MSPmentor Blog
Turning Bad Customers Good

Turning Bad Customers Good

The days of firing bad customers are over.  Just because they didn’t start out under a managed contract, doesn’t mean you can’t get them there. Yes, it can be a process.  Yes, it make take some time and it will certainly take some effort.  But in the end, transitioning your reactive customer to a managed service model will ultimately make you more money, elevate customer satisfaction and strengthen your business.

Over the years, we’ve seen VARs and aspiring MSPs get motivated and fire their existing customers simply because they didn’t want to, or weren’t ready to, “make the move.”  The business model changed overnight, and a new type of customer is wanted. So what’s the problem?

The fact is many partners didn’t, and still don’t, have the pipeline to replace the business in real time and end up spending the next twelve to twenty-four months chasing down new business leads, losing revenues and eroding their profit margins.  It’s an irresponsible, no-win cycle that certainly hasn’t done our industry any favors – especially when it comes to commoditization and adoption of managed services – yet many are still advising these seemingly “cut your loss” actions.

So what’s my advice?  Don’t fire your customers simply because they don’t fit into the “managed” model.  Find ways to create a recurring revenue contract with your customer and grow that contract over time by educating thm on the business value and showing them the results. Keep the focus on earning the business versus demanding the switch.  A few ways to go about it:

Give them a test-run

Introduce a simple, yet managed service to your customers – such as endpoint security or backup.  Give them a taste or trial of what you’re offering and show them the results so that you can build up to 100 percent IT coverage.  Eat the elephant one bit at a time. Don’t go for that quantum leap from reactive to fixed fee – there are very few customers out there that are able to and willing to do that out the gate.

Bring in the proof

One of the most powerful sales tactics remains word of mouth.  Put forth a soft-touch sales and marketing campaign to existing customers that promotes your new services and shows them what’s worked for others will work for them.  Offer a free assessment, hold a quarterly business review, put together a client appreciation event or education seminar that will allow you the opportunity to demonstrate your services and success.

Show them the savings

Do business a little differently. Give a guarantee, bring in reports and share the projected savings with your customers.  If moving to a managed model doesn’t save them money and improve their service levels, you’ll call it quits and go back to business as usual.  There’s got to be a mutual win here. Show them what’s in it for them.

All things accounted for we should never walk away from existing business until we’ve exhausted all our options for making it work.  If the customer is a happy customer today, make them an even happier client tomorrow.

If you’re not sure where to start, look to N-able. We offer a series of free webinars that demonstrate how to transition your customers from break/fix and reactive to managed without radically changing your business model or making extensive investments in infrastructure. The partner-tested and approved 12-part series will show you how to leverage our freemium offerings (so there’s no risk to you) to get your foot in the door with existing customers and prospects. It will also lend valuable insight into how you can achieve fixed-fee recurring revenue over time from all your SMB customers.

The tools, technology and resources to evolve your customers over time to a managed services model are readily available. The next step is to find the “in” and make the transition happen. Remember - the goal with managed services is to establish recurring revenue.  If you’re doing that – even on a small scale – you’re on the right track.

N-able Technologies VP of Sales Mike CullenMike Cullen is VP of sales at N-able Technologies, which develops remote monitoring and management automation solutions for MSPs and IT departments. Monthly guest blogs such as this are part of MSPmentor’s annual platinum sponsorship.
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