Are Your MSP Contracts a Potential “Nightmare on Elm Street”?

Content by: David Walter from MTS

As an MSP, maintaining a steady stream of Monthly Recurring Revenue (MRR) is crucial for your business’s success. It is natural to want this revenue to keep rolling indefinitely. However, this desire can sometimes lead to the temptation of including a potentially terrifying clause in your IT agreements: the auto-renewal clause.  This seemingly harmless clause can turn into a nightmare for your clients, much like the horrors faced on Elm Street in “A Nightmare on Elm Street.” 

The Complacency Trap 

Relying on auto-renewal clauses can lead to complacency in IT Support, causing the lines of communication to deteriorate. This often manifests when Account Manager meetings become infrequent or non-existent, or when these meetings shift from being a listening session to mere opportunities for selling or up-selling. As a result, clients feel neglected and dissatisfied, prompting them to consider switching IT providers.  They might even start soliciting competitive bids, seeking better service and attention elsewhere. 

The Hidden Danger of Falling Asleep 

However, if these clients have “fallen asleep” on their contracts, much like the characters in “A Nightmare on Elm Street,” they may have forgotten that their agreements likely renewed months before the term ends. When they finally realize this, they will find themselves trapped in a nightmare worse than Freddy Krueger’s grasp. They are stuck in another long-term contact with an IT company they no longer trust or want to work with, leading to frustration and resentment. 

The Ripple Effect of Bad News 

If you are not careful, your IT company could get pulled into these nightmares. Remember, bad news spreads faster than good news. If relying on auto-renewals has made your firm complacent, leading to unhappy clients trapped in this hellish situation, it is likely they will start sharing their experiences with other business owners. Much like the characters in “A Nightmare on Elm Street” who warn each other about Freddy Krueger, your dissatisfied clients will spread the word about their negative experiences. As this bad news spreads, you risk losing more customers and finding it increasingly difficult to grow your MSP business. 

Avoiding the Nightmare 

Avoid becoming the Freddy Krueger of IT providers in your community by eliminating auto-renew clauses. Instead, embrace the challenging work of vigilantly maintaining open lines of communication with your customers during account management meetings. Focus on listening to your clients rather than upselling them, ensuring they feel understood and valued. By taking this approach, you can prevent falling asleep in nightmares for both yourself and your clients, fostering a more positive and trusting relationship. 

Here are some practical steps to avoid: 

1. Eliminate Auto-Renew Clauses: Set up a system for manual renewals to ensure both parties are actively involved in the decision to continue the contract. 
2. Regular Check-Ins: Schedule consistent, meaningful meetings with clients to listen to their needs and address concerns. 
3. Clear Communication: Keep clients informed about contract terms, renewal dates, and any changes well in advance. 
4. Flexible Contract Terms: Offer flexible contract terms that allow clients to adjust their services as their needs change. 
5. Proactive Service Improvements: Continuously seek feedback and improve your services based on client input. 
6. Transparent Billing: Ensure that billing is clear and accurate, avoiding hidden fees and providing detailed invoices. 

Stay vigilant and do not allow yourself or your clients to fall asleep in a “Nightmare on Elm Street” of unexpected auto-renewals!