TLDR Preview:
Some of your worst clients may be salvageable. By removing service options based on time and materials billing and ala carte backup and security features, you may be able to convert C Level clients to A Level clients. Give them one choice: a full managed services package. If they decline, it’s clear you must cut ties with them.
Shawn’s Big Surprise: From The C List To The A List
When I switched to the managed services model, a surprising thing happened. I had a handful of clients who would definitely rate as C List. They didn’t pay on time, and they questioned a lot of what we did. They fell into the “cheap and a pain in the ass” category.
We were ready to play hardball with them. This was our opportunity to change those relationships. To move ourselves into the power position where we dictated the terms and didn’t just keep going along with whatever was thrown at us. It was either that or we’d happily get rid of them.
Honestly, I was 100% certain that these clients, based on past performance and behavior, would all tell us to take a hike and head down the road to our competitors.
But then a funny thing happened…
At the very first meeting I walked into, I explained to the client that we had a new way of doing things. I told them that we would no longer be doing break/fix work. All clients who wanted to continue to work with us would have to move to the new proactive (managed services) model.
I let this client know that much of the work would be done remotely behind the scenes. They would have to pay a flat fee every month. That fee would be collected in advance through automatic payment. They could no longer hold invoices for 60 or 90 days. When I finished my spiel, I began packing up, waiting for the swift kick in the ass that I knew would send me flying out the door.
But the client just looked at me and said, “Sounds great. What do you need me to sign, and how long will it take to get started?”
I nearly fell out of my seat. What? Excuse me? You, the client I have to call and beg for money every month, are going to go on autopay? You’re going to let me do what needs to be done to your systems without arguing with me? Okay, I didn’t say this out loud, but it was going through my mind as I fumbled to get out the new agreement that I had expected to leave right in my bag.
This happened time and time again.
We actually retained most of the clients I thought we would lose. And those C-Listers quickly became A-Listers, paying on time every month, in advance, and not making much noise. Ironically, some of our best break/fix accounts that I didn’t consider C List never came over. They just didn’t get it. They loved us as firefighters, but they couldn’t quite see us as the gardeners we had become.
Looking back, I now see that the reason so many struggled with our services prior to moving to a managed services model was that they just didn’t understand what we were doing. The way we explained it as engineers probably didn’t help.
When you work in a break/fix model, you are telling someone who really doesn’t understand business technology “Call me when you need me.” Then you are asking, “What else can I do for you?” The problem with that method is that these clients are not qualified to know the answers to those questions. That is our job as the experts.
When managed services are sold right, the offering is a productized service. In other words, we are putting our services in a virtual box—and the client should have a clear understanding of what is inside the box and what is not. They must also understand the outcomes they can expect from buying the box.
Things like solid uptime, better security, and meeting relevant compliance obligations belong in the box. Most business owners don’t like to appear unknowledgeable about a subject, so it is hard for them to admit, “I don’t understand this.” When they call for IT services, they fudge their way through the conversation. They tell us to do what they think we should do, instead of saying, “I have no idea. I’m a lawyer, not an IT expert. You tell me what to do!” If they think they know what to do, that can be even worse!
If MSPs package and present their services in a productized manner, clients are more comfortable with the offering. They know what they are going to get, so they stay out of the way and pay their bill on time. Clarity is a wonderful thing!
Eliminating À La Carte
Even when MSPs have what they think is a good service offering, they can reintroduce confusion by giving a client too many options. Options might seem like a good idea that greases the skids toward some kind of sale. But the problem with this is that often clients don’t really understand the ramifications of the choices they are making. They don’t want to look stupid, so they nod and pick something they think will save them money. If there are services that they most definitely should have, they should not be offered packages that exclude those services.
I was hit squarely in the face with this realization when I had a law firm that experienced a data loss. The firm’s server had died. They were on a managed services agreement we had put together in the early days of our MSP. It included monitoring and maintenance, but several items were still à la carte…including backup.
That afternoon, the office manager called and asked me to attend a meeting with the partners. I had a feeling I knew where this meeting was going, so I took a copy of their agreement with me. When I got to the client’s office, I was ushered into a meeting room with the partners and several associate attorneys.
The partner who was my point of contact stood up, planted his hands on the table, and came on like a prosecutor going after a hostile witness. “Why did our firm lose data? Isn’t this what we pay you for?”
I held up my ace in the hole, a copy of the agreement he had signed, and pointed out the section about backup services. Feeling confident, I said, “Here is where you initialed that you didn’t want backup. You said it was too expensive, and that your office staff would continue to handle that.”
He looked down at the desk and back up at me. Silence. He looked back down at the desk and up at me again, a pained expression on his face.
Then he said words that still ring in my ears to this day: “You should have insisted.”
It was a dagger to the heart. My first thought was that I wanted to punch him in the nose for putting this on me. My second thought was that he was absolutely right. He didn’t say it, but I had no doubt what he meant: He was not qualified to make that decision. I was. I was the IT expert, and that was what he was paying me for, my expertise. He didn’t know what he didn’t know about IT, which is why he’d hired me—and I had failed him. It was no different from what we expect from our attorney or our CPA.
Sometimes, the most important job we have as IT professionals is to protect our clients from themselves.
That very day, we got rid of all à la carte options on our current agreements and began upgrading our old ones. Not a single client said no when we explained why we were changing things. Backup, basic security, and other functions that protect the client would no longer be optional.
Eventually, we went to a single agreement option. It was flat rate, all you can eat, with a minimum seat count of 10.
This one agreement option provided increased clarity for the client and for our team. We actually found that it was easier to sell. No customized agreements. Nobody had to wonder “Is this included or not?” This helped us start to move away from owner-led sales. When an offering is standardized, anyone can sell it. And it was easier to service. Expectations were clear on all sides, making relationships with both our clients and our staff much healthier, and in the end, more profitable.
So how about your MSP? Do you have clients that are time bombs… because you’ve allowed them to shuffle along in that state? Time to act. If you lose clients because you do so, they are absolutely the clients to lose. If you can’t convert them into clients that have a quality of technology and protection you can put your seal of approval on, they belong on compost pile.