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MSP Minute
June 24, 2021

The 7 Red Flags to Look for Before You Lose a Client

Denes Purnhauser

It’s no secret that everybody hates losing a client. Maintaining client relationships can sometimes be a struggle, particularly with difficult clients. But what happens when the relationship breaks down and it's your MSP that is the one on the chopping block? We break down the seven reasons why clients switch their MSP and how to move forward from it.

The 7 Red Flags to Look for Before You Lose a Client

Everybody hates losing a client. Sometimes MSPs lose clients due to a merger or an acquisition and there’s nothing to be done about it. They’ve outgrown you and it’s as simple as that. But there are a lot of other instances where the MSP is responsible for losing a client in some way or another. So let’s take a look at the seven most common causes of losing a client.

1. Failed to Set Proper Expectations

Whether you or your sales people are overpromising, it can contribute to churn later on if your team fails to set proper expectations during the sales process.

2. Poor Onboarding Process
The first impression is always important and there’s a chance that clients will regret their decision within the first month. If you have a poor onboarding process, it will give your new client time to collect the evidence for them to part ways because they already want to do it in the first place.

3. Lack of Technical Skills
Whether there was a security issue, a backup issue or some critical item went wrong, clients can lose trust in you due if your team’s technical skills are not up to snuff.

4. Communication Issues
There are quite a few general support issues that can cause a relationship to derail. From deadlines to expectations, problem resolution, email or phone communication, access and more, simple communication issues should be something to watch out for.

5. Failed Relationship Management
There may be staffing changes on the client side that can result in new decision-making criteria due to new points of contact. These new individuals may have an idea on who they think is the best MSP. If you’re not able to show your value to sway their opinion, you might lose their business.

6. Cultural Changes
You might be a good cultural fit at the start of a relationship, but things may change if there’s growth on either side. New people can spur the development of a new internal culture that can create a wedge between you and your clients, leading to failure.

7. Lack of Account Management
This usually means that you don’t have a strategic IT approach. For higher-end clients, you’ll be viewed like a vendor as they don’t see you as a strategic provider. As a result, this usually puts you into some sort of price pressure and if another MSP comes in with a better offer, your clients may choose to make the move.

So what do you do? If you experience churn, it’s likely the result of one of these seven problems within your MSP. The root cause is usually a lack of activity or a lack of a particular role within your organization. This is where you’ll want to take a step back to determine which one is most likely the cause of your client churn while thinking about what role could have prevented it.

No matter the cause, just be sure to try to solve one thing at a time, and not just because you don’t want to lose clients. Chances are that you’ve got existing clients who may be experiencing this as well. Focus on creating a better client experience while making sure that you’re positioning yourself as a strategic advisor to your clients.