Don't over promise your clients and under deliver for your MSP

Low cost, fast, high quality. When it comes to service, most successful entrepreneurs will tell you to pick two of the three if you ever want to build a resilient and profitable MSP.

Yet, time and again, I meet MSPs who make the near-fatal mistake of trying to accomplish all three. Just this week I was talking to a new-to-market MSP who plans on charging $50 per user per month with the promise of a 90% first contact resolution and a commitment to resolve those incidents in an average of 15 minutes. Very ambitious, and I’ve no doubt his customers will love him for it … for a while.. as he’ll soon be losing money or breaking promises. Probably both.

Although his price per endpoint may be right for that particular marketplace (regional USA) – what this tenacious new MSP owner has failed to calculate is what it will take to deliver on his low cost, fast, high quality promise consistently - day in and day out. It can so easily go off track if any one - or more likely - all of the following unexpected service demands occur:

• two or more calls come in at once;
• your staff get sick or goes on leave or resigns unexpectedly; or
• you sign up just a couple of new customers.

Have you enough staff to cover an unexpected surge in calls? Can you cover the gaps when you are short staffed? What happens when the success rate starts to drop to 80% or 70%? Now we need an account manager or as I like to call them - the “apologies department” to provide cover for an "underperforming" delivery team. An MSP's biggest cost is labour. But rarely do sales and revenue grow fast enough to justify adding new full time staff to meet new or unexpected service demands in a systematic way.

When I talked this through with this MSP newbie - he rethought. While he doesn’t think he can push prices up much higher than $50 in his small regional area he decided to set more reasonable turnaround expectations with his customers and through, Benchmark 365, provide a lower cost help desk solution that still provides 24/7 coverage and service.

Fair, reasonable and achievable

Many in the MSP space like to say that they provide “white glove” service. A term foreign to me as an Australian (white glove service sounds like being treated to an unwanted strip search at the airport..) but essentially means high speed turnaround times, exceptional quality all often delivered by the business owner him or herself!

I often wonder how a promise like this is made without either capping your growth as a business and remaining a “boutique” with a small group of customers or increasing your prices considerably in what is a market that is under considerable pricing pressure - even before our current predicament.

So the question is - is it really necessary to provide such high levels of service? Are you just creating unsustainable expectations in your customers? It's better to simply ask prospects what they think is fair and reasonable:

• what do you think is a fair and reasonable time for us to respond to your emails? and;
• what is an acceptable time for us to phone you back after you’ve called us about a problem?”

In my experience, the typical response goes something like this: “We generally don’t mind, so long as we’re kept in the loop”. And if it’s an emergency we need you to act as soon as possible." Seems fair, reasonable and achievable to me.

Of course, sometimes customers need a little education on what is fair and reasonable. I can recall negotiating with a few companies who wanted a person onsite 3 times a week or a 5 minute turnaround time on every support request. A brief lesson in economics will often do much to sharply lower their expectations once they realised that the cost would be 3 times the price and that anyone offering it for less would be losing money hand over fist and eventually fail to live up to the deal.

It's never too late

In times like these it can often feel like you have to do whatever it takes to keep the customers you have happy. The problem is that if you have over promised on service delivery and then your customer wants you to take a pay cut because their business is suffering - you might find yourself doing more for even less.

So get out in front of it. Talk to your customers now about how their businesses are faring. Take a look at the service you are delivering them and see if its really what they need and even offer ways they can save with a commensurate reduction in service level - even if its temporary. In difficult days, customers will thank you for proactively seeking to help them out and you wont be stuck getting less for more effort. The time you save can be put to use shoring up other more important customer relationships or finding new business.

Take a listen to Episode 24 of our Infinite Scale podcast - So what's really changed for MSPs? I take a look at what's really changed for MSPs and provide some perspective and tips on how to manage your customers wanting the same for less - plus a few other ways to build resilience and protect your profitability.