Bad MRR: What MSPs Can Do to Eliminate It

MRR is the lifeblood of our company. But is all MRR created equally?

Even though you may find it tedious and time consuming, evaluating your clients is the first step in separating the good MRR from the bad. At the end of the day, what you sell and who you sell to matters.

Another way to think about it is like this: There are good clients and then there are bad clients. While good clients are profitable and good to work with, bad clients are not. Good clients value you, buy into your process and fall into your technical sweet spot, while bad clients do not.

It’s as simple as that.

But instead of getting rid of bad clients, many MSPs don’t. They unfortunately end up fighting bad clients for years (sometimes forever in some cases). They refuse to fire bad clients for the same nonsensical reasons I’ve been hearing for decades.

We have other important stuff to do! We have too many tickets! Our clients won’t go for that! We don’t want to upset our clients! This is too much work! I just lost a person!

These MSPs are waiting for what they believe to be the “best time to fire bad clients.” They’re awaiting the day when there’s nothing on the calendar, there are no support tickets to resolve, and the sun is shining bright. Well, I’ve got news for you — that day is never going to come.

The reality is this: The best time to fire bad clients is today.

Remember: Money isn’t always the problem. For instance, sometimes a client is an issue culturally. If a client treats your team members in a way that’s against your company’s core values, it’s time to walk away from that client.

Now, reevaluating your clients doesn’t necessarily always produce doom and gloom outcomes. If it’s possible to save a relationship, then do what you can, but my advice is this: Don’t go above and beyond. For instance, you may be able to get the client in question to pay the appropriate amount for the services you’re providing — and that would be a great thing. But don’t settle for anything less than you and your team members deserve.

Settling for anything less than you and your team members deserve puts you in the same predicament you were in before, as the amount of reactive noise that client will produce in the future (and there will be lots of it) will always take precedence over any proactivity.

You get stuck reacting or waiting for things to happen when your reactive noise is significant. And the last thing you want to see as an MSP owner is your reactive noise growing at a faster rate than your MRR. That’s why cutting ties with bad clients and pursuing good MRR is necessary.

All MRR is not created equally. Identifying bad clients is the first step to removing bad MRR. After you do that, you’re on your way to generating good MRR and becoming more profitable than you ever were before.

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TOPICS: monthly recurring revenueMRRstrategic relationshipstop MSP
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