THE STATE OF CHANNEL stickiness is … well, rather “unsticky.”
According to a recent survey from technology consultancy Analysys Mason, “SMB churn with channel partners suggests that IT service providers need to improve their performance.”
Indeed, the survey report, SMB Technology Demand in the USA, found 35% of small businesses (and 57% of medium-size business) had changed their IT services channel partner in the last 12 months—not very sticky at all.
The report’s conclusion: “This should be a wakeup call to vendors and providers to create value propositions that address SMBs’ future goals and facilitate stronger relationships with SMBs.”
What Is “Stickiness”?
When it comes to client relationships, the term “sticky” refers to the qualities that affect retention.
Bob Coppedge, CEO of Stow, Ohio-based Simplex-IT, gives the concept of “stickiness” a lot of thought—but finds the term itself to be a bit misleading. “For as much as computers are supposedly accurate and specific, half our industry uses buzzwords that can mean 20 or 30 different things,” he quips. “‘Stickiness’ is one of them.”
Coppedge suggests two metaphors for conceptualizing different types of enduring client relationships. The first is a “hostage” or “prison” environment, where MSPs create solutions so customized and convoluted that the cost of moving client data precludes the client from changing providers. The other is a “resort” environment, where the client is so content and stress-free, they wouldn’t even consider changing services.
“We definitely fall on the resort side,” he says. “We want to create the relationship such that the default thought from the client is, ‘This service is so great why would we ever want to change?’”
Juan Fernandez, co-founder and CEO of MSP Growth Coalition and co-chair of CompTIA's Channel Development Advisory Council, sees a similar dichotomy. “In the customer-hostage environment, you create stickiness because you have all this data,” he says, “but customers realize these traps.”
Fernandez says rather than boxing a client in, he much prefers a more “positive approach” in which customers are able to “get away” if they want to—but they simply don’t want to.
“I want it to be so attractive to stay that they never leave,” he says, “and that only comes from deep customer engagement. I’m not interested in owning your tenant or your backups or server infrastructure because I’m not trying to hold you hostage; I’m trying to deliver mutual success.”
Avoiding Portfolio Creep
The “deep customer engagement” that leads to long-term client relationships begins well before the sales process. It actually starts with the MSP’s portfolio.
Nothing makes IT services less sticky than a hard-to-grasp menu of offerings. MJ Patent, co-founder and CEO of channel marketing consultancy Alveo Strategy, puts it this way: “If your sales team can’t figure out exactly what you’re offering, then how will the client figure it out?”
The first step, Patent says, “is making sure your services portfolio makes sense and aligns with your story.” She notes that MSPs add practices outside their competency far too often.
“It blows my mind how often people talk about ‘adding on,’” Patent says. “I get it; MSPs don’t want to leave money on the table. But that shouldn’t drive your service portfolio. If you’re standing up a new practice, and it’s crap, you’re killing your delivery teams, customers are not going to have a great experience, and it’s going to impact your entire brand.”
Talk about an unsticky start.
Fernandez takes it a step further. He advocates MSPs not only define and limit their quality service offerings but take a hard line about what goes into those services—and what the price will be.