How to recognize client churn risk as an MSP

If you’re ticking all the boxes on paper and still facing significant client churn, there’s clearly something going on.

But if you’re delivering on all aspects of your MSP service agreement and performing all the technical requirements to a T, it can be hard to put your finger on exactly why your clients are leaving. Ultimately, it probably comes down to the fact that they’re just not satisfied with your service, for many different reasons — some being completely out of your control.

Client churn can be difficult to address, but it’s not impossible. The first step to reducing client churn is understanding why it’s happening and how to recognize the signs.

In this article, we walk you through everything you need to know about client churn and what you can do to mitigate it.

What are the different types of client churn?

Voluntary active churn

Voluntary Active Churn is where a client proactively chooses to stop working with you. This could be because they’re not happy with your service offering or because they’ve chosen to engage a competitor or bring someone on in-house.

They could be leaving because they don’t need your services anymore, maybe it’s because of budget cuts, or it can be for a million different reasons.

Involuntary churn

Involuntary churn is when a client does not intend to stop working with you. This usually happens because of a problem with their payment method.

Though it’s important to be aware of this kind of churn, it’s not usually a concern for most MSPs. Given the personal relationship that most MSPs have with their clients, if you do face involuntary churn, you can most likely reach out directly to your client to resolve the issue and get their payment back on track.

Downgrade or down-sell churn

Downgrade churn is when a client decides to switch to a lower, more affordable, service agreement that you have on offer. Though they remain your client, this also signifies a reduction in your MRR and is usually something that most MSPs want to avoid. This can happen because of financial concerns or because your client feels like they’re not getting value for money at a higher-tier subscription.

Reasons for client churn

As we said earlier, pinpointing the exact reason for voluntary client churn can be difficult.

Clunky or lackluster client onboarding

Your customer retention strategy should begin at the onboarding stage. You must invest in welcoming your new clients to your service, initiating them into key workflows, and ensuring they fully understand the scope of your service.

Your client onboarding process should also set up your client for long-term success, so make sure you put the effort in to make them feel welcome.

Bad client experience

Even if you’re delivering on all objective aspects of your service agreement, some of your clients may still have a net-negative experience. This could be because of several reasons. For example, they may not be satisfied with the quality or level of service you’re offering, or the fact you’re not able to address their needs with the necessary level of expertise.

If they encounter significant friction in some key workflows involving you and your team, this could be another reason they’re not happy with your work.

Less-than-optimal customer support and service

If you’re unable to keep on top of support tickets disrupting your clients’ business continuity, this could be why you’re facing significant client churn. An integral part of your role as an MSP is to support your clients’ IT environment and needs — which is why customer service and support are so important.

If you’re struggling with this, consider using a tool like Atera that is built specifically to streamline MSPs’ workflows. Using the intuitive and user-friendly Atera helpdesk and ticketing system, you can centralize your customer service hub and manage all your tickets quickly and effectively.

Switching to a competitor

It pays to keep an eye on your competition. Even if you’re ticking all the boxes, if a competitor offers similar services for a better price, you could see some of your clients defect in favor of a more affordable rate.

That being said, you can potentially prevent clients from leaving you for a cheaper competitor by communicating your value to them in a way they’ll understand you’re worth every penny, and that just because a client has lower-priced services than yours, doesn’t mean they’ll be a better fit for them in the long run.

Potential signals of client churn risk

Lower engagement

If you notice a client is engaging less with your service, this could be a serious sign that they’re at risk of churn.

Of course, this could also indicate that you’re doing your job so well that they don’t need to be in touch with you.

More complaints to your support team than usual

On the flip side, if a certain client posts numerous complaints to your support team, this can be a sign that they’re not really satisfied with the level of service that you’re providing to them.
Keep in mind, that it may not be that you’re doing anything wrong, but rather that the client is not the right fit for you, and that’s okay!

Instead, you can think about what your ideal client looks like, and how you can get more of those customers onboard.

Changes in point of contact

If a client’s point of contact within your business changes, this transition can sometimes trigger customer churn. This is especially the case where they have built up a particular relationship and rapport with that person, and are unable to strike the same tone with their replacement.

Diminished need for your service

If a client finds that they don’t require your services from the outset, this can mean they don’t feel as though they’re getting true value for their money. This kind of churn is fairly unavoidable except for at the customer acquisition stage. It pays to vet your potential leads to ensure their needs actually align with your service offering. This ensures that your marketing efforts and customer acquisition strategy are resulting in lucrative client deals, rather than short-lived relationships.