Letting go of bad Clients: Guide for MSP's

Is your business being pulled down by one or more bad clients? This guide will walk you through how to let go of clients who aren’t a good, profitable fit, so you can focus on clients and prospects who are.

How to tell when it’s time to fire a bad MSP client ​

Aside from a few other not-so-nice adjectives, bad clients are, simply put, a drain. 

  • They drain the precious time you could be spending building your business.
  • They drain your staff and other business resources without adding commensurate value.
  • They can even drain your bank account if you don’t recognize and cut them off quickly enough.

 

Let’s explore the leading reasons you should consider, and a few reasons you should reconsider, firing a client despite today’s uncertain economy.

Not all revenue is created equal

We were inspired by this social media conversation about firing bad MSP clients to think about the Pareto principle, which is named for Italian economist Vilfredo Pareto who noted the phenomena that, often, 80% of consequences are the result of 20% of the causes.

The way this applies to your MSP business is that, in many cases, 20% of your clients will generate 80% of your revenue. And similarly — 20% of your clients might be responsible for 80% of your stress!

For clients who don’t fall into the first 20% but do fall into the second 20%, it might be time to consider letting them go so you can focus on building a brand and upping your level of service so you can move your business in a more profitable direction.

The wrong clients can keep you from making the right business decisions

Sometimes a client isn’t so much “bad” as they are “wrong.”

MSPs often outgrow their original client base as they settle into their niche, grow their staff, and need to start charging higher prices. Neither party did anything wrong in this scenario, but if you choose not to create new arrangements or ultimately cut ties with clients that are keeping you from making the moves you need to make to grow, you might be the one responsible for creating a client relationship that’s gone bad. 

When should you rethink letting a client go?

You literally can’t afford to lose them

Maybe you’re still a single-person shop. Maybe you’re actively building out your client pipeline. Or maybe, like plenty of other businesses, the past year has just been rough on your business. 

Sometimes, the truth is that you simply can’t afford to fire a single paying client. 

That’s okay. If you’re in that spot, stick it out — just don’t become complacent and fall into the trap of letting the wrong clients determine your business direction like we mentioned above.

The client is more challenging than bad

Sometimes when we’re experiencing burnout, which plenty of us have during the past year, it can be hard to tell if a client is actually unfavorable or if it’s just our outlook that’s grim at the moment. 

Of course, what “bad” means is different to everyone, but we’ve put together a few comparisons to help you determine when a client is actually a poor fit for your business and when they’re just difficult

  • Challenging clients can ask a ton of questions because they don’t understand your services, but bad clients automatically think they know all the answers — and will fight your decisions every step of the way.
  • Challenging clients might be a little hard to get ahold of from time to time, but bad clients will communicate irrationally — sending 15 emails one day then neglecting to reply to you in any way for the next two weeks. 
  • Challenging clients might balk at your pricing and recommendations because they’ve never worked with an MSP before, but bad clients think they should have the power to align your budget, your business decisions, and even your timeline with what they think it should be.

Dealbreakers

Abusive or unprofessional treatment

Yelling at your staff over the phone. Using demeaning language in emails. Sending a flurry of irate texts about a non-emergency at 9 p.m. on a Saturday — or any time, for that matter. This and any other behavior that alarms and scares your team or oversteps professional boundaries is abusive and grounds for immediate firing.

Lack of respect for your expertise

The above abusive treatment often results from clients who don’t respect the expertise of your MSP business.

Even when a client isn’t using obviously abusive language, they can show their disdain in other ways. Often with bad MSP clients, this shows itself through an unwillingness to comply with your expert recommendations for protecting and improving their business. This happens because the client thinks they know more about networks and security than you possibly can. As such, they’ll eventually start undermining your and your staff’s capabilities and, of course, prices.

Repeated security scares

One of the scarier things that can come from clients ignoring and even going against your expertise is risks pertaining to their business security and compliance. If a client is willing to put their business at risk just to prove how much more they trust their own opinion than yours — let them. Just make sure you’re no longer under contract with them when they do. 

Considering today’s increasingly sue-happy business environment, don’t put your own MSP business and future insurability in jeopardy just because a bad client is willing to do the same with theirs. 

Unreasonable demands or expectations

Just asking questions or making an odd request here and there isn’t usually a fireable offense. It’s much better to have an inexperienced yet curious client than it is to have a demanding one who doesn’t seem to learn when you try to teach them which requests and expectations are simply unreasonable.

A client who’s convinced they know it all and isn’t willing to bend to reason isn’t one you want to keep letting grind down your morale.

Recurring late payments

Make sure every client signs a payment agreement and make sure that agreement arranges for upfront payment for services. 

If a client is uncomfortable agreeing to these terms or makes a late payment even once, say goodbye to them permanently before you have to say goodbye permanently to the money they owe you. 

Let XEOX help you

RMM tools help you detect viruses easier and faster than monitoring your devices on your own. XEOX’s Configuration Management Database (CMDB) is an Information Technology Infrastructure Library (ITIL) database, which enables you to store all your information about hardware, software and user assets in one central location. You can easily track if something is wrong with your devices here.

MORE BLOG POSTS

Tools

Diskless Restore

Diskless Restore A diskless restore, also known as a network boot or netboot, is a method of booting a computer from a network rather than

Read More »