When times are tough, you might feel like you need to take on any customer you can get. However, this is can be a risky move. Some clients can actually be detrimental to your success—and your bottom line.
Here are five problem customers you need to watch out for when booking new business as an MSP:
When a customer lacks cash flow, you could end up paying for their troubles with a stack of unpaid invoices. Before signing a new customer, do some research to determine if their business is financially viable. If it seems shaky, skip this one. Also, if they seem reluctant to sign an annual agreement, that’s another warning sign.
Some people have a sense when you’re hungry for business, and they’ll take advantage of this. They might insist on lower prices, try to change the terms of your agreement without providing compensation, pay late, cancel meetings, and show a general lack of respect for you and your time. You either need to take a firm stance with this type of customer from the beginning or be willing to kick them to the curb.
These businesses don’t want to pay and will find any excuse not to. They also expect you to provide additional services without additional compensation. For example, they might ask you to meet with them repeatedly to get things just right, but they are actually seeking free consulting services. You’re in business to make money, so steer clear of the cheapskates.
If a prospect has no clue what they want but they still expect you to help them succeed, think twice before signing them on. If you do work with them, you’ll spend countless hours reacting to their whims. Their indecisiveness and constantly changing requirements will make success impossible because nothing will ever be good enough.
Being a successful MSP requires a partnership with your clients. But when you can’t depend on a client to work with you and hold up their end of the partnership, you can’t possibly meet their needs. This is frustrating and will only cost you in time and money in the end.
You need to learn to say no to bad business and look for your ideal clients. This can be difficult, but you can spend more time cultivating good relationships with quality clients if you aren’t wasting time on these bad apples.
Tips for avoiding problem customers
- Ask the budget questions upfront. In the Ulistic 17 step sales process, I recommend asking about budget right away. It’s essential that you know what the prospect is thinking for an IT support budget. If they don’t know, provide them with estimates, but always shoot high. Lower your numbers is easiers than trying to ask for more money.
- Request references. Prospects always want references from you. So why not ask for references from them? If they are unwilling to provide you with references, you should be concerned.
- Do your homework. Research each prospect online and in the community before engaging in any work. Make sure you know who you’ll be working with.
- Get a retainer up front. Your lawyer never starts work until you pay. Why should you? Get a retainer before starting any work.
- Never extend credit to those who haven’t earned it. You are not a bank. Acting like one won’t help you or your customers.