How to Manage Customer Churn as a Service Provider

Written by Richard Thomas

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    On average, customer churn costs businesses around $1.6 trillion per year. This is terrible news across all industries, often exceeding the costs of customer acquisition in the first place. Worse, bringing new clients up to the same level as those lost accounts can cost as much as 16 times more than holding onto them. For service providers already fighting industry commoditisation, this is a growing risk, with competitors looking to undercut you making churn even more likely. 

    Businesses that rushed into managed IT services in response to last year’s almost overnight shift toward remote working have already begun to seek new solutions elsewhere. To ensure that those swaying loyalties don’t have a crippling impact, service providers need to think about how to keep customers happy in the now, and also how to manage churn in the long term. 

    At Highlight, we make your retention and acquisition programs more effective with a customer-facing dashboard that keeps you relevant, and ensures that your clients know about it. But technology is only part of the solution. By adopting the right processes, strategy and mindset, you can improve retention rates and grow as a business. Here, we are going to explain exactly how to do that in 2021 and beyond.

    Step 1: Actively find ways to demonstrate value

    You do a lot of things for your customers. It’s critical that the services you offer are high-quality. But delivering against a scope-of-work isn’t enough. Keeping your customers fundamentally comes down to finding ways to demonstrate your value without annoying them with constant updates. You need to continue to prove the value of services on the ground, reminding clients why you are the best provider for their needs right now.

    As we will show, demonstrating value is also a critical component of effectively upselling and cross-selling services — a critical component of a holistic MSP growth strategy. However, from a back-to-basics standpoint, finding ways to demonstrate your value should be at the top of your list when it comes to improving retention rates. 

    How to get started

    Success starts with the ability to understand what clients need, and the ability to make them aware of how exactly you’re filling those gaps. Real numbers and the simplified communications necessary to ensure customers understand what they mean can prove particularly useful for providing you with a value-led edge sharp enough to keep your customer base well and truly onside.

    Customer-facing communication platforms are a great way to make the demonstration of value easy. If these tools help customers better understand their network and business, while also providing a talking point for your review meetings, you can add value to workflows while actively demonstrating ways in which your services improve outcomes. 

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    Step 2: Make yourself indispensable 

    Standard practice for service providers is to sell a modular “box of bits” — delivering interchangeable products that largely sit in the background. Unfortunately, this is the very issue that’s squeezing margins. 

    Creating a more profitable future requires leaving this approach behind. Leaders in the current landscape are driving more holistic approaches that inject services right into the heart of customer processes, and function as part of the in-house IT team — making themselves indispensable. This helps sell more margin rich services, but it’s also critical to reducing churn over the short and long term. 

    How to get started

    As well as providing network services at a base level, services providers looking to become key players now also need to become a part of how clients review those services. To start with, that means truly understanding your customers and their networks, a goal that you can ultimately achieve by asking customers key questions including:

    1. What business problems are you actually trying to solve?
    2. How can the network play a part in that and support it?
    3. How do you prove your value to your internal customers?
    4. How can we help you deliver answers, and prove it?

    Once you know that, you’ll be able to see how you can truly help your customers – rest assured your competition is very unlikely to be talking to them like this. Specifically, you want to be seen as part of the in-house team, helping them solve their problems. This opens the doors for a consultative approach that will see companies coming to you for a long time to come, rather than the other way around. 

    Step 3: Always address issues as they arise

    The past year has taught us a thing or two about how quickly significant gaps can seep into existing company processes, highlighting what many service providers already knew about the need to avoid stagnation. These gaps are a driving force behind customer churn and, as they arise faster than ever, service providers need to make sure that they stay relevant and valuable (see above) by addressing issues in the moment to prevent the need for clients to look elsewhere.  

    As well as supporting the retention of existing services, this focus on improvements has the benefit of helping cross-sell and up-sell as areas for improvement come to the fore. That’s fantastic news considering that renewed sales approaches cost around five to twenty-five times less than acquisitions in the first place — all whilst keeping churn well at bay.

    How to get started

    White space analysis is a valuable tool with regards to retention and continued sales, allowing for tailored service offerings and suggestions for improvements backed by real numbers. These insights stand to open the floor for a range of loyalty-creating, and sales-inducing benefits, including:

    • Consultative selling rather than pushy onboarding techniques
    • Prioritised conversations to ensure the timing and efficiency of all sales proposals
    • Suggestions substantiated by facts that further prove service value

    You need software platforms that simplify whitespace analysis with analytics and insights — pointing you at the right information at the right time, and helping commercial teams understand how to add value to customers. This, along with the ability to share your findings with customers in real-time using simplified visualisations they can understand, ensures you have everything you need to protect profits and keep your place in a client’s long-term business strategy. 

    The right technology and processes ensure churn stays at a minimum

    Growth and profitability simply aren’t possible without customer retention. Unfortunately, commoditisation of the industry makes that goal harder to achieve, and you can bet that your competitors will be more than happy to pick up the pieces if you slip. 

    A major step forward for your teams is providing them with information that helps them better understand their customers, provide data-driven strategies to commercial teams, and improve customer communication. But the right technology needs to be paired with internal processes able to harness this information and use it in ways that matter to your customer. The achievement of both of these goals is exactly why we built Highlight

    Highlight is a commercial tool that transforms traditional network monitoring capabilities into digestible and actionable insights that commercial teams can use to improve customer relationships. With easy integrations and the ability to prove value in ways your customers can understand at all times, we provide the capabilities that you need to keep churn at bay and ensure a happy ever after with every one of your hard-earned clients. If you want to learn more, get in touch for a demo, or check out our eBook — Transformation the Value of Networks.

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