This article also appears on MSP Mentor.
Successful MSPs understand that doing business with someone isn’t always just providing services. MSPs are aligning philosophies about technology and business with any clients they work with. It stands to reason that although it’s tough to turn away clients, you can’t work with companies that can’t see the value in what you provide. They’ve got to understand the philosophy behind your monthly fees, and most of your clients probably do. But there’s one type of client that simply doesn’t pay out in the long run and will only drag you through the fiscal mud. It’s time to fire that client.
Most MSPs are trying to go all in on managed services. This lets them take advantage of recurring monthly revenue as well as the benefit you get from managing client networks day to day—it’s more stable across the board. Having full oversight of a client is useful when any trouble comes up, but that’s something you don’t have if you’re still doing break-fix or emergency-only work for some of your clients. These break-fix clients are the ones you’ve got to get rid of.
Why? The problem with your break-fix clients is that they will call you with big problems that are much more difficult to fix, simply because you don’t have an eye on their network. When something goes wrong, you’ve got to waste time finding the problem and that’s time you should be spending on maintenance for your other clients, or time you should be saving.
On top of that, how can you plan ahead with break-fix clients? How can you tell when you’ll need staff to support them? What happens if you’ve started a large project and one of your break-fix clients has a major issue? Now you’ve got to reallocate time and resources to fix a problem you may have been able to avoid if you had only been managing them. That’s no way to run a business, and it certainly isn’t any way to grow one.
Moving to managed services
Chances are that if you’ve got clients you only work with on a break-fix basis it’s because you either offer break-fix or emergency-only services, or because you couldn’t win this particular client over to a managed service model. This is tough to swallow for some, but the first step is to stop offering break-fix services altogether. Even if clients are paying exorbitant amounts of money when something goes wrong, it’s costly for them and it’s a time-wasting headache for you. But before you fire anybody, you’ve got to make one last pitch for managed services.
Clients need to understand that you’re changing things. In order to do your job—which is to provide them with excellent, reliable service—you need to be performing maintenance tasks, monitoring their backups, and keeping a watchful eye on firewalls to keep out virus and malware. If you aren’t able to monitor these things, your clients have to do a lot of that themselves (if they do it at all), which will undoubtedly lead to more problems for them and for you when you’ve got to show up and fix ten things that went wrong at once.
Illustrating the value shouldn’t be too tough, especially when you discuss the cost of downtime. If you’re not watching their network and something goes wrong, they’ll be down for a lot longer as you discover the problem than they would if your management tools told you what the issue was right away. The cost of downtime can add up really fast, but it’s reduced enormously by a vigilant MSP.
Being proactive, not reactive
Some people see technology as a necessity that costs them lots of money and is a constant frustration—I’m sure you have some of those types of client. The thing all of your clients need to understand is that technology is an excellent tool that, if harnessed properly, will help them increase productivity immensely. This can only happen if they’re proactive about it, meaning their tech is current and maintained properly. They need managed services to have that.
If they aren’t proactive, they’re reactive and only responding to issues that could have been avoided. Our MSP partner, Guy Baroan told me recently that he compares technology to a car, asking his clients, “Would you rather change the oil regularly or wait until your engine explodes?” The better option is clear, even if it does seem costlier, and regularly maintenance is really what keeps systems up and running so they continue being a valuable tool and not a pain in the neck. There’s much more value in the certainty that someone is keeping a close eye on things. In some cases, an MSP can have a client up and running after a failure before the client even realizes there is one. Break-fix clients can’t have that.
Breaking up with clients
You’ll have to talk to clients to whom you still provide break-fix service. For Guy, it was as simple as sending a letter to all of the clients he worked with under the break-fix model. He explained that in six months, his company would be providing managed services for a monthly fee, which provided clients with a lot of additional value. According to Guy, most of them were ok with the switch and understood that it was really beneficial for everyone. The ones who wouldn’t switch were fired.
Luckily, Guy was able to pass those clients gracefully on to a friendly service provider so they weren’t left high and dry. This might be an option if you know any service providers, but it might be that they’ve got to find someone else on their own. Guy’s clients had six months to plan, which was ample time to find alternatives. You certainly want to give them time to switch if for whatever reason they don’t stick around.
Keeping the money train rolling
Clients that don’t stick with you will end up limiting your growth and profit potential anyway, so don’t fret about losing them. In Guy’s case, relatively few clients actually left and the ones that stayed around were the exact types of clients he wanted to work with. Don’t forget that you have a say in who you work with just as much as your clients. Finding the clients that understand your philosophies are the ones that will be happy to pay you each month for your valuable services. Your job is to find that type of client, and work with them exclusively.
Photo credit: JM3 via Flickr