Why MSPs Stay “ Stuck ” With Wrong-Fit , Low-Margin Clients
An Obsession With Growth And Gross Over Quality And Profits
If you ’ re not too picky about who you take on as a client , it ’ s relatively easy to get growth . But it can cost you in profits , retention , and equity valuation , not to mention having to deal with a high level of churn , staff burnout , and a bad reputation that will come from these crap-heads posting negative reviews about you online .
Over two years ago , we moved to two- and three-year membership agreements . We eliminated our money-back guarantee that we had used for years . We also implemented stricter requirements for smaller MSPs to join our membership . ALL of this was done to get rid of those MSPs who wanted to “ try ” marketing or “ see if it works .” Those are not good clients for us , and these changes have increased the quality of member we ’ re now getting . That ’ s because when they enroll , they ’ re more committed to implementing a long-term plan for success in marketing and sales , not a wishy-washy , half-a ** ed attempt at growth .
Imagine having a client come to you and demand they get to “ trial ” you for a couple of months and reserve the right to fire you at a moment ’ s notice . That ’ s great for them , but YOU have to staff your organization to handle their account . YOU have to purchase software licenses to support that client that aren ’ t always month-tomonth . YOU have to onboard them , which is very labor-intensive and difficult , particularly if they have a terrible environment that is lacking critical IT infrastructure . YOU have to take the risk of doing all that work without the benefit of long-term recurring revenue .
Before you make the decision that this arrangement is OK , really think it through . IS that the “ best ” client for you ? Is that even reasonable and fair ?
An Extremely Flawed Sales Process
There are two parts to this . First , if you don ’ t set the proper expectations for new clients on what is required of THEM and how they should behave , you ’ re set up to FAIL before you even get started .
Based on my experience , very few MSPs have a well-documented onboarding process , and only about 13 % of the MSPs out there are doing regular QBRs ( quarterly business reviews ) with all of their managed clients . And very few are putting together any type of annual budget and a plan for upgrades and investments . Why are these important ? Because if you properly sell the client that “ this is the way you work with us so we can get you the best possible outcome ,” and you get them to buy into that premise , they will be far more lucrative and productive for you ( not to mention they ’ ll get a better result , less risk , more uptime , etc .).
“ It ’ s very likely that 80 % of your stress , problems , and costs are coming from the BOTTOM 20 % of your clients .” – Robin Robins
The other flaw in the sales process is to not weed out the bad clients early on . When you don ’ t have a strategically designed sales process , you end up with clients who have wildly inaccurate expectations , fee and contract concessions , and other misalignments that come back to bite you later . Selling is NOT just getting the contract . A great sales process gets the deal done at the right price , with the right terms and the right expectations .
Tied closely to this is the fact that many MSPs lack proper marketing systems and therefore have very few leads ( opportunities ) coming in , which makes them desperate to take anyone who waves a dollar and fogs a mirror .
ZERO Thought , Strategy , Or Definition Of What A GREAT Client Is , So They Have No Target To Aim At , No Criteria To Filter Through
Most MSPs just take ’ em all and sort the mess out later . I ’ ve repeatedly harped on the importance of really understanding your target market and ideal client avatar . This is not just demographics , like number of employees , revenue , industry , and zip code . It ’ s also psychographics — the attitudes , aspirations , beliefs , and biases a customer has , often represented by what they buy , the events they attend , the publications they read , and definitely their attitude toward IT , security , and productivity .
For example , an HVC for me is someone who has HONEST ambition . They want to grow their business , they like to learn , and they are willing to invest in coaching and consulting ( obviously ). But how do we use that in marketing to find them ?
First , the majority of articles and content I produce have the common themes of hard work , avoiding shortcuts , and owning your position as an entrepreneur , rallying against being a “ tech .” Just go to www . MSPSuccess . com and review
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