“You’ve got to know when to hold ‘em, know when to fold ‘em…”
“The Gambler”, Kenny Rogers, 1978.
The late, great Kenny Rogers’ song – The Gambler – has particular relevance in the new COVID world. What expenses should we hold onto? Which clients are we making money on and which are stretching us thin?
In talking with MSPs they are getting hit with two similar questions from their customers:
- Can we cut back on what we pay you but still have the same services?
- Can we defer payments until we are back to normal?
So while you just spent all of this time setting them up to work from home, they’re simultaneously asking for a discount. How do we figure out what the right play is? Too often, we resort to our gut feeling in determining whether or not a client is a “good client”. More often than you’d imagine, your biggest customer is your biggest resource drain. Sure, they pay you a lot, but your entire payroll jumps whenever the client calls. But are you actually making money off them?
Customer profitability: know what you’re dealing with
Certainly during these times, these questions are more important than ever! When you get a question like this, turn to the data you already have in your system. It’s important to not only know what the current month’s data is but how the client has been throughout the life of the relationship.
The next thing is – why? Why is the profit margin so low? Look at common influencers on this client. Do they have a high number of tickets per user? What can we change to make them profitable?
Reviewing these things before you give a response to the client isn’t just a nice thing to do, it’s required for any MSP to come out in a strong position.
Sure, you may realize you should have cut this client long ago. Or you may realize you’ve been under servicing this client. Another danger is just waiting for your competitor to find out. But the important thing is you know… it’s not just a feeling.
Our team has dealt with these challenges before. It’s why we developed Cognition360 – to enable MSP owners to steer the ship. Are you steering the ship or is it steering you?