Client retention is a concern for any managed service provider (MSP) who wants a healthy and profitable business.
If you’re not careful, slips in service and poor communication could result in them shopping around for a new provider.
So what can you do to reduce this kind of client churn? And what steps can you take to improve your customer service game?
In this article, we take a look at what client retention is, and the role that customer service plays in reducing client turnover for your MSP business.
What is Client Retention and Why is it So Important?
Customer retention refers to the ability of a company or brand to retain its customers or attract repeat business. For MSPs, this translates to the ability to retain clients.
The key to this is delivering a consistent service which keeps your clients satisfied.
In order to make your MSP sustainable, you need to keep a balance where you’re keeping your current clients happy, while attracting new clients to your business.
Key Customer Retention Metrics
As we often say here at Team Tubb, if it’s not measured, it’s not managed.
According to an Average Customer Retention Rate Report from CustomerGauge, average retention rates across all industries are about 72%. However, as many as 44% of businesses are not measuring their retention rates at all.
Having a clear picture of where your business currently sits in terms of client churn is a good idea. So, what other data is worth making a note of?
Here are a few examples of metrics to record and manage in your MSP business:
Churn Rate – This compares the number of new clients you take on over the year compared with those you let go.
Client Health Score – This metric helps you to determine the likelihood of clients being able to grow, stay stable or churn. This will help you identify clients who may be at risk.
Customer Satisfaction – This can be measured through surveys when tickets are resolved, or as part of regular reviews.
How Good Service Can Elevate the Experience for the Client and Their Customers
There are a number of reasons why a client may seek out other IT providers.
If your prices are too high for the client’s budget, or if your stack doesn’t suit their needs, that’s one thing. However, clients may also leave if they feel undervalued, which could result from feeling they’re just not getting the service they were promised or expected.
If this is the case then that’s something that you need to address, as it could have implications for your other clients too.
Better Communication Stops Issues Escalating into Major Problems
Just as important as understanding a client’s technical requirements is understanding their operational rhythms, growth goals and communication needs.
Better communication results in a stronger relationship between partners, and often it can prevent issues from becoming bigger problems further down the line.
Helping your client understand your service level agreements and escalation policies will result in fewer conflicts. Plus, it will allow you to take control of your service request queues, and not run around chasing your tail.
Finally, you have to be aware that when dealing with client representatives, they may require different assurances, depending on their role within the business. For example, a finance director may want to know the detail behind figures, whereas an executive might be more concerned with outcomes.
Tailoring your communication is a skill that comes with practice, but it makes all the difference to your clients.
When it comes to the channels available to your clients, an omni-channel approach will offer your clients options. However, you must ensure consistency across a broader spectrum to ensure you serve them all equally.
Empathy and Accountability Builds Trust
Good customer service is an ethos that should be part of your company culture. When your clients raise a service request, you are committing to deliver on a promise and provide a positive outcome in the best way you can.
When things go right, and the client or their customers are happy, then it’s an ideal outcome. However, when the client isn’t satisfied, or needs further assurances, then that’s when it’s important to be accountable too.
When services don’t go according to plan, it’s important to demonstrate that you empathise with the client, and hold yourself accountable. Attempt to understand the problem before attempting to resolve it so that you don’t cause further strain on the relationship.
Once that’s done, attempt to resolve the issue in a timely fashion, and then follow up with a report that demonstrates full transparency. Finally, state how you intend to improve your process in the future. By doing this, you are showing that you’re putting your client first, and that you’re going to make positive changes.
Consistency is Key
When clients receive a consistent service, they can better rely on you to provide support when they need it most. There are two ways to ensure consistency in what you do. Ensure your team is trained to deliver services to a high standard, and ensure you communicate that standard to your clients.
Training for your staff needs to go beyond the technical capabilities of the job and incorporate customer service training as well.
And hold yourself to the high standards you communicate to your clients. Things may not always go to plan. However, if you can recognise any failings and aim to improve in the future, it will prevent patterns of inconsistency from becoming an issue.
Under Promise but Over Deliver
It may be tempting to show confidence in your sales pitch to new prospective clients, but you should be realistic about their expectations of you too.
Clients are always much happier when your service exceeds their expectations. So, in order to make this happen, never fall short on the promises you make to your clients.
When you deliver more than they expect in terms of service, that’s when they truly appreciate you for going the extra mile.
Why Feedback is Important to Both Gather and Act Upon
Feedback is the lifeblood of any service improvement strategy.
Bill Gates once said: “”Your most unhappy customers are your greatest source of learning.”
However, we know it’s not easy to ask for feedback, as it forces us to acknowledge our weaker areas. It gives our clients a medium to tell us what we’re getting right, and what we’re missing the mark on.
You can ask for feedback whenever you like, but it’s often easiest to ask just after delivering a service, when it’s fresh in their minds.
If you have a ticketing system for service requests, it’s common to have a survey tool plugged in to it. Once a ticket has been resolved, the survey is then issued to the user to complete.
One completed survey will help you see how well you did on that one ticket. However, once you have a number of completed surveys, you can start to analyse the data across a wider area. And see where the areas are that you need to improve upon.
Quarterly Business Reviews (QBRS)
Another area to collate client feedback is directly from the client representative you deal with as part of your regular business review meetings.
QBRs or TBRs (Technical Business Reviews) allow you to ask for feedback on a more strategic level. As part of this meeting, you’ll already be discussing that client’s technical roadmap and future projects, as well as any regularly raised tickets or other sticking points.
Sometimes this can result in sales opportunities for you, and other times it will highlight efficiency savings for both your team and the client.
Acting Upon That Feedback
Service improvement is something every business should be aiming to do. And feedback can assist you with what you should focus on improving.
It’s all very well asking and getting the feedback from your clients, but you must act upon that feedback for it to be worthwhile.
If the remedial action required involves education and training for your team, then it’s worth sharing in your marketing. You’re acknowledging the problem and doing something about it, so it shows your client that you’re listening.
If, however, the problem you’re trying to solve involves working on a new project, then it’s worth taking note of the baseline results ahead of undertaking the work. This will give you some data to compare to once the completed project starts producing hopefully better outcomes.
Failing to take any action to improve at all might not have any immediate impact, but it will affect how your clients perceive the benefit of completing surveys. This may also impact client retention rates too if many of your clients feel you’re not listening to them.
Other Tips for Better Customer Retention
Aside from improving customer service and operation efficiency, there are other ways MSPs can improve customer retention.
Proactively Prevent Issues from Affecting Your Client’s and Their Customers
When you’re operationally aligned with your clients, you are much more likely to spot and circumvent problems that might otherwise affect them.
Applying your knowledge and experience as an IT expert allows you to make course corrections and apply updates with minimal impact to their business.
This is the value you provide as a managed service provider, and why your clients trust you to protect them from future setbacks.
Stay Ahead of the Technological Curve
Another reason that clients choose to move on from their IT suppliers is stagnation.
If clients believe that you’re not keeping up with the latest technology, it can be a great concern to them. Companies demand the newest and best tools for their business, and if you’re not keeping up, they may look to other suppliers who can meet their needs.
However, it can also work the other way too. Some clients refuse to adapt to new technology because it requires additional training, and they can become too comfortable with the familiar.
A challenge some MSPs often have is to get clients to commit to migrating their customer data to a newer, more up-to-date platform and let go of legacy systems they’ve grown accustomed to.
Utilise Automation and Standard Operating Procedures
It’s difficult to provide a consistent stellar service when you have a busy workload. However, there are ways to make some efficiency savings while keeping your service running effectively.
By incorporating email templates, you can easily set standards for communication, while automation tools will help you even further.
Client Retention Through Outstanding Customer Service Conclusion
With exceptional customer service at the core of what you do, you can reduce client churn in your business. Client retention is challenging enough when you have to keep up to date with new technology trends and threats and trying to provide value for your clients while making a profit.
Communication and consistency are two areas every business should look at to see if there’s room for improvement. Keeping your clients happy with a service that never goes wrong is a good thing. How you react when things don’t go according to plan is just as important getting it right.
Dealing with a client that has been let down, whether it’s your fault or not, is an opportunity to show how good you are at listening and empathising. If you can secure a positive outcome for that client, it will build greater trust. Even better if you can later follow up with them about how you can avoid circumstances like that in future.
Have you made changes to your customer services policy that has seen greater client retention? Or have you lost a customer that you let down over something that could have been easily prevented? If so, we’d love to hear about it in the comments.
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I'm a small business owner, technical writer and blogger, with 15 years experience in corporate IT. I frequently attend MSP peer groups and create content relevant to IT service providers and business owners.
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