Churn sucks. It’s a pretty reasonable assumption that losing clients hurts MSPs more than, say, a big B2C firm. After all, MSPs have relatively small client bases, so each client makes a pretty clear contribution to your ability to keep the lights on.
Furthermore, if you struggle at all with lead generation, you’ll appreciate how much of a hassle it is to bust your hump to find a new client, only to lose one at the other end. A virtuous cycle of profits that not only increase but feed into more profits requires understanding client behavior, especially what leads to clients churning.
So it’s important to understand what makes clients leave.
Exit Interviews to Understand Better
If there’s one thing that stands out in the literature, it’s that you need to be proactive. Try to understand from past experience what causes clients to leave. While it may be tempting to write them off, it’s best to have a conversation or two about what went wrong. You might not change their minds, but you will hopefully gain some insight as to what influenced their decision. This knowledge, in turn, will allow you to make moves proactively. The better you can predict when a client is at risk of churn, the more equipped you are to deal with the situation before it gets to the “awkward conversation” stage.
Customer Experience Is King
Ok, this one’s obvious. If you underperform your SLAs, you’re leaving the door open for competitors. Make sure that you regularly review how you’re servicing each client, so that you can identify clients who might be feeling negative about your service. Don’t wait for the CSAT scores to tell you, either. Not everybody complains loudly – some just grumble under their proverbial breath and you only find out when they depart that they weren’t happy with the service they were receiving.
Failure to Address a Major Problem
It’s well-established that it’s not so much a mistake that creates negative experiences, it’s the way a company responds to mistakes. To err is human, after all, and most people understand that. If you respond to a problem with exceptional service, you will often find the customer more satisfied than if no mistake had been made at all. It might seem counterintuitive, but the client wants to know that you’ve got their back at all times. Showing that you have their back even when it’s uncomfortable for you because it was your error in the first place? That’s the highest level.
Lack of Strong Relationship
There's no such thing as a “set it and forget it” client. The relationship between MSP and client isn’t just during the sales process or at the service desk. Intuitively, the MSP promise of proactive service doesn’t really work if you’re mostly communicating with clients when something goes wrong. Maintain the relationship with regular touchpoints – QBRs work for many, but even informal communication at the leadership level can help. Consider this story from Brian Weiss, about how his MSP was able to maintain nearly all of its clients following a major issue: It was the strong relationship they’d fostered over the years.
It’s not always easy to maintain great relationships. Everybody is busy, so getting meetings is hard. Plus if everything seems to be working well, there’s less motivation to sit down and talk about business. But the upside is that with stronger relationships you’re less likely to lose business and more likely to understand why if you do.
Avoid Unforced Errors
Have you ever forgotten to bill a client for services they were using? That’s a fun conversation in the making. You probably won’t even have that call. Instead, you'll write off that lost income, just to avoid going to the client months later. The reason you do this is because it was your error, and the client is highly unlikely to be impressed – your reputation is worth more than whatever that dollar amount is. Never put yourself in a position to choose between money and reputation, because you lose either way. Thankfully, we’ve got something cooking that will help with billing reconciliation. But you’ll want to examine other potential sources of unforced errors and eliminate those as well by improving your processes and workflows.
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