What should MSPs consider when firing a client?

As a business owner, it doesn’t make a lot of sense on the surface to “fire a client”. You’re building an MSP business in order to grow profits and actively reducing the number of paying clients seems absurd. The harsh reality is that there will be times in your business where ending a relationship with a client could be a good thing.

It’s not easy. But by delaying the inevitable and not having those uneasy conversations, the more damage could be done to your business.

When firing a client, every person’s situation is going to be different. As such, there is no universal process for how to fire a client the right way. However, there are several guidelines and considerations that would help you with the process.

Look At Problem Areas

Before sitting down with any client, it’s important to review what areas aren’t working. Naturally, every relationship is going to have some rough patches. These can result in clients leaving too, and that’s a part of running a business.

In some cases, there are issues in the control of an MSP to correct. Talking through these situations could expose areas you can improve to smooth the relationship over. However, there are factors beyond the control of the MSP to rectify, and if a client is unwilling to work to resolve these from their side, the relationship may be unsalvageable. Identifying the issues and who holds responsibility for the disconnection is an important step.

Problem areas could be:

Mismanaged expectations. Some customers might be dissatisfied because the services didn’t meet their expectations. How you talk to a client as well sets the tone for those expectations as well.
Breached SLAs. Your service-level agreements are written promises to customers; but they also serve as a boundary for the level of service you are expected to provide. They can be hard to track down and measure; and if you have made multiple SLAs with the client, it’s even tougher to evaluate.
Weak customer service. Your customers rely on you and put your trust in you. As such, they demand an easy method of communication. If you can’t provide that, they’ll look for someone who can.
Too many tools to track and maintain. When you offer so many distinct services, it can be tough for customers to see what you actually provide and what you don’t. For example, some customers might think you provide cybersecurity coverage when in reality you don’t. Some customers assume that service is a given. When you have so many tools to track and maintain, it can be hard to be transparent and explain to customers you don’t provide those services.
Profitability. Some customers you pick up as clients may not be that profitable. Some will agree to your services, but the reality is they may not be able to afford your services in the long-term.

Have A Plan Of Action

Once you know your problem areas, it’s worth putting together a plan of action to discuss with your client. Here is how you’ll want to approach the situation.

First, have a meeting with your executives/members who’ll be in the client meeting. The idea with this meeting in advance is that you don’t want to be in this situation three months from now. The goal is to acknowledge that the relationship with the client isn’t going to help you nor them and that this needs to be solved together.
Second, gather evidence and understand why this situation won’t benefit either party. Explore the problem areas you identified in more detail and build up a case for why this isn’t going to work. At the same time, you can also look for how to cover those problem areas in the future.
Lastly, list off all the issues openly and listen as well. In many cases, if you’re open and not accusing them about it, they’re going to be open with you too. This can help in determining whether you and your client can solve the issues together or whether it’s better to part ways.

There Is Always A Reason

When firing a client, there is always a reason behind their actions and it’s important to identify what those are rather than immediately dissolving the business relationship. Instead, by learning to gather information and know problem areas in both your client’s and your own MSP, you can bridge the gap and have further understanding.

In some cases, even after doing that, you may determine it’s time to end the business relationship. The benefit of this process is that constructive communication may resolve the situation and you’ll retaining these clients. Perhaps more importantly, you’ll identify your own weaknesses that your team can begin to address.

About MSP Corp

MSP Corp understands you’ve worked hard to build your business and you want to protect it. With a mission to be a world-class business partner for MSP owners across Canada, we actively seek to acquire and partner with owners looking to secure the value of the business they have built and provide a seamless exit process that ensures business continuity and employee and client stability.