Tip Tuesday: Getting SMBs to agree to a longer contract term

Posted by Lauren Beliveau on Nov 7, 2017 8:22:00 AM

shutterstock_334043420.jpgEntering a long-term contract with your SMB customers can be a win-win situation. It creates predictable income for your MSP business, and it helps them lock in a fixed monthly managed service rate, which can save them money down the road. While it may be difficult to convince a prospect to sign a lengthy contract with your MSP, it is possible, and you may already have tools that can help.

This week’s tip comes from Mark Perry, one of the regional account directors at Barracuda MSP. He believes that with the hardware options available through Barracuda, partners will have an easier time signing customers to multi-year contracts.

“Barracuda automatically refreshes all hardware after four years. This gives MSPs an opportunity to lock their SMB customers into a longer contract, without having to worry about increasing prices. This partnership, which we extend to our MSP partners, can then be extended to their SMB customers to add value and hopefully give MSPs more leverage when they are negotiating contracts."

“Another great thing that we provide for every Barracuda MSP partner is automatic Energizer updates. If there is a sudden change in cyber security and another threat is discovered, minutes after the threat is detected, the threats’ fingerprint is sent to every appliance—for complete and total protection.”

3 Talking points to encourage your SMBs to enter a multi-year contract

SMBs may be hesitant to enter a multi-year contract for a number of reasons. They might be concerned about what their budget might look like down the road or the level of service they’re going to get. They might be afraid their needs will change, or they could just be afraid of making a commitment. Here are three talking points to help convince your SMB customers to enter a lengthier contract.

  1. Aim high. When you think about contracts, what is the ideal length that you want a customer to sign on for? Start the negotiations off at four or five years and work your way down from there. Just like when you are negotiating their tiered bundles, you always want to start off with your premium option. This gives them the opportunity to discuss what they are comfortable with—and their answer might just surprise you.
  2. Highlight the benefits. Think about what value and incentives you can offer them. For example, will this lock in their rate? If they enter a five-year contract, can you offer them a discounted rate or an additional value-add? The more incentives you can offer while still making a margin, the more you will entice your SMBs to sign a lengthier deal.

Note: If you are worried about inflation and product prices increasing, talk to your vendor. Often, they will have ways to help you keep your overhead low.

  1. Leverage the relationships you already have. Use success stories and testimonials to highlight the longevity of your customer relationships and the reasons customers are satisfied with your services. To get uneasy customers on board, have them meet a few members of your technical staff. These are the individuals they will likely be meeting with day in and day out, so offering a free training class, an in-person meet-and-greet, or a business assessment with a few members of your staff on site can help ease their minds.

As an added bonus, you can highlight products and services such as Barracuda’s Energizer updates to show your SMBs that they will always have the most up-to-date protection throughout the term of their contract.

By communicating the added value of a longer contract term and highlighting the benefits it provides to your SMB customers, you can start stretching out your standard one-year contracts to a more substantial period.  Long-term contracts don’t need to be a burden for your MSP or your SMB customers—they can ultimately be a win-win for both of you.

Appliance Demo

Photo:  Uber Images / Shutterstock. 

Topics: Growing Your MSP Business, Tip Tuesday

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