EP226 – What To Do When Your Clients Say
They Can’t Afford You Anymore
with Clare Elliott & Ian Luckett

IAN: In this episode of the IT experts podcast, we're going to help you work out what to do when your clients say, I can't afford you anymore. I'm leaving.

INTRO: Welcome to the IT Experts podcast, the only podcast to help MSPs scale to 1 million and if already there, get to 5 and go fast. At the end of the day, isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN: Good morning. Good afternoon. Good evening. Welcome to the IT experts podcast today. We've got a really important show for you. It's all around what to do when someone says I'm leaving because I can't afford you, whether there's been increasing costs or whatever it is that's going on in their environment. And we're bringing into the podcast lounge for the first time, Claire Elliott our MSP finance expert. Welcome to the show, Claire.

CLARE: Thank you so much. Thank you for having me.

IAN: No problem at all. So we've been talking in the Growth Hub and the question has been coming up and the situation's been coming up quite a bit lately with, I can't afford you anymore. I've been reviewing my costs at the time of recording, right? It's March 2025, there's a lot of increasing costs going on right now, a lot of increasing national insurance, taxes, all sorts of other things. It's putting a squeeze on people's personal finances and also on the business finances as well. We'll probably touch into that a little bit in the moment, but it's Claire's working with us at the growth hub and our amazing clients to help them work out their finances and what they need to do and what they shouldn't be doing and what's best practice and all of this kind of great stuff. So we're going to dig into giving you some tips and some tricks on what to do when someone phones up and says, hey, I'm leaving because I can't afford you anymore. That's the episode, what this is all about today. But before we get going, Claire just share with everybody, who are you? What'd you do? And who'd you help?

CLARE: Yeah, so I'm your finance guru in the hub. So I work with whoever needs me at the time. So come to your alignment sessions, the intensive. So come to the day sessions that we do. So get involved with people doing little workshops and answering questions that they have. And then outside of that, we often have little one to ones with clients answer questions, go through their financials, do a little review for them, whatever, really, whatever they need, finance, that's me.

IAN: Fantastic. And what's your history in the MSP, the IT channel, in the finance section, as it would be.

CLARE: Yeah, so I've been working with MSPs for the last seven years, I think it is. Yeah, got involved in that industry about seven years ago. Have quite a bit experience now and obviously even more so being in the hub because we have so many clients. So there's so much information that comes into the hub, so much knowledge that's shared through the hub. Yeah, so have some. Have some knowledge of that industry now.

IAN: Fantastic. That's great. And the insights that you're providing and the support, it's oh, I need to be doing this. We'll talk about one of the frameworks a little bit later on that we've launched, which is really exciting. Clare, from your just from your point of view from a finance point of view, not necessarily from an MSP point of view what's your kind of feeling? What's your gut feeling about the rest of this year, obviously, there's a lot of stuff going on across the pond, noise, media, that's political noise as it would be. And in April, we have got this, in the UK this hike in national insurance, haven't we've got the. minimum wage. We've got other bits and pieces going on. Do we need to worry about this? Do we all need to? I saw a poll on LinkedIn yesterday. Do you want to leave the UK? It's do we all going to run away? What's your kind of gut feeling with this? Because you must have, in your experience, you must have been through these situations before and gone through the other end. Is it going to be a car crash in your view, or is it just something we just got to get on with and just work out how we can work through it. What's your kind of take on it?

CLARE: Yeah, I think the latter, I don't think it's going to be a car crash. I think it's just the same as any other year. We always have challenges. Budgets always bring changes. There's always politics. There's always underlying currents going through. So I don't think it's going to be a car crash. It's just going to be another year. And the most important thing to do is have knowledge of it and plan for it. Know your business, know where you are, know where you want to go, and then you'll work through it. Costs are always going up, always got trouble with your clients, there's always service issues, all of these things don't change, do they? It doesn't really change over the years. But what is most important is knowing your numbers, knowing where your business is, knowing your clients, knowing where you want to get to, what you want to achieve and being and setting yourself up for success. So being in a good place today is going to get you through the next financial year. Yeah, there are some big hikes and national insurance will impact depends how big your business is as to how that impacts, but it will be an impact. Same with national minimum wage. Depends how many people that impacts in your business. But remember everyone's in the same boat as well. We're all in the same situation. So costs are rising across the board with everybody. So it's not a surprise that you are going to be putting your costs up to your clients because they know that's coming. They know it's happening. They're doing it to their clients as well. So yeah, so I don't think it's going to be a car crash. If you're well prepared that's key, isn't it? It's being prepared.

IAN: Absolutely. And I like a nice lifestyle. I like money, but I find numbers boring. And I think a lot of people find numbers boring as well. And we know that there are people in this world like yourself, Claire, who find numbers. I quite enjoy playing around with the spreadsheet and having a bit of fun and doing things like that. And I think probably if someone wants to say to me, what's the biggest impact you've made on business owners since we've been doing what we're doing, it's raising the awareness of knowing your numbers. And some people don't like to do it cause they're a bit scared what they're going to say. But when you've got an economic tremble, I think we'll call it coming up, knowing that you can weather it, a bit like the pandemic. We didn't really know what the hell was going on there, but, a bit like any kind of change with interest rates up and down costs going up and down clients going up and down and all that sort of stuff. Yeah, knowing your numbers and understanding what that looks like ahead of the game is it's your responsibility, right? As a business owner to, and an employee and a mother or a father to know, what's going on in the business, isn't it?

CLARE: It absolutely is. And where are you going? If you don't know your numbers, where are you going and how are you going to get there? What's your goal? Because ultimately your finances need to be in a good place to progress your business. And I think is quite scary. I think it's also a harsh reality. So if your business is going really well and you know that it's good, then your numbers are quite exciting, aren't they? Cause you see them going up, you see them changing and you want to understand them. You want to be involved in them. If it's quite challenging, then it's quite scary because it is the cold, hard truth is the reality. So sometimes it's not. Nice to see it, or it's easy to bury your head in the sand. It's easier to not be aware of it than to actually try and do something about it. And that's the other thing in the hub as well, that we get a lot of questions about how can I change it? What can I do? Because sometimes you can see that it's not working, but. How can you change that? How can you make something successful? And that's not just from us as the experts within the hub. That comes from the hub and everybody in it. Everyone's got their different ideas. Everyone's been through it. Whatever question is raised, there will be someone else, at least one person, who's experienced it. Yeah, so I think it's quite scary. It's quite daunting, but it's the reality.

IAN: It's absolutely what you need to do. You need to be aware of your numbers. And if you're not, if you're listening to this now going, I'm going to bury my head a little bit and I'm going to continue to listen to that. You need to just rip that plaster off and you need to understand some of the basics, your cash flow, your profitability where your costs are, where the income's coming from and maximize, we'll go into that into another show. But today we want to talk about that moment when you have an amazing client has been with you for three or four years and they phone you up and they say all the, because the other thing, you just mentioned there, most MSPs, generally up to about 20, 30 people, maybe 40 people, something like that in the UK, it's going to have an impact, the national insurance, but it's not like you've got three or 400 employees. Now the thing is that your clients might have three or 400 employees and they might all of a sudden might be at the tipping point where they're going outsourced. We need to bring this inside or they might actually. There could be an opportunity to flick it the other way actually, couldn't there? So that's an again, that's another podcast. Wow. Look at this first time on and I've already got two other podcasts lined up in my head, when the client come towards you and says, I'm leaving, it's almost too late, isn't it? What can we do before that to make sure that we understand and we got a line of sight of what's going to be going on with our happy clients.

CLARE: Yeah, I think you're right. The point at which your clients come to you and say that you actually should know it, you should be expecting it because there will be a reason and you should be having an inkling as to that reason. And it, I think it falls into two categories, doesn't it? It might be related to you and your service and your business and what you've been providing for them. It might actually be nothing to do with you and you've just touched on it. It might be that we've got our own economic issues and we know we need to make a change for this reason. And that might be completely outside of your control or you might lose the client because their business is not viable anymore. They need to close down or whatever. So it might be completely out of your control, but before you get to that point, I would say, try and keep it within your control and try and do everything that you can to make sure that the service you are offering them is what they need and what they want and the best that you can be. So things like, I guess the obvious one is account management. So doing your consistent check ins, having somebody that stays in touch with those regular updates. Be proactive. So don't wait for a problem to arise. Actually be on top of it. So do those monthly check ins, preempt issues, make suggestions, give them ideas because you don't know what you don't know. So they might be sitting there thinking don't know what to do. I don't know where, what the situation is, but if you tell them, then, you're just aligning yourself with that customer, aren't you? So be a partner with that customer, be a business partner to them. Also preventing issues it's good for them. It makes you look good. It's being proactive, but actually it saves you money as well because you're not having to constantly rectify problems. You are actually preempting and stopping problems arise. Those check ins, that regular communication, being proactive It could be that you send updates, it could be that you just do like newsletters of trends, latest changes. You might want to personalize it to your clients so that it actually does resonate with them. Case studies, testimonials, all that sort of marketing stuff. That's really good as well. Sharing their story and sharing stories of how you've helped other clients and how that might relate to them.

IAN: Yeah.

CLARE: Yeah. That's always a good one as well. So develop that relationship, be make sure you are the reason that they're successful, but most importantly, make sure they know that you're the reason that they are successful.

IAN: I love it.

CLARE: You might be doing something amazing. They just might think you're doing the bog standard. They don't know what you're doing if you don't tell them. They don't know that you're watching their servers in the background, picking up little incidents that happen and, you're quietly fixing them. They don't know that. So tell them, so make sure they know that you are being proactive and, seek out those opportunities to big yourself up.

IAN: I've just written down here, you, there is a possibility you may need to resell the value to them about what you're doing. If you haven't been operating, a regular account management process, then they've obviously not forgotten you, but they're not being nurtured like this. And there's a whole thing that we've done previously around account management and how to re-engage clients and things like that, because there might be the point now that everybody's listening to this show, Claire, who knows their numbers, but in actual fact, I don't want to save this client. They're actually costing me a bucket load of money. What's some of the quick checks and balances that MSPs can make sure they've got in their business so that they know that the client's worth keeping because that's not always the case, is it?

CLARE: It really is. And you'll be amazed at how many people, I think you generally get a feel for whether a client is good or not good, but actually so many MSP owners don't really know the profitability of that client. And we break it down into these three key areas, don't we? So we have the projects which are quoted independently so we can make sure they're profitable. We have our services that are, recharging of our managed services so we can make sure they're profitable, but it's the support. I think it's the contracts that are more difficult because you do need to be monitoring your time, your service to those clients. And I think that's the thing that is actually harder to measure. But we have to measure it. You have to understand whether that client is profitable or not and whether you do want to keep them. But you should know that way before you get to the point of them saying that they're leaving. If you're at the point of them leaving and they're a brilliant client, that's on you. That's such a shame that you've allowed that to happen. If you get to the point and they're leaving and they're actually a really poor client that's still on you because why are they still there? You should have been pricing them out before or asking them to move on before that point. So do everything you can not to get to that point with a client, like really know their business and know what you're giving to them. And tell them the service that they're offering. I think as well, I think we've all been in this situation where you'll see another company do an advert for something and it's a brand new shiny ball and you're like, wow my service provider doesn't do that. That's brilliant. But if you ask them, they probably do. But they're not telling you. And what a shame to be doing all this work and not telling your clients, really understand your clients. Yeah. Really understand every single service that you offer to your clients. Know exactly how profitable that is.

IAN: Yeah. Brilliant stuff. So when they come to you and they, if unfortunately, there's someone comes to you and they're already looking to move, there's a pretty good chance you're in the losing race anyway, because they've been asking around. But if you, let's talk about pushing back on price, because, and this could even work when you're trying to acquire a new customer, because as this is going along here, as this podcast is going on, I'm thinking, Clare, how important is it that MSPs have a tiered system for their packages? Like gold, silver, and bronze one, two, and three, because we hear different versions of this, don't we? You can pick which one you want, or, you can, this is the one that we recommend, what do you find works best for the MSP and for the client?

CLARE: That's an interesting question. And I don't think that we have an absolute answer to that, because I think it very much does depend on the MSP. Some businesses do focus more on specific industries. And they know the industry, they know what they need. So they. Possibly don't need the tiered structure.

IAN: Okay.

CLARE: Maybe if you've got a bigger offering to different industries, different types of customer, that might be where the tiered structure is beneficial to you. So I don't think there's necessarily a one size fits all, but depends on your MSP really, and if you can manage those tiers as well, because you do have to be able to put the resources into to do that. Yeah. Managing those tiered structures, the people behind it. And also I think having a clear definition of what you're offering. So if you're selling a bronze level to a customer, don't slip into giving them a silver service because that actually happens as well. You've got to be very defined in your processes, your team have to know exactly what they can deliver to that client and what they can't and what needs escalating for quoting because it can get quite muddled within your internal processes. So if you're doing a tiered structure or pricing packages, then make sure that is very clearly defined with your team so that they also understand that...

IAN: And that could be where potentially on your projects on your services on your help desk is where you could get cost creep where all of a sudden someone's, I've been working with, I've did some really great work for John today. Oh, it's absolutely fantastic. That's not in his package. I've now got to go back and invoice him. So making it as clear as you possibly can is really important. And another thing I heard the other day which still frightens me. Is the yeah, we've got our support packages and then we have a security package and it's up to them, which one they should get best practice is what we're hearing right now, which is that security packages for an MSP in 2025 should not be an option. They are, this is what you get. This is what you get. This is what you get. If you don't want to have that security, that's going to keep the MSP safe, then you need to question whether or not you want that customer at all. Cause if they don't take security seriously and there's different ways of selling security and adding that value and all that sort of thing. But number one thing we want everybody who's listening to this podcast to be here next year. We don't want you to be hacked. We don't want you to be, compromised and everything like that. And if you're not telling people and advising them and, saying this is our minimum security package to keep you safe, if you don't want it, we're not going to do business together, and that's, I think that's really important. And having this, all of a sudden you've then got six packages, haven't you? And it's Oh they have a little bit of this. Oh, can I have a bit of that? And with a bit of this, and then, as you say, if you create this pick and mix this packaging, then it just. complicates everything, all the costs and everything like going down, which is really...

CLARE: It really does it complicates it for you internally. So, if you've got the structure to cope with that's absolutely fine. But if you haven't, it's that classic kiss, isn't it? Keep it simple, stupid. Sometimes that really is the best strategy because everyone knows where they are and your clients know where you are as well. And I've also seen it where clients coming back to the security, clients don't have the security that you want to sell them. They're just opting not to. It's fine. We'll take a risk. It's fine. Something then goes wrong. You have to then put a team in. It's, becomes a project to try and help that client out. The cost of that is so extortion. It can be so extortionate and it can run away as well. It can run away with the client, but it can run away with you. You might be putting so much. Into helping that client because you feel that you need to, that you should, you want to help them and who's benefiting. Nobody's benefiting from this. So I think having your standards. And only selling your standards, having your minimum requirement for your, because you are then protecting your business, aren't you? It's not just about your client. It's looking after yourself as well.

IAN: That's number one, isn't it?

CLARE: Yeah, absolutely.

IAN: If they fit your safety your oxygen mask first. And that's the key thing, isn't it?

CLARE: Yeah, I like that analogy. That's a good one.

IAN: It's one of Stuart's actually, but don't think about it.

CLARE: We won't tell him.

IAN: Don't tell him. No, don't tell him. Knowing when to walk away. We've spoken about your numbers, your profitability and all of that kind of thing. And sometimes you can, if you don't know that you could quite easily scramble and then start offering discounts and this and that to try and keep that customer. And the worst thing you want to do is do that and then find out that you then do your numbers and then you realize, oh my God, this is ridiculous. I've just signed him into a three-year contract and I'm not going to make a bloody beam because of X, Y and Z. Yeah. Do we need to know a cutoff point? Is there a, do people need to set barriers or, particular areas when they just go, do you know what I'm out and be brave enough? I think it's about being brave, isn't it? To know, do you know what we've done with this? What does how does that kind of show up sometimes?

CLARE: Yeah. You say brave, but I would say be prepared because if you know your numbers and you know where you are, it's an easy decision, isn't it? You're not being brave. You're just saying actually, no, you're not helping my business. Therefore, I'm not going to be good for your business. And that's it. And it goes back to the start of the conversation where hopefully we're not going to be in this situation because we will. I've been so proactive that we won't get to this situation. If you are in this situation, it's already out of your control. It's from some other factor, and you've already lost that client. But yeah, definitely knowing when to cut your losses, when to walk away. You should absolutely know that ahead of the game with that client so that you're not in that situation of looking a little bit desperate, trying to move quickly, trying to save the situation quickly, because the first thing you're going to do is discount. And that is one of my pet bug bears actually is discounting. Where is that getting you in the long run? I think discounting can be good for. Product sales because it can be a very contained thing It can be either a quantity limit or a time limit. So special deals and discounts can be great if they can be contained. So it could be a 20, to give away, it could be a time limit for the next month. We're going to do this, but for service industry where you're selling contracts, as soon as you start to discount or give away, that's for life. That's for the life of that customer. You can't make it up. You can't get that time back. So scrambling to get a special deal or a discount to save a customer is just not going to do you any favors. Absolutely not.

IAN: Particularly not the next month when Microsoft might decide just to go and put their prices up again. And then all of a sudden, if you've included that in, which is why it's always a good recommendation, isn't it? To have your prices in part of the package and then the licensing separately. So when they put their prices up, it doesn't look like you're increasing your costs. It's just a license thing that just, it's just happening in the background. So absolutely brilliant.

CLARE: I think as well shift the conversation as well. So come back to everything we were talking about. So know your value, know the benefits that you're offering, know your USP. Shift the conversation back to what you are offering that client and why they should stay with you. So rather than try and discount to save the situation, say this is my value and this is why you should be staying with me. Because if it is salvageable, then that's going to be the thing that saves it, not really the discount. If they're not happy with you, the discount is only going to last for so long, they're still not going to be happy with you.

IAN: And you can also ask them if they have decided to go or they are thinking to go with another MSP is, trying to find out what they're offering to see if it's actually comparable, because half the time and sometimes they're going to do it cheaper. One office, one's offering apples and the other one's offering pears, aren't they? So they are completely.

CLARE: Yeah, exactly. So again, comes back to this transparency, make sure that they know what you're offering.

IAN: We hear it so many times that someone goes there someone's up against a client who's given them a price. I don't know how you could actually deliver it for that. So they've either lied to them or they are just not going to deliver anywhere near that service. And that's why, when we talk about, the marketing, the positioning, the value that you're talking about your job as an MSP marketer. As a business owner is to educate in what good it looks like and what bad it looks like so that when you have these conversations you could they can then they then see the value and they see the reason and why they need these particular functions or features, within the package.

CLARE: Yeah, absolutely. And I think if you're honest, and we've seen it, we've seen this happen is that you be transparent, you be honest, you say, I can't cut my price. And this is the reason why this is the value that you're getting with me. Allow them to leave. They often do come back. We have seen them come back because what they have been sold elsewhere. Isn't the same, it's not comparative service offering. And then they do suddenly realize, oh yeah, no, it actually was good. And yeah, I do need to pay the money because that is what I want.

IAN: So don't burn your bridges off board them professionally, providing that, that you make your money out of and stuff. And you want them to come back. Cause if you don't want them to come back then.

CLARE: Oh yeah, that's true, yeah

IAN: If they are that customer, then you can do that. And then when they come back, you can put their prices up and then say we shouldn't have bloody all left to start with, should you.

CLARE: Exactly. I like that. Very good.

IAN: Clare, thank you very much. For your insights that I think has been really reinforcing, actually, I think many MSPs will sit there and some of them will be sitting there going. Yes, I need to do that. And some of you go, no, I'm pretty good. Actually, I've got most of this kind of stuff covered, which is really good. So please share this episode with whoever, needs to hear it. But , just before we wrap up, Clare, what's the top three things that the MSPs need to take away from today's show?

CLARE: Oh, okay. So top three things know your numbers, know them inside out, backwards, upside down, everything, know everything about your numbers, your profitability in all your different areas. Be proactive. So that's your account management. So don't get yourself into this situation in the first place. And then you won't be surprised that your customers are leaving. So either know that they're staying because you're offering them amazing value for service or know that you already want to get rid of them and you'll be managing that situation out. So don't let it be a surprise to you. And I think demonstrate. Your return on investment to that, to their business. So do that proactively. So they know exactly what service level they're offering, but then if you are in this reactive situation, do it again. Don't revert to this discounting, show your return on investment to their business.

IAN: Great point. Remember that costs are not going to go down. They're always going to go up and that includes your costs, your supplier costs, energy costs, everything else costs are going to be going up. So if you conversation I had with a client the other day is that if you don't put your prices up, you'll be very generous and you're giving your profit back to your client. So well done you. And that's holidays, cars, houses. pensions and all of that kind of great stuff. So a little bit of a little bit of a punch in the guts to the end. Clare, been a great show. Really enjoyed it. Thank you very much, bucket load of value as usual. And the MSPs will hear this and I'm thinking they're going to be hearing a little bit more from you. Thanks again for your help with this today. I look forward to catching up with you soon. You take care.

CLARE: Great. Thanks Ian. Take care. Bye everyone.

OUTRO: Oh, but one last thing, just before you shoot off. And if you're curious about how this episode links with the ability to scale your MSP to a million or, or if you're already there, accelerate to five, then we want to invite you to come and take the MSP mastery quiz. And in just three minutes, you're going to get a 360 degree scan of your business where you can identify the one or two tactics that can help you find more time.

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Now you can go and enjoy the rest of your day and we look forward to catching up and connecting with you soon. All the best.