Want to be more proactive about your MSP’s growth in 2024?
One area that often needs attention is your recurring service contracts. Reviewing and updating these contracts helps you meet your client’s evolving needs and stay competitive.
This article will explore ten clues that indicate it may be time to review and update your recurring service contracts. It’s a valuable opportunity to strengthen your relationships with clients, enhance your service offerings, and ultimately drive the growth of your managed services business.
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Clue 1: New regulations or security threats impact the industry
In today’s digital world, regulations and security threats are constantly evolving. Managed service providers (MSPs) need to stay informed and compliant. If new regulations are introduced or a significant change in security threats, it’s a clear clue that your recurring service contracts need a thorough review.
By doing so, you can ensure that your services meet the required standards and offer the necessary protection to your clients. Additionally, you can address emerging security threats and implement measures required to protect your clients’ data and systems.
[Editor’s note: Gain a competitive advantage by ensuring compliance with ControlMap, an MSP-focused cybersecurity compliance automation and audit-readiness solution.]
Clue 2: Changes in the client’s business size, structure, or goals
As a trusted partner, you must adapt to the changing needs of your clients. If you notice changes in their business size, structure, or goals, assessing whether your current contracts adequately support these changes is crucial.
In revisiting and updating the agreements, you can align your services with their evolving requirements and continue delivering value. This flexibility allows you to maintain strong relationships with your clients and provide them with the support they require.
Clue 3: Service level agreements (SLAs) don’t reflect current performance goals
Service level agreements (SLAs) lay the foundation for the services you provide and the expectations of your clients. However, over time, performance goals may change. When you notice that SLAs no longer reflect your current performance goals, it’s time to update your recurring service contracts.
Ultimately, you want to ensure that you and your clients are on the same page regarding service delivery and performance metrics. This alignment helps you set realistic expectations and deliver high-quality services that meet or exceed client expectations.
Clue 4: MSP adds new services to its portfolio
As an MSP, it’s essential to constantly evolve and expand your service offerings to meet the changing needs of your clients. Updating your recurring service contracts is critical if you’ve recently added new services to your portfolio.
Integrating service contract reviews into the process of introducing new services can ensure that these new services are proficiently documented, priced, and aligned with the overall structure of your contracts. Proactively meeting requirements strengthens relationships and positions your business as a trusted partner.
Clue 5: The end of the current contract term is nearing
Contract renewals are an excellent opportunity to reexamine your recurring service contracts. These are critical moments in any business relationship.
When the end of a contract term is approaching, take the time to assess whether any updates or modifications are required. Leveraging this time ensures both parties can address evolving needs or concerns before committing to another term. Proactive contract management helps you maintain client satisfaction and secure long-term partnerships.
[Editor’s note: Stay on top of contract renewals easily with Quoter Contracts. Skip to 0:43 on the Quoter Contracts video overview to learn more.]
Clue 6: Consistent feedback from clients indicates dissatisfaction or unmet needs
Client feedback is a valuable source of information for MSPs. If you consistently receive feedback from clients indicating dissatisfaction or unmet needs, it’s a high-alert sign that your recurring service contracts should be reviewed. Addressing these concerns can improve client satisfaction and strengthen your relationships.
Regularly reviewing and updating your recurring service contracts allows you to identify any signs of client dissatisfaction or unmet needs. By addressing these issues promptly, you can prevent them from escalating and ensure that your clients receive the level of service they expect.
Clue 7: Offering certain services at low margins or operating at a loss
Pricing and profitability are critical considerations in any business. By reviewing and updating your recurring service contracts, you can analyze the profitability of each service offering. This analysis allows you to identify services with low margins and make informed decisions about eliminating or modifying them.
Optimizing your pricing and profitability aids the financial health of your managed services business.
[Editor’s note: Leverage data-driven insights on areas of improvement for your clients’ IT environments with Lifecycle Manager, the IT Asset Management Software for MSPs.]
Clue 8: Uncontrolled scope creep negatively affects profitability
Scope creep occurs when a project’s requirements expand beyond the agreed-upon scope, leading to additional costs and potential delays. If uncontrolled scope creep consistently affects your profitability, it’s a clear sign that your recurring service contracts need attention. By implementing tighter controls and clear boundaries, you can mitigate the risks associated with scope creep and protect your profitability.
Clue 9: Using pricing models that are no longer competitive or industry-standard
Pricing models play a critical role in the competitiveness and profitability of your managed services business. If your pricing models are no longer competitive or industry-standard, it’s time to update your recurring service contracts.
You can maintain a fierce competitive edge and drive growth by ensuring that your pricing reflects market realities and positions you appropriately. To do this, try researching market trends, benchmarking against competitors, and adjusting your pricing strategies accordingly. You can position your business as a valuable, cost-effective solution provider by offering competitive pricing.
In conclusion, regularly reviewing and updating your recurring service contracts is integral to managing a successful MSP business. By staying vigilant and proactively addressing any clues that indicate the need for an update, you can ensure that your contracts remain current, relevant, and aligned with the evolving needs of your clients. This ongoing effort will strengthen your business partnerships and position you as a trusted advisor in managed services.
See how Quoter Contracts makes it easy to manage recurring service contracts. Book your demo today.