Mastering Customer Retention: Proven Strategies for Managed Service Providers (MSPs)

In today’s competitive business landscape, customer retention strategies have become a top priority for Managed Service Providers (MSPs). As an IT professional or MSP, your goal is to build lasting relationships with your customers, ensuring they come back for your services time and again. But how can you achieve this? The answer lies in deploying effective customer retention strategies that not only meet but exceed your customers’ expectations.

In this comprehensive guide, we’ll dive deep into the world of customer retention, exploring proven strategies, key metrics, real-world examples, and more. Let’s get started!

Understanding Customer Retention

Customer retention refers to the ability of a company to retain its customers over a specific period. It’s the art of cultivating long-term relationships with your customers, encouraging repeat business, and preventing them from switching to your competitors.

For MSPs, customer retention is about providing exceptional IT services that not only solve immediate problems but also add long-term value to your clients’ businesses. The more value you can deliver, the more likely your customers are to stick around. Frankly, the more value you can deliver, the more they’ll see you as a valued partner and not just another replaceable commodity vendor.

The Importance of Customer Retention for MSPs

Customer retention has several benefits that make it an essential focus for MSPs. Let’s delve into a few of these:


Retaining customers is significantly less costly than acquiring new ones. By investing in customer retention strategies, you can reduce expenses linked to marketing and sales outreach, thereby increasing your bottom line.

Higher Revenue

Repeat customers tend to spend more than first-time customers, leading to higher revenues. A study by Bain & Company found that long-term customers spend 67% more than new customers, emphasizing the financial benefits of customer retention.

Brand Advocacy

Satisfied customers often become brand advocates. They promote your services within their networks, providing valuable word-of-mouth marketing. This not only helps in attracting new customers but also boosts your brand’s reputation in the market.

Key Metrics in Customer Retention

To implement effective customer retention strategies, it’s crucial to measure and understand key metrics. Here are a few metrics that MSPs should track:

Repeat Customer Rate

This metric measures the percentage of customers who make more than one purchase or avail of your services more than once. A higher repeat customer rate indicates successful customer retention strategies.

Purchase Frequency

Purchase frequency refers to how often your customers return to avail of your services. A high purchase frequency means customers are regularly engaging with your services, indicating a high level of satisfaction.

Average Order Value (AOV)

AOV measures the average amount spent by a customer when they avail of your services. A high AOV not only indicates that customers find value in your services but also contributes to increased revenues.

Customer Lifetime Value (CLV)

CLV measures the total revenue you can expect from a customer during their association with your business. A high CLV means customers are loyal to your services and continue to bring in revenue over a long period.

Churn Rate

Churn rate is the percentage of customers who stop availing of your services during a particular period. A low churn rate is desirable as it indicates a high level of customer satisfaction and successful retention.

Essential Customer Retention Strategies for MSPs

Now that we’ve explored the importance and key metrics of customer retention, let’s take a look at proven strategies that MSPs can leverage to improve customer retention:

1. Align Services with Shared Values

Your company’s values play a vital role in attracting and retaining customers. Whether you’re committed to providing eco-friendly solutions, support a specific charity, or prioritize data security, ensure your values align with those of your customers. This shared connection can strengthen customer loyalty and encourage repeat business.

2. Prioritize Customer Feedback

Regularly seek feedback from your customers to understand their experiences with your services. Use surveys or just talk with them to gather this feedback. Pay special attention to any negative feedback as it can provide valuable insights into areas for improvement.

3. Enhance Customer Experience

Invest in making it easy to do business with you. Provide easy-to-use online portals, efficient service delivery, and responsive customer support. An easy customer experience not only satisfies your customers but also encourages them to continue using your services.

4. Offer Personalized Services

Every customer has unique IT needs. Offer personalized services to meet these specific needs and enhance your customer’s satisfaction. Personalization can range from customized IT solutions to personalized communication and support.

5. Develop a Customer Loyalty Program

Reward customers for their repeat business. These rewards can include discounts on future services, exclusive access to new offerings, or points that can be redeemed for various benefits. Such programs provide an incentive for customers to continue using your services.

6. Provide Exceptional Customer Support

High quality customer support is a the most basic foundation of customer retention. Ensure your entire team is equipped to resolve customer issues efficiently and effectively. Also, consider offering multiple channels of support, such as phone, email, and live chat, to provide convenience to your customers. Remember, you want to meet your customers where they are. If you don’t, your competitor probably will.

7. Implement a Referral Program

Encourage your existing customers to refer new clients to your business. You can offer incentives such as discounts or free services to customers who make successful referrals.

8. Deliver Consistent Value

Ensure your customers perceive you and your team as consistently deliver value. This involves staying on top of the latest technologies and trends, continually improving your service offerings, and ensuring your services meet or exceed industry standards.

9. Make Your Services Irreplaceable

Differentiate your services in a way that makes them difficult to replace. This could involve offering unique features, superior quality, or exceptional customer service. The more irreplaceable your services are, the more likely customers are to stick with you.

Real-World Examples of Customer Retention

Let’s look at a few real-world examples of businesses that have successfully implemented customer retention strategies:


Everlywell, a health and wellness company, uses personalized emails to engage its customers. They send relevant product recommendations and promotional offers based on customers’ purchase history, thereby encouraging repeat purchases.


Chubbies, an online clothing retailer, has a hassle-free return policy that encourages customer loyalty. They offer free returns and exchanges within a specific period, making the return process easy and convenient for customers.

West Path

West Path, an ethically sourced clothing brand, includes a small gift (a sticker) in every package they send. This small gesture enhances the customer experience and leaves a lasting impression, encouraging customers to make repeat purchases.

When to Focus on Customer Retention

The stage of your business dictates whether you should focus more on customer acquisition or retention. A newly established MSP needs to focus on acquiring customers, while a well-established MSP should prioritize retaining existing customers. However, a balanced approach that includes both acquisition and retention strategies is essential for sustainable growth.

Ultimately, the key to successful customer retention is understanding your customers’ needs and expectations and delivering services that meet or exceed these expectations. By implementing effective customer retention strategies, you can boost customer loyalty, increase revenue, and drive sustainable growth for your MSP.

FAQs on Customer Retention

What is considered a good customer retention rate?

A good customer retention rate varies by industry. The MSP industry, overall, has a low annual churn rate of seven to ten percent. If your business, however, is in that 7-10%, you’ve got a problem. Additionally, as an MSP/TSP, you certainly want to focus on maintaining as much of your customer base as possible.

What are the key factors for successful customer retention?

The key factors for successful customer retention include offering high-quality services, providing excellent customer support, engaging with customers regularly, and using customer feedback to improve services. Be sure to share customer feedback with your team. We’ve noticed many companies limit the sharing of customer feedback to the executive team. We recommend sharing all feedback with all team members. Knowledge tends to be self-correcting.

How can MSPs improve customer retention?

MSPs can improve customer retention by aligning their services with customers’ values, prioritizing customer feedback, enhancing the customer experience, offering personalized services, developing a customer loyalty program, and providing exceptional customer support.

How is customer retention measured?

Customer retention is typically measured using several key metrics, including the repeat customer rate, purchase frequency, average order value, customer lifetime value, and churn rate.

What role does customer service play in customer retention?

Customer service plays a crucial role in customer retention. When customers receive excellent service, they are more likely to continue doing business with a company. On the other hand, poor customer service can lead to customer churn and damage a company’s reputation.

In conclusion, customer retention is a critical aspect of a successful MSP. Implementing effective customer retention strategies can help you build strong, lasting relationships with your customers, leading to increased loyalty and revenue. By understanding your customers’ needs and delivering exceptional services, you can ensure your customers keep coming back for more.

Next Level IT Customer Service Training

Enroll your team now in Compassionate Geek IT online customer service training so they can work together, get things done, and take care of customers.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top