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Posted
May 27, 2021

How Extended Warranties Can Help MSPs Create Happier Client Relationships

Chances are you can think of a time when one of your clients refused to replace aging hardware or renew a subscription in order to save money.

Despite educating them on the risks of an aging asset and the business value of upgrading their mission-critical equipment, they still didn’t budge.

Then the inevitable happens - an asset breaks down. As a result, getting a replacement becomes a priority and this issue generates a ton of work while having to drop all other service requests to help your client.

Sound familiar?

This is a textbook definition of a “lose-lose” deal.

How MSPs Should Think about the Hardware Asset Lifecycle

When it comes to the decision-making process for hardware investments, the outcome of any device replacement discussion can only be to:

  • Replace the asset
  • Extend the warranty period
  • Leave a device in the system without warranty
  • Decommission the device


Most MSPs will advocate for replacement, however, as we all know, it’s not uncommon for clients to push back and even to build arguments to leave a device out of warranty.


On one hand, MSPs may lose trust with their clients if a replacement is done and the client feels like it's an unnecessary cost. On the other hand, MSPs may feel unappreciated and will need to make up lost revenues elsewhere if client pushback is constant.

So how can we turn lose-lose situations into a win-win once and for all? Rather than relying on client feelings, habits and perceptions to guide the seemingly never-ending cycle of asset replacement decisions, Partners can implement a simple decision-making model to simplify this process.

Using a visual aid such as the following Hardware Asset Lifecycle Decisions model, it becomes easier to understand the client’s points while they get a deeper understanding of the trade-offs. Using this model during meetings will help simplify complex things and make decisions easier for both parties in a visual way, leading to a level of understanding that drives alignment.


How to Convince Clients to Choose the Best Hardware Investment Option

Before diving into hardware investment options with clients, it’s important for service providers and clients to have proper alignment on performance needs and budget. Win-win decisions will become more natural if conversations are structured strategically in the following way:

Talking Point #1: Performance

It’s important to start the conversation discussing their business needs and why an at-risk device exists in their system. This part of the discussion should be less about tech and more about the problem they need solved.

The performance issue can be speed, reliability, security, feature richness or anything related to the particular device. For example, an at-risk server needs to be top-notch if it’s running their ERP system. However, if it’s running something that’s non-essential for legacy sake, then it will be less of an issue.

Ultimately the goal here is for MSPs and clients to become better aligned on business goals. As a result, clients will be more likely to be open to various possibilities later on. 


Talking Point #2: Investment

Once everyone has a clear understanding of business goals, it’s time to address any potential budget challenges. Unfortunately, this is typically where clients tend to have blind spots.

While clients are prone to focus on invoices, it’s important to also acknowledge the heroic work, inefficiencies and service efforts needed to support aging hardware.

The key thing to communicate here is that this scale is not about the cost of the device but rather the total cost of ownership.


Talking Point #3: Encourage Any of the Win-win Decisions

You may notice in the chart provided below that the option to leave a device out of warranty has been removed. The reasoning for this is that this option can never be a win-win.

A failed device runs the risk of either hurting the client’s perceived quality of service or generating extra work for the provider. Ultimately anything that happens with a device that’s out of warranty will likely hurt relationships in the long run. 

With the best interests in mind for service providers and clients, this leads to three simple choices:


Option A: Replace the Device Now and Decommission the Old Device

If there is willingness to invest and the device is highly needed for performance,, it’s best to set up a project for the replacement and decommission the old device. This will lead to better performance for the business requirements.


Option B: Replace the Device Later and Extend the Life with Warranty 

If there is no willingness to invest or the performance of the device is good enough, going with a warranty extension would be the smartest choice. As an affordable default option, it’s simple for the provider to set up, and the replacement can be planned in the client technology roadmap.


Option C: Decommission the Device Without Replacement

If there is no willingness to invest and the asset is not required for the efficient operations of the business, the device should be decommissioned and taken out of the system.

Conclusion

Leaving devices out of warranty can introduce many issues that will end up hurting relationships in the long run. In a perfect world, replacing devices in a regular timeframe would be the most ideal choice. However, extended warranties provide an affordable option that helps keep a win-win relationship for both service providers and their clients.

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