managed services client churn

Stop MSP Client Churn

When you’re experiencing MSP client churn, do you focus first on service delivery to stop the bleeding?

Do you focus on sales and marketing to replace your revenue?

Great questions.  Let’s talk about MSP sales and marketing first.

How Does Cold Calling Help Instigate MSP Client Churn?

  • Around 10% of managed services buyers will make a decision to change providers this year.
  • 20% of those customers will change MSPs because they want more comprehensive features or services that their current managed services provider does not offer.  (Or has not yet offered to them!)
  • 5% of those managed services customers will change providers because of pricing.  (That’s okay, you really don’t want those ones.)
  • The other 75% of the MSP customers who change providers this year will do so because of a service delivery issue.

Our outbound MSP calling team is trained to remind people exactly why they don’t love their managed services provider all of the time.  Most IT companies are only 90 days away from a poor service delivery event that will cause a customer to rethink their relationship.  I want to make sure that my team is calling that customer right around the time of that service delivery event.

When our agent calls them right before that event, this sales call can prompt that  managed services client to call our client after their provider drops the ball.  If our agent calls them soon after the poor service delivery event, our call can prompt that client to ask for a meeting and then a proposal.

Either way, a well timed cold calls encourage managed services buyers to evaluate new providers.

Consistent Prospecting Is the Control Factor

We do the same thing, all day, every day.  Our calls do not change, and our process does not change.

The only real variable in cold calling is the level of satisfaction that a prospect has with their current managed services provider on any given day.

If every prospect was happy with their MSP all day every day, cold calling for managed services would be completely ineffective.  Yet, we have helped almost a thousand MSPs win business away from their competitors through cold calling.

Should You Start Cold Calling For New MSP Business?

Your MSP can benefit from cold calling.  However, with only ten percent of buyers changing providers annually, statistically your MSP would benefit far more from simply improving your service delivery.

Keeping your clients is much cheaper than winning new ones.  Cold calling with Managed Sales Pros could win you, on average, about one new client a month, at a cost per acquisition of about $6000 per client and about $1500 per lead.  One of our clients did some math on it last week – we charge about $5.00 per call.   Cold calling in house may cost a fraction of that, but it is still a major consideration and expense, especially when you consider the cost of finding, training and managing that new sales asset.

Remember, client retention begins in the sales process, and sales is everyone’s job.  Check out these posts from the archives:

Client Retention Begins At Hello

Are Your Clients Loving You Or Leaving You?  

Most MSPs call Managed Sales Pros when they already have a stagnant pipeline or a revenue hole. Often that means we’re helping these clients replace seats they have lost, not add new ones.  We aren’t actually growing their revenue, we’re just helping them hold steady.

Why Is Mastering Service Delivery More Challenging Than Selling?

While we are inclined to think that we buy or sell in truly unique ways, we really don’t.  There are hundreds of generic or specific programs to follow, and dozens of managed services sales experts you could hire right now to fix your sales issues, myself included.

You may think you have great service delivery.  After all, you have a process.  You have a mission and core values.  Maybe you even have a strategic plan you’re following. However, If you have a revenue hole, or you have been unable to grow your MSP year over year, you likely also have a service delivery problem.

The most challenging part of developing and improving your service delivery is no two clients will experience or consume services in the same way. What rocks the socks off of one of your clients may be entirely unimpressive to another client.

The good news is you have insight into your clients that your competitors do not.  The sooner you figure out what your clients want from you, the harder it will be for others to poach them from you.

Is Your Service Delivery Making Your MSP Clients Poach-Proof?

Here are some questions to ask yourself as you consider making improvements to your service delivery process:

  • What are you doing to make your clients feel special?
  • Is your day-to-day interaction process seamless for them?
  • Is any part of working with you a hassle for your clients? Repetitive? Frustrating?
  • How can you remove points of friction for them?

Before you invest in sales and marketing to fix a revenue hole, look for your service delivery and customer experience holes, and fix those.  Otherwise, you’re just filling a leaky bucket, and while that may provide a temporary fix, it’s not viable long term.  You’ll work harder and be less profitable, and eventually you will lose the revenue replacement shell game.

Do you know when a client is most likely to leave your roster?

Or when it is easiest to win a new client from a competitor?

Review this article from SmarterMSP identifies the times when you need to pay the most attention to your client base!

This article from SmarterMSP talks about how to delight and retain your clients.

 

Are you a small MSP wondering how you you’re going to grow?  We advise you to focus on sales and marketing first – nobody wants to work with the second-best provider in the market, and you can’t support clients you don’t have.

If you’re a small MSP under 500K in ARR, we invite you to our free sales and marketing coaching webinars, every Wednesday at noon:  Wednesday Working Lunch.  

When you’re a bigger MSP who has flatlined for several consecutive years, you grow by shoring up your service delivery and protecting your base before you focus on sales and marketing – filling a leaky bucket is just a lot of work.

Regardless of your company size, having a plan will improve your chances of success.

If you’re not yet focused on strategic planning to fix what’s broken, and create repeatable process in your MSP, talk to Ian Richardson. Ian is the CEO of Doberman Technologies, and a certified Paterson Center StratOp facilitator.  Using strategic planning, Ian doubled his managed services revenue in under 2 years.  Check out this webinar to learn more, or email him at grow@doberman.net.

If you’re interested in learning how to stop MSP client churn,  you can start by creating a great customer satisfaction survey. Use this to begin fixing your service delivery or process holes before you start adding in outsourced sales and marketing solutions. We’ve got just the thing!  Request a copy of Carrie’s new book:  “The Sales-Focused MSP”, and check out the chapter on protecting your base.

Here’s a sneak peek from “The Sales-Focused MSP” – check out page one of our five page worksheet series on creating CSAT (customer satisfaction) surveys to help you prevent MSP client churn and generate more referrals before you invest in sales and marketing:

MSP Client Churn is inevitable – mergers and acquisitions, financial challenges – some of your clients will go, regardless of your service delivery.  Proactively building a predictable sales pipeline will help protect your business from unexpected revenue holes.  Call us, or email hello@managedsalespros.com to learn how we’re helping companies like yours increase their revenue.