When a customer cancels their managed services contract with a provider, it’s often due to a misunderstanding of the agreed-upon service level. Many customers make assumptions in this area, and what’s more troubling is that the contract rarely defines the service level clearly. Instead, customers typically base their dissatisfaction on an email or conversation that, due to its nature, is open to interpretation.
The managed services blueprint
Fortunately, Info-Tech Research Group is now sharing a blueprint that businesses and IT leaders can use when contracting an MSP. Here’s an inside view of the blueprint Info-Tech shared:
- Define business objectives and align the engagement model: Organizations must assess their strategic goals and ensure that the engagement model and service scope reflect these objectives. Clearly defined expectations from the outset help prevent contract misalignment and inefficiencies.
- Establish SLAs, KPIs, and governance for performance management: Service-level agreements (SLAs) and key performance indicators (KPIs) must align with business priorities and get measured against clear performance benchmarks. A strong governance framework ensures continuous service optimization, accountability, and long-term value delivery.
- Validate risk and compliance management: Effective contract management requires a proactive approach to risk mitigation and regulatory compliance. Organizations must assess disaster recovery plans (DRP) and business continuity planning (BCP). Additionally, they should establish well-defined exit strategies to ensure contract flexibility and long-term stability.
Bridging the knowledge gap
The advice provided by Info-Tech Research Group contains a certain level of common sense, but things that might be obvious to an MSP executive are not always so apparent to an IT or business leader, especially if they have never engaged an MSP before.
Sy Syms, a retailer, once said, “An educated consumer is our best customer.” That logic also applies to MSPs that usually don’t start to turn a profit on a contract until after the first year of service. Any time a customer decides to cancel a service early, the MSPs’ bottom line takes a hit. Many MSPs should pass along the blueprint created by Info-Tech Research or a similar trusted third party to their customers to help minimize churn. Some savvy MSPs have even gone so far as to appoint a chief customer success officer to help reduce customer churn specifically.
The importance of clear communication
Regardless of the approach, MSPs must ensure customers clearly understand their value proposition. In the rush to close a deal, MSPs often make vague assurances that come back to haunt them later. Everyone involved will naturally have a different recollection of what was said and meant. However, unhappy customers will find ways to make themselves more trouble than they are worth. This is especially true if they choose to hire a lawyer to file a grievance. The truth is many MSPs would be financially better off if some of those unhappy customers simply moved on to another provider.
Of course, no one wants any business relationship to deteriorate to that point. This is why clearly spelling out expectations for all concerned is essential.
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