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3 Simple Ways to Improve MSP Customer Retention

Author: Michael Mowder
Author: Michael Mowder

Depending on which study you read, acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Even at the low end of the spectrum, it requires significantly more time and effort to obtain a new customer, especially when you take into account all the money spent on sales and marketing activities. The costs are even higher in cases where new customers are always being brought on to replace customers that have been lost. To ensure your MSP runs smarter — instead of just working harder — here are three tips to help keep your existing customers happy and to minimize the high cost of churn.

#1: Make Your Value Visible

At the beginning of a managed services relationship, customers often feel like they’re getting a lot of value, especially if they can avoid large upfront capital expenses by rolling the costs of switches, servers, and other IT appliances into a Hardware-as-a-Service agreement. Over time, however, paying a monthly subscription fee can lose its appeal. Research from The 2112 Group, found that providers of managed services saw their ability to maintain prices erode over time as customers became desensitized to the value of services delivered. Consequently, many customers demanded price concessions or increased services with no price increase upon renewal.

The challenge behind price objections is often that customers aren’t aware of the value an MSP provides behind the scenes, such as patch management, remote diagnostics, troubleshooting IT hardware problems, validating daily backups, performing security scans, and providing helpdesk support, to name a few. A proven way MSPs can show their value to existing customers is through monthly reports that highlight their customers’ RIO.  And, rather than merely emailing the reports, it’s a good idea to occasionally review the results with key stakeholders in person to ensure they’re getting the message.

#2: Avoid TV Service Provider Behavior

I’ve learned over the years that most service providers care most about their new customers. For example, cable and satellite TV providers will bend over backwards to offer special deals and incentives for new customers, while neglecting to offer any incentives that recognize existing customers for their loyalty.

As an MSP, it can be easy to fall into the same trap of treating prospects like gold while basically neglecting your existing customers. It can be especially tempting when your technology provider unexpectedly lowers its pricing on cloud storage, for example. Rather than using this opportunity just to try to attract more new customers, why not find a way to share the good news with existing customers, too? For example, you many consider looking for a way to keep their spend equal while providing some extra value such as backing up additional data sets to the cloud. The end result feels more like a win-win that’s sustainable compared with the price fatigue experienced during the second year of most TV service providers’ (and some MSPs’) contracts.

#3: Make Sure Client Satisfaction Is Evidence-Based

Nearly every MSP believes its customers are happy with their service, but that belief is based merely on a few anecdotal comments. To objectively gauge your clients’ satisfaction level, consider sending a quarterly e-mail survey, or incorporating surveys into periodic business reviews. You can also use your Professional Service Automation (PSA) tool to assist with customer surveys. What’s nice about this is that it makes it easier to get feedback immediately after you’ve delivered value, such as closing a ticket after fixing a computer problem.

When using this approach, a short survey can automatically be emailed to your client after the ticket is closed. Additionally, filters can be added so that the same person doesn’t receive more than one survey within a 30-day window. A good place to start is a simple format made up of five to 10 questions and a simple scale (e.g., 1 to 10) along with at least one open-ended question that allows customers to leave comments.

Any responses below an acceptable satisfaction level present a good opportunity to immediately follow up with a client and fix whatever’s preventing them from giving you a better score. And, when you receive glowing reviews highlighting your fast, friendly service, celebrate those victories with your service reps and get your customer’s permission to use their feedback in future marketing messages.

Following the three tips may require a little extra effort, but when you consider how little it costs and the potential upside, it’s really something you can’t afford not to do.

Michael Mowder is senior director of partner success and services for Intronis MSP Solutions by Barracuda. Read more Intronis MSP Solutions by Barracuda blogs here.