There is a certain element of people who are willing (and able) to whip out their checkbooks or plunk down their credit cards the minute they receive a quality product or service.
Think Apple and Tesla; two companies that make a lot of their money up front. Many will stand in line and pay a premium to obtain their latest and greatest offerings.
For example, Tesla has taken more than 300,000 reservations for its Model 3 — that’s over $300 million in deposits for a vehicle most of those people wouldn’t receive for another 18 to 24 months.
While MSPs are rarely in a position to generate that type of brand loyalty, many tend to underestimate the value of their services for small business customers. Some seem to worry too much about the competition swooping in and stealing away their best clients the minute a price increase goes into effect, or when their payment processes change.
The real concern should be the effects on cash flow from charging too little and allowing AR to escalate.
Develop business partners, not clients
Many providers seem to lack confidence when it comes to a rate hike or altering financial terms and processes.
In some cases, they may have legitimate value concerns, but the bigger issue may be their failure to convert clients into true business partners.
MSPs that deliver consistent, quality service and address their customers’ compliance and security concerns earn the right to ask for fair compensation and prompt payment. Some simply hate to have those conversations. Do they lack the confidence to ask?
Even when an MSP knows the cost of inferior competitive services is higher, they may be uncomfortable having those discussions.
MSPs with cash flow issues get caught in that trap frequently. They tend to second-guess decisions that impact their bottom line and commonly let customers dictate pricing, discounts, and payment terms. When cash is tight, they worry about paying the bills if they lose a major client. So they keep the status quo.
Remove the roadblocks
The reality is that customers who object to using a digital payment platform like ConnectBooster are often slow to pay and tend to utilize more of an MSPs help desk time and services. These clients are usually less organized, unwilling to invest in infrastructure, and may have significant cash flow issues themselves.
Their reluctance to utilize an MSP’s partner payment portal is a red flag — and some providers will either walk away from those types of prospects or put them on the sales “back burner.”
Existing clients may have their own objections, especially with business owners who don’t understand the value of their MSP’s continued support and the benefits of using a platform such as ConnectBooster. Those conversion discussions can be tough.
Those who do switch tend to appreciate being able to their access current and past invoices. Others sleep better knowing their payment transactions are secure. Of course, there are always ways to incentivize holdouts, such as taking a percentage off their next invoice for agreeing to use the payment platform.
If an MSP has consistently delivered quality services and /or they rely on his or her expertise, customers may simply do whatever they are asked to. For them, a single conversation may be all that is needed.
No provider wants to walk away from long-term revenue — unless they’ve evaluated the profitability of a consistently slow paying client.
They may spend hours discussing billing delays through emails and phone calls, or incurring expenses that may not be reimbursed for three months or more. The cost of doing business with those customers can be substantial.
If those types of slow paying clients refuse to convert to a digital payment platform, an MSP should have no problem walking away. The time and expenses they recoup can be better spent with customers who treat them like true partners and on landing new prospects — those who will pay them on time for the services they deliver.