How to save your MSP from painful customer churn rates
How to save your MSP from painful customer churn rates
0% churn rate is the ideal figure for MSP businesses across the board. Sadly, many MSPs are far away from that dream figure, way too far. A study shows that every month, North American MSPs gain four new customers for every three lost.
This means many MSP's are literally in a ‘find one/lose three’ customer loop. What’s the point of adding new customers if your recurring revenue remains more or less the same!
High churn rates hurt the financial performance of many MSPs. The money spent on acquiring new customers is initially recovered from current customers. When folks stop paying for your service and there’s no revenue stream to bank on, all you’re left with is expensive acquisition overheads.
Your MSP business has very little chance of surviving against a growing churn rate if you do not have an effective plan in hand. The best way to tackle this issue is to be proactive and ensure it never happens. Here’s how you can save your MSP from painful customer churn rates:
Make’em like you from the get-go
MSPs underestimate the role of onboarding in reducing customer churn rate. A weak onboarding leads to bad customer experience, increasing early churn.
The foundation of a solid onboarding experience revolves around meeting customer expectations. Different clients will have different demands, but at the heart of it all, all they want is to understand the core functionality of your services.
To make the first-run experience a ‘wow’ moment and ensure customers don’t churn, focus on the following onboarding elements:
Transparent service setup: Offer educational resources so customers can start applying them.
Keep it light: A large volume of information can add to the cognitive load of customers.
Follow up: Be ready to answer all the burning questions new customers may have after onboarding.
Actively engage your customers
When all MSPs are selling more or less the same services, customer experience becomes a major competitive differentiator. In fact, 89% of business will compete mainly on customer experience.
Engagement plays a key role in shaping the customer experience. This goes beyond just delivering a good onboarding experience. MSPs should continue educating customers, even long after onboarding, in the form of emails or webinars providing personalized experiences. This breeds customer loyalty and helps them form long-lasting relationships with their customers.
Pulseway is a great example of this practice in action. Apart from offering a full IT stack solution to MSPs, strong relationships are formed on the backbone of engaging content. Blogs, webinars, tutorials, and videos are ways customers feel informed and empowered which is why Pulseway experiences lesser churn.
Stop being the sleazy car salesman
A sleazy used car salesman doesn’t care about existing customers. Their only goal is getting new customers, period.
Similarly, your MSP may fall into the trap of cozying up to prospects at the expense of existing customers. For instance, many MSPs offer incentives exclusively to attract new customers. This just goes on to show how much you value existing customers for their loyalty — and that figure is zilch leading to customer churn at a large scale.
Make the customer journey more rewarding by establishing a customer loyalty program. Show that you care by offering incentives like a month-free upgrade, early access to new services, exclusive content, and much more.
These personalized gestures build a positive customer experience and the chances of a happy customer canceling service are highly unlikely.
Re-think sales and marketing
Often, high churn rates are a byproduct of attracting the wrong type of customers. You need to re-evaluate your sales and marketing to ensure new customers benefit from your services.
The reason you are attracting the wrong customers might be a sloppy marketing pitch. If your message is too vague, you'll have customers who might have no use of your services. The other reason might be your sales team is working with a faulty qualifying set of questions. Irrespective of the reasons, a wrong pitch brings wrong prospects, resulting in early churn.
Sit down with your sales and marketing team to understand who your prospects are and learn how to reach them. This will be overwhelming considering team members have to go back to the drawing board to re-figure everything out. But in the end, it will help your MSP and customers.
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How to keep customers happy? Find the answers and save yourself from potential customer churns. However, it’s hard to imagine that many MSPs come to that conclusion based on a few anecdotal comments or worse, instincts.
To know what pleases customers about your MSP business, carry out a survey. On one hand, the survey makes it evident to customers that their opinion matters to you, making them feel valued. On the other front, you have actual data to customize service offerings that will resonate with customers. A win-win situation for all.
A few things to keep in mind while sending out the perfect survey:
- Keep it short. Expecting quality answers from a three-page survey is futile. Restrict the survey to not more than a page with a maximum of ten relevant questions.
- Start with open-ended questions. Don’t build a survey full of multiple choice and ratings. Use open-ended questions to gain some qualitative answers. For eg: instead of asking customers to rate your services, ask them what they liked or didn't like about the service.
- Ask right after you have solved a problem. Once a ticket is successfully resolved, send out a survey to the customer. The psychology of reciprocity makes it a sweet spot where customers will happily fill in answers without any reluctance.
These tactical tips will not only reduce customer churn for your MSP but simultaneously increase profit margins. Try them, tweak them, whatever it takes to make customers fall in love with your MSP and stick by you for good.