ConnectWise and Kaseya. The expansion and platform focus suggest material choices ahead for MSPs considering stack consolidation, endpoint management, and integration requirements.

Supporting analysis from Dave highlights trends in the categorization of platform players, noting shifts among vendors such as Enable, which is repositioning from the MSP infrastructure platform to the security domain. The discussion raises a technical consideration: the evolution from API-driven integration toward emerging orchestration standards such as MCP servers, though details from vendors remain limited. MSPs are advised to understand tier distinctions among platform providers and carefully assess how these shifts may affect integration, security posture, and operational alignment.

Adjacent topics explored by the speakers include the risk and tradeoffs involved in vendor onboarding, M&A (mergers and acquisitions) processes, and the relevance of business continuity strategies. Ryan Morris and Dave Sobel critique extended, six-month vendor evaluation pipelines as potentially eroding competitive positioning in a landscape characterized by rapidly evolving technologies, especially AI-driven tools. Additionally, the episode revisits the skill set of the IT generalist, acknowledging that while specialist expertise remains essential in domains such as security, contemporary AI adoption demands generalist capabilities for validation, interpretation, and curation of technology outputs.

The podcast asserts several operational takeaways for MSPs and IT leaders. Prioritizing process documentation and standardization enables scalability and business value beyond the presence of individual owners, as financial professionals weigh factors such as repeatability and owner-independence in valuation. Businesses should balance rigorous stack control with responsive, customer-centric experimentation, managing the pace of change in vendor portfolios and technologies. In M&A scenarios, the speakers caution against overly formulaic approaches, emphasizing contextual evaluation of fit and motivation to mitigate post-transaction dissatisfaction. Collectively, these themes stress the need for ongoing adaptation, systematized governance, and objective risk management in MSP operations.

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