By Carrie Richardson, Richardson & Richardson Consulting
If you ask my Mom what her biggest problem is right now, she’ll tell you that it’s her shoulder. She hurt her shoulder this year, and it’s not getting better.
When she first visited the doctor, she described what was wrong: her shoulder hurt all the time, and it hurt more when she knitted, held her phone, or typed.
The doctor, without asking any follow up questions, recommended a steroid shot.
My mother didn’t want a steroid shot - I told her to get the steroid shot – she had pain, she should fix it.
Several doctors, an orthopedic surgeon, a massage therapist, a physical therapist, and an acupuncturist later: she finally got a steroid shot.
And It didn’t work.
I gave my mother bad advice. She was right to want a diagnosis so she could make an informed choice about long-term healthcare. There are risks with any healthcare decision. I wanted her to fix the symptoms, she wanted to fix the root problem causing the symptoms.
When your MSP is experiencing pain, you’ll experience the symptoms of that pain well before you begin to understand the problems leading to the pain. Much like my Mom and the steroid shot, it can be very tempting to try to address the symptom without a proper diagnosis.
For example, a business owner experiences an unexpected drop in revenue. It’s a significant drop, in different intervals, over several quarters. It’s never happened before.
First, they are curious, “That was unexpected - I wonder why this happened?”
Then they become concerned, “Why is this happening so often?”
Next, they feel scared, “Is this going to stop happening?”
Finally, they feel defeated; “Why can’t I stop this from happening?”
With revenue shrinking, the business owner begins to double down on sales activity to replace the revenue. They make investments in sales or marketing programs. However, a new sales and marketing strategy is going to take over a year to produce a return. Now the company is both losing MRR and spending more money. The business owner continues trying to solve their sales problem, but is that the correct course of action?
Do they really have a sales problem?
In this case, lost revenue is a symptom – and throwing time and energy into replacing revenue is focusing on the symptom.
When a business loses revenue, the knee-jerk reaction is “replace that revenue immediately.’ This can lead to a deluge of ill-suited clients. They may lower their rates or begin to take on more of the smaller, high-maintenance clients they’ve worked hard to replace over the years.
When we dig a little deeper – past the symptoms of lost revenue – we understand that sales aren’t their problem – they’re struggling with client retention, not sales. If they hadn’t had revenue loss, they wouldn’t need the high volume of new clients they’re trying to generate. Most often, retention problems are customer experience problems. Lost revenue could be a sign of a sales problem, but in this case, guiding the business owner toward more sales activities is doing them a disservice.
Almost all business problems can look like sales problems. In this case, the MSP is losing clients faster than they sign new ones. Before focusing on growing sales, I’d encourage them to focus on fixing their service delivery. Adding more clients to an already unstable support environment only makes the problem worse.
Customer experience is the number one reason that MSP clients leave. Before throwing money and time at replacing revenue, it makes sense to invest time in retaining your base. Here are some key indicators that you have an issue that adding new clients and more revenue won’t fix:
- Your service desk is understaffed, leading to long customer wait times, or missed SLAs.
- Your processes are undefined, leading to inconsistent outcomes for clients.
- High team turnover - clients have no rapport with a rotating door of new techs assigned to their accounts.
- Documentation is poor or incomplete, leading to simple “unforced errors” in client environments.
When you’re experiencing an unexpected loss in revenue, make sure you’ve isolated the problem before you try to fix the symptoms. Don’t be afraid to share your challenges with an expert – a little bit of patience, the ability to be uncomfortable, and a small investment in professional guidance could save you from making a very expensive mistake or prolonging the problem for much longer than necessary.
About The Author
Carrie Richardson has built three seven-figure businesses over the last eight years, including Managed Sales Pros, which she successfully exited in 2022. She is the cofounder of Richardson & Richardson Consulting, a strategic consulting agency that supports the I.T. channel. Carrie spends her free time adventuring with her husband and business partner in their off-grid conversion van, Penny.
Richardson & Richardson helps entrepreneurs achieve and realize their vision through installing strategic operating systems, creating and documenting processes, and helping with leadership development and team accountability.