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MSP Mastery Podcast
Welcome to MSP Mastery Podcast, the podcast for IT leaders, MSP owners, and service delivery professionals who want to elevate performance, improve processes, and stay ahead in the fast-changing managed services landscape.
MSP Mastery Podcast
Losing a Whale Client: Turning Business Risk into a Wake Up Call with Abhishek Bhargava
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Welcome to MSP Mastery: Ctrl Alt Deliver Podcast, the podcast for MSP owners and leaders who want to build a better MSP, one that actually works for them.
I am Jeni Clift, joined by my husband and long time business partner, Nick Clift. Together, we unpack what is really working in thriving MSPs, including insights from the trusted partners and peers who support them.
In this episode, we are joined by Abhishek Bhargava, Sales Director at Telco ICT in Melbourne. With more than 16 years of experience across telecommunications and managed services, Abhishek has helped guide the transition of Telco ICT from a telecommunications business into a business focused primarily on managed IT services.
Abhishek shares the story of losing a major client and the impact it had on the business. Rather than allowing the situation to take over, he and his leadership team focused on understanding the financial impact, communicating honestly with their team and creating a plan to bring in new business.
We discuss why losing a large client can become a wake up call for an MSP, particularly when one client represents a significant percentage of revenue. Abhishek explains why MSP owners should work towards dispersing their client base, with no single client representing more than 20 per cent of revenue.
We also explore the importance of stepping away from daily operations, empowering the team and creating the time to focus on business development. The conversation covers client referrals, LinkedIn outreach, local search engine optimisation, email marketing and the importance of maintaining a consistent sales pipeline.
Here is what we covered together:
✅ The risk of relying on a whale client: Why having one client represent too much of your revenue can put the entire business at risk.
✅ Keeping client concentration under control: Why MSP owners should aim to ensure no single client represents more than 20 per cent of revenue.
✅ Turning a setback into a wake up call: How losing a major client can force an MSP owner to focus on the work that needs to be done to grow the business.
✅ Communicating with your team: Why leaders need to be truthful and open when explaining the financial impact of losing a major client.
✅ Moving out of daily operations: How separating from the operational side of the business gave Abhishek and his business partner more time to focus on new business.
✅ Empowering the team: Why trusting the team to take ownership of service delivery can create the space needed for business development.
✅ Creating new conversations: Why MSP owners need to consistently speak with existing contacts, clients and potential clients before they urgently need new business.
✅ Asking existing clients for referrals: Why referrals can be one of the strongest ways to find new clients who are likely to be a good fit for your business.
✅ Finding opportunities within existing clients: How reviewing current relationships can reveal opportunities to support clients with additional services or projects.
✅ LinkedIn outreach: Why personal and thoughtful LinkedIn conversations can be effective, and why automated outreach should be approached carefully.
✅ Local search engine optimisation: How a strong Google Business Profile, genuine reviews and a useful website can help local businesses find an MSP.
✅ The importance of a fast response: Why responding quickly to a new enquiry can make a significant difference when a potential client is comparing several MSPs.
✅ Cold outbound activity: Why outbound marketing is a long term process that requires regular follow up rather than a single phone call.
✅ Delivering client happiness: Why MSPs should focus first on delivering an awesome outcome for the client before focusing on tools and automation.
✅ Reviewing software costs: Why MSP owners should regularly audit their software subscriptions and remove applications that are no longer required or being used.
✅ Making difficult decisions: Why business owners sometimes need to make tough decisions about costs, staffing and client relationships.
✅ Understanding the client relationship: Why MSP owners need to consider the personality, expectations and working relationship of the people they support.
✅ Building a healthier business: How losing a large client can create an opportunity to review the business, improve the pipeline and build a more sustainable client base.
✅ Continuing to innovate: Why MSPs need to keep improving and helping clients understand how technology can support their business.
We created this podcast to share the real conversations and lessons we wish we had more of while running our own MSP, with practical insights from people who understand the challenges of this industry.
Learn more about Abhishek and Telco ICT, or connect with him on LinkedIn.
👉 Read more episode notes here: mspmastery.blog
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Never have a wage client. You should disperse your clients or maximum 20%. You should never have a wage client. And if you have a wage client, you need to use that period to get more customers.
SPEAKER_02I think losing that big client that's kind of forced you to go and do what you should have been doing.
SPEAKER_01And it is a weaker call because you would never want to have your business that one client leaves and you're putting your business at risk.
SPEAKER_03You just need to deliver an awesome outcome for the client. Just get that client happiness, get the processes and then the tools and automation come in after that.
SPEAKER_02Welcome to MSP Mastery, the podcast for MSP owners and leaders who want to build a better MSP. I'm Jenny Clift, and alongside my longtime business and life partner, Nick, we draw on our 60 plus years of combined experience to explore what's really working in thriving MSPs. Our goal with this podcast is to share the real stories and hard-won lessons that inspire and add genuine value to our industry, helping you build a business that is both profitable and fulfilling. This is MSP Mastery. Here's Nick, myself, and today's special guest. And joining us today is Abi Bhagawa, the sales director at Telco ICT in Melbourne. With more than 16 years of experience in the industry, Abi has spent the last decade and a half at the intersection of telecommunications and managed services, helping to grow a successful Melbourne-based MSP. As a partner and sales director, Abi has a unique perspective on how to successfully bridge the gap between traditional telco services and modern managed IT. He's highly regarded for his ability to integrate those two worlds, creating a seamless experience for clients while building a robust recurring revenue business. He understands the commercial strategy required to navigate the complexities of both sectors and knows exactly what it takes to scale a service-to-focus business in a competitive market. Abby, welcome to MSP Mastery.
SPEAKER_01Thanks, Jenny. Thanks, Nick. I appreciate that. That was quite an introduction.
SPEAKER_02I know, I know. I came up with a few things in there.
SPEAKER_03Yeah, I I I can't wait to hear the story. Yeah. Yeah. Yeah.
SPEAKER_02We've known you for a while now through the industry. Uh you were in uh one of our mastermind groups there for a while, so it's good to to catch up again.
SPEAKER_01No problem. I think MSV is uh small community. Everyone is there to help each other.
SPEAKER_02Yeah, and it's such a unique like usually in industry you get you know full-on competition, nobody shares anything, but it's one thing I do like about this industry is the the willingness to to share and and help. Not everybody, of course, but but most people. So as an EOS implementer, I always start my meetings with this. Please share your personal and professional bests from the last six months.
SPEAKER_01I would say for the last six months, I am a lot into health. The best time is, you know, balancing the family life and healthy life. I mean, that's my goal for this year. I mean, I always look back as you can get wealth anytime, but you can't get your health back. And during my worst times, health has taken the hit. So I'm very, very happy and just being healthy. That's a motor. So that would say is my good win's in the last six months.
SPEAKER_02Nick, any personal professional best for you? I haven't asked you for a while.
SPEAKER_03Well, you haven't, no. Interesting you mentioned that, Abby, because I I totally agree. The health part, when we get busy and overwhelmed and a bit of stress and strain, and we will go through a few short stories today, I'm sure, about some stress and strain, but it's important to have that focus on your health. And for me, the mental release of actually going to the gym for an hour, and I tend to always use personal trainers because when I'm there, I'm listening to them. You know, they're making me hurt in different ways, but it takes your mind off the stress and strain of what's happening in the business. And that the more physically and mentally resilient you are, the better you are to handle bumps along the road. So that's that's a good bit. So to answer your question, Jen, for me, it's it's also with Jen and I've been on a bit of a health kick our souls over the last six months. And I'm at my lightest I've been since I can remember recording my weight, which didn't really happen until I turned 50. So I'm happy with that. That's my win. And I think the professional win for me is the my recent trip to Australia, or our recent trip to Australia, and I went to two IT conferences, and a number of people that came up to me and and commented and said, Oh, they really love the podcast and really love listening to our our stories and how we've got really good guests on there. That's absolutely been the number one thing. And it's given us the encouragement to invest a bit more time and effort into it and come up with some more creative ways. So yeah, YouTube is the next mission for us, and we've got the channel going now, and more and more content will be getting on there, so which hopefully helps a lot more people because yeah, different people take information different ways.
SPEAKER_02Hey, so I'll be moving on from my introduction. Can I get you to introduce yourself and share a little about how you ended up where you are today?
SPEAKER_01Yeah. I think I came from an interesting background of not being a technician. So my background is 16 years in selling. Used to be a lot in telco, mainly as telco ICD is a Tel Shah dealer as well. So when we started the business, we were doing all the Tel Shah stuff and everything. And then at a certain point of time, we had to pivot to managed IT. And yeah, I'm an avid learner. So anything I could see that I can get my hands on. I think just understanding the sales cycle, but understanding the actual technology. And that's what I'm really good at. So if I need to learn something, I'll learn it. We started the business as a telco selling the Telstra stuff and all. And then our existing customers kept on asking, do you do managed IT? Because your texts are pretty good. And then we ended up hiring a technician who had a lot of experience of managed ID. So he created the benchmark, the service team, and everything for us. And that's how the business started. So where it's at right now, it's like 95% is managed IT and 5% is terco-riding.
SPEAKER_03Oh wow. That's a that's a big transition. Yeah, that's nice.
SPEAKER_02How long did it take to switch? Like when did you actually move in or in when did you make that hire?
SPEAKER_01We hired the technician in 2019 just before COVID. So perfect times without knowing what's gonna come. Yeah, what's gonna come in? And yeah, it was actually a really good, I think it just happened to be where we had like a few customers asking for it, and then I thought there is a gap in the market. You just have to go with your gut. And my instinct was saying, just you know, look for someone, and we advertised it on Seek and then found a system engineer who had worked previously with other MSPs. And then we just interviewed him. And I think during his first month, the moment he was hired, we actually ended up getting two projects as well. So it wasn't really we just hired somebody completely blinded, but we had two projects, and we already have a revenue of three, four months to pay off his wages. That's how we started. So it was a bit of a risk, but at the same time, I could see genuinely feel my instinct that you have to do something.
SPEAKER_02Risk with a plan.
SPEAKER_01It just played out really well.
SPEAKER_03And along that journey, so going from basically 100% telco to nearly 100% managed service now. I'm sure you tried some things that didn't work and some things that did work. Is there anything that kind of sticks out in your mind as to something that you tried and goes, oh my god, that didn't work? Because you've got an existing customer base, and I'm assuming you would have used them as warm leads and gone to them and had the IT support conversation over time. And I know quite a few people that have done that or tried to do that transition, some successfully, some not. So I'd be interested to see your feedback on that process. Yeah.
SPEAKER_01You hit the nail in the head. So our biggest asset was our existing customer database. So we approach all our clients, but because you're working with someone new, and I think the technician we hired at that time was like, I need this, I need that, I need that software subscription, I need that software subscription. And there were a lot of subscription which was completely uncalled for, wasn't really required. And we ended up signing a long-term contract as a big mistake. So I think anyone who's starting an MSP, just be wary, like do a bit of research. I mean, now you have AI too, you can figure it out within a few minutes or so. But before that, you were just depending on one person as what they say. But that's actually for me was I kept on asking other people as well, but I didn't end up signing for CRMs, PSAs, unnecessary. It is necessary now, but I think when you're starting, it was just a lot more subscription before even you got your first managed client. And they were termed subscription of three years or so.
SPEAKER_03Yeah, I get what you're saying. Yeah, we end up we developed our own internal ticketing system twice. I don't want to say the bad old days or the good old days, but the original version of our stuff is the engineers had a three and a half inch floppy disk that they used an access database on their laptops, and then that was handed into the little girl in the office and uploaded it, and we did all our reporting and building. So that was our first version. Then we went to a Lotus Notes version, which was online. Then I thought, oh, there's got to be a better way. We're not software development house here, we've got to. And then we found for us it was autotask in the day, and that changed everything. But yeah, right, that initial phase, I think too many people do go in and say, Oh, yeah, there's 17 or 15 different products I need, but you don't, you just need to deliver an awesome outcome for the client. And even if you're doing it in a spreadsheet, initially you just get that client happiness, get the processes and then the tools and automation come in after that. So that's a really good one, there.
SPEAKER_01I do remember going to SMBIT, my first visit to SMBIT, and I introduced myself, what I'd done, and I just said, I've just started an MSP, but I've got a lot of telco experience, got hundreds of customers. And I remember an MSP sharing his idea, and he said, look at the bottom line. You can sign up for every different software in the world, but make sure you negotiate. Make sure you look at what other people are paying and make sure you negotiate for it. That was such a big takeaway for me, and that's what I followed after that. I don't remember the name of the MSP at that time, but yeah, it just happened to be. I just listened to it.
SPEAKER_03Exactly. You get those nuggets, and that that's the secret of going to any place. Yeah. Listeners of today will take a few nuggets away and go, oh, I'm gonna go do that, or I need to talk more.
SPEAKER_02And it's astonishing the difference in payment. And I get scale, the greater the volume, the the better the price. But often you see way different pricing on similar-sized businesses, and whether that a friendly account manager or a better negotiator, who knows? But uh, yeah, sometimes we've seen things and gone, wow, I'm not gonna say anything, but that's crazy.
SPEAKER_03Yeah, and it's really interesting for me because I'm a bit more philosophical now than what I have been in the past, and especially living in Indonesia now for three years. It's the exact opposite here. So the way the government looks after the people, because there's 300 million people here, and there's no welfare, unemployment benefits or any of that stuff. So I'd say two-thirds of the population don't have what I call an employment salaried. They're basically mini micro entrepreneurs. They're doing what they need to do, the hustling to make ends meet. So the way the government helps them is they fix the entry-level price for the micro businesses is fixed low cost, right? So fuel here in the whole kerfuffle with the Middle East, nothing changed here. It's 90 cents a litre and it's going to be 90 cents a litre forever. If you go to premium fuel or diesel, that's way more expensive. But for the average person who rides a scooter, they protect that. And electricity is the same. If you have a low consumption rate, you pay a lot less per kilowatt hour. And if you have a higher consumption rate, you pay more per kilowatt hour. So their theory here is it's the opposite to Australia. That if you're consuming more, that means you've got a bigger business, you're making more money. You should pay more.
SPEAKER_02Or you're a Westerner, an expat, and you can afford it.
SPEAKER_03Yeah, and it's really interesting because we're in Australia, you think well, you get more, you make more money, you have a bigger business. So you pay less. So it's I'm actually, I don't know what the right answer is, but it's different. It's just really different. So we make it hard for the small business to get going because they pay a premium, whereas the bigger businesses that are more profitable and bigger, they pay less. And the bigger you get, and then you get to multi-billion dollar corporations, they pay basically get everything for free. They don't pay tax, they get everything. And it's like, you know, a bit philosophical here, but it's complete opposite to what it's like over in an emerging economy where they support the lowest person through cheaper prices.
SPEAKER_01But you're also got to remember if you're buy prices more, that's what you're gonna pass it to the customer as well. So you may not be competitive as well.
SPEAKER_02Yeah, that's very true. As you said, you have to watch that bottom line. You have to be making money. So let's move into our topic for today because we've got a very specific topic that we are covering, and that is, and we've been through this ourselves, so we're very familiar with it, and that is your whale client moving on. So without naming names, what did those first 48 hours look like for you? And how did you process the news that you were losing that client?
SPEAKER_01It was quite disappointing when it happened. We gathered the whole leadership team between us and just discuss about the financial impact and also reviewed the contracts as well for future and existing clients, you know, what it will look like. Identifying just the risk involved, okay, if there's another one coming out as well. As a leader, I had to control the narrative, you know, what I'm gonna say to the team, because you don't want them to hear rumor from someone and then the whole internal thing will come in, you know, what has happened. But we always have put more trust in your team. Be truthful to them, what is exactly gonna happen. If you just have to put it down that it's not under our control. But be very truthful and honest with the team that this is what we are looking at. And, you know, most of them completely understand as well.
SPEAKER_02What percentage of your revenue did that client bring?
SPEAKER_0130% at that time. And yeah, I mean, look, it happened. And I remember myself being as a leader because it happened around the circumstance where we could see the new employee that company has hired, I would never work with them. And when it happened, I was relieved. Because then you're like, I don't have to focus on their business now. I have to focus on my current customers. Importantly, I was pretty much just positive because I think if you think about negative, negative thing will happen. If you think about fear, fear will happen. If you're gonna get angry, that's what will happen. So you just have to be positive, be neutral. And look, when you're starting a business, you're already taking a lot of risk and challenges with it. So this has come in. I think you have to take it down. This is a bump in the road, and you will come back.
SPEAKER_03And I I remember just reflecting on what happened with us. We had a, I think our client that we lost was a I said a 50% of our revenue. It was a lot of hardware, a lot of project work, and a good solid support, support agreement underneath it. And it was definitely our biggest client, and we basically anything they asked for, we did. So we overserviced above and beyond. We had people on site, which they weren't paying for people on site, but just chose to do that because they were a big client. We had enough projects. So and the reflection afterwards, 12 months later for us, we were we lost a lot of revenue, but we were more profitable 12 months later. And that was a bit of a wake-up call and go, hang on, how does that work? So my challenge to the people listening out there is if you've got a whale client and that's defined as somebody who's more than 10% of your revenue, actually understand the real numbers. And I went through this process with a client recently, and they look at the ticket data and say, Oh, well, we're billing five grand a month and our expenses are two grand a month to deliver that. So where service gross margin is in the ballpark. I said, Okay, cool. So does your VCIO and NetAdmins do they put their time on tickets when they go on site? Oh, no, no, no. Okay, cool. Does the owner, when he does his quarterly visits and he does the strategic discussions, full quarterly business review, do they put their time on tickets? Don't think so. Okay, cool. Project pre-sales, scoping for all the project work. Is that all factored into the actual contract? No. So ultimately, when we broke it right down, they were nowhere near as profitable as what the owner thought. Because he was just looking at recurring revenue versus salary minus, that was basically it. Recurring service gross margin is recurring revenue minus salary. But they didn't take into account the overall impact that client has. How much time is it taking up in leadership meetings? Like you said, I mean someone new goes into a client and all of a sudden it's a difficult client. You're having more discussions. It seems to be harder to do work there. They're not taking on your advice, they're not signing off on deals, they've asked for quotes for. And all these are indicators that that relationship's not where it needs to be. But we are very, very attached to our revenue. So we can't, and how many times have we had a not ideal employer, not ideal client that's not matched to your core values? But you don't make the hard decision, and ultimately they either resign and leave and you go, oh damn. Or the client leaves and you go, oh damn. But in hindsight, you said, I should have been the proactive one that put them on notice earlier. So my challenge is just and I it'd be interesting to get your feedback on your situation. With it all said and done, was the impact as great as what you feared it would be at the start, or was it a like you said, it was a fresh turn, and let's have a real good review of what we're doing and how we're looking after our Yeah.
SPEAKER_01I think going back a year back, and I'm gonna go back because recently, just because we could just finish our financial year in Australia, just like yourself, Nick, we realize this has been the best year out of the last three, four years or so in terms of revenue. The win is like our leadership team, we were more, I think it was just to prove ourselves that it will happen. And then looking at, okay, yeah, what will work? So if this happened again, are we ever going to come back or not? So when you have the best year and it, you know, you lost your biggest client a year back and you still were able to overcome this situation, it just fills you with pride. So here, again, going back to the question, what has made me happy in the last six months is looking at the numbers as well. But I think it also just shows you, because I always say take business as sports. You're always gonna have win and losses. Then it's much easier to take it that you're never ever gonna be winning every deal that you're gonna get in. You will never have clients who are gonna stay with you for your lifetime. I mean, especially with where we are right now with AI and so many new challenges are happening and everything are being discovered right now. I think the client retention will be very hard and it's gonna get complex as well. So anything with compliance, virtual CIO, anything you can do to retain the client, that will help as well.
SPEAKER_02If I look back at our whale client, the happiness in the team, one person left and actually went and worked for that client, which was a good move. But our team was just so much happier because that client was so demanding and it just you know that initial, oh my God, is the company going to survive? To this is so much easier without them. I think that was a big win for us as well. Because they were demanding when they wanted something, they it was literally if they said jump, they expected us to ask how high. It was a financial hit to the business. We were more profitable, but everybody was way happier.
SPEAKER_03Yeah. And it comes back to really understanding your client. Like that particular client, I'd say 70% of the revenue was project work, hardware sales and project delivery. And the margin on that, yeah, on the server side of it, because it was mostly servers. Oh, we did we did everything. We did the desktop, we did everything. So servers were good, desktops were bad, they were a government organization, so there was basically a fixed price on that, which is low margin. And the service agreement itself basically funded one person, and that one person, we did a deal with the client and they went and worked for the client anyway. So we only had to, you know, losing half of our half of our top line revenue, which were probably around that three million dollar mark at that time. We only let one person go, and it was a mutually beneficial thing anyway. So it was amazing because then we did the analysis and go, oh, actually, oh, okay, we've dropped a bit of revenue, but that was all product. So everything got better. Yeah, the workload got better, everyone. So understanding your client is the key. We tend to get busy and we tend to look at the overall revenue bucket versus overall expenses bucket, but it does, it is pertinent to actually do a deep dive on individual customers, at least on a quarterly basis, to understand exactly where your A players are and your problem childs are, and what do you do about that?
SPEAKER_01Yeah. I think in our case, the client was very profitable. It was a managed service client. But I think looking back at But right now, it was more Matt and I had to separate ourselves from their day-to-day operational. And I think a lot of MSPs, they just are too much into operational. And at that point of time, when we knew we are going to leave, we are going to lose this much revenue and it's not going to come back. We had to completely separate from the business. And kudos to the team because they took the ownership as well. You know, that hey, you guys focus on bringing new business and lead the operational part with us. And I think having that discussion with your team did help us a lot because at that time we were focused on bringing new business and also just qualifying the new business as well, because we wanted to make sure that we are not working, I mean, with us certain type of personality or so. And we should enjoy when we are working with. I mean, that was actually one of the first customers we lost in the last six years, like the first customer ever. We've never had customers losing. We never lost a customer in the past. So I think coming back to that one is understanding the personality of the people that you want to do the business with and just making sure you identify that you're going to have a good, honest feedback from them. And also you're going to have fun with them as well. So separating ourselves from operationals and just focusing more on new business development, that's what really bought us new business as well. Because I think as a MSP, I've seen a lot of MSPs and even in our peer group as well. There's so much focus on what's the new technology that's going to come out, what what's the new software they're going to do, how to automate everything, but not actually looking at how many new conversations I'm going to have with the new clients as well. Once we overcome that, that's what really happened.
SPEAKER_00Yeah.
SPEAKER_03Yeah, there was a revenue hit to the operation. So you chose to take yourself out of those basically budget lines and focus purely on sales and say, well, guys, you've got to run the service team now because we don't have the budget for me to be involved in. I think that's a great way of looking at it and empowering the team. And I see it today, people are trying to put service delivery managers in, but they don't have any financial visibility or control. And I remember when I left UNISIS, I was service manager at UNISES and one of my bosses there caught up with him about six months later and he said, How come you're so different, Nick? I said, Well, when I worked for you, I was given an expense budget and told what it was. I didn't have any ability to change it or to change my income. In my business, I get to keep what's left over at the end of the month. And he goes, Well, that makes a lot of sense. I said, Yeah, well, in the big corporate, if I fail or succeed, there is no consequence. You still get paid. You still get paid, and there's no incentive for me, and there's no even any opportunity for me to improve things, change the pricing model for the client. There was none of that in the big corporate, right? You just got told to deliver. You've got a head. We literally they use the word, this is your head count, number of people. There was nothing about custom parts, cost of labor, cluster travel, none of that. It was just a headcount, and all the financials were hidden behind me. So I had no visibility, and it didn't set me up very well to run a good MSP at the start because I had no experience at running that. But I soon learned that if you spend more money than you're earning, you don't have much money left at the end of the month. Yeah, don't need to for the month. Yeah, yeah, exactly. So yeah, it's a hard reality. And he was very, very surprised at my change in attitude. I said it was really simple, mate. I get to keep what's left at the end of the month. And if you want your team, your managers internally at the corporate to work that way, then you have to give them operational budgets they have control over.
SPEAKER_02And one thing I wanted to touch on as well that you mentioned, Abby, is we worked with local government for many, many years. And they had the IT manager or the IT coordinator, whoever it was, of course, we had no control over who that was. But the years that we worked with them, and I remember one particular IT manager at one of those councils, I think whenever his name popped up on the phone system, it was him calling, people literally just hid under their desks. Nobody wanted to talk to this guy. And it was an absolute nightmare. And it was interesting. He took Nikki took a couple of months off, and then when he was to come back, they had a a bunch of people come to the HR team and said, if he comes back, we're all leaving. And don't know how they managed it, but he never came back. But sometimes through no fault of your own, you've had a great relationship, you've had that client forever. They bring somebody in and they are a difficult person to work with. Sometimes you've just got to make that hard call. And we retained that client, and I'm presuming Otto still works with them. But just such one change can have such a big impact on your business and for us affect the culture and affect our team. And it was almost to the point of making a call and saying we just don't want to do this anymore because of this person.
SPEAKER_03That's an interesting yeah. I might I might share a bit more about the details on that one because it's an interesting one for the guys to listen to. So we, based on all the peer groups and involvement that I was in, everyone told me longer-term contracts are better, right? They're better, better, better. So we we worked really hard on the tender process for this particular client was a three plus two plus two contract. So it's three years initial plus two plus two. And in the end, they decided to go with a five-year straight up with a plus two at the end of it. That was a five-year contract. So and the pricing was locked in for five years. Okay, so that's that's number one challenge. Okay. Um, and doing the the merger and the exit of auto and all that stuff, then all the valuation processes we did discovered that if you have a more than a three-year fixed contract, that actually becomes a liability in your business because you can't guarantee what's going to happen in three years' time. So when you're thinking about everyone says, oh, three long-term contracts are more value. Well, you've got to be careful. Three years, two years is great, three years is okay, four or five. That's actually it becomes a liability because you're on the hook to deliver something that you have no idea what the impact's gonna be down the track. So that's one part of it. But what happened in this scenario? We had the contract, and then the person that it was the that we reported to basically got exited out of that business and replaced with somebody else. And that person was that their briefing, whatever it was, was to hold these guys accountable. And we had this five-year contract. So the staff loved us, we loved the client, he didn't love us. So there was a bit of negotiation, and I went into it and said, well, this tried my best to do what was going to happen. And part of that agreement was on-site support for us. And it was, I think it was say it was 10 grand a month. So in the end, I said, okay, am I gonna keep this? It's an adversarial position. I don't want to be in an adversarial position. It's a government contract, they can't cancel it. It's either gonna be pay it out or they're gonna suck it up and make our life hell. And I didn't want either of those. I didn't want to be adversary. So I said, what can we do to work here? I said, Well, I want to have my own help desk internally. I said, Great, okay. So what about we take a percentage of the managed services and put that towards a project retainer? So we cut back our level one work and we we negotiate, and that worked really well. And in the end, we kept that client to the end of the five years and they automatically extended the next two years. So there's ways to negotiate difficult clients, and like Jenny said, that's good for everyone else. That guy, I actually had that guy where I wanted him. We had a good working relationship. He was still a bit of a pain in the butt to deal with on a day-by-day basis. But the contract and the agreement and the relationship between the companies was quite good. So you can negotiate sometimes. And if you just stick to your guns and say, no, no, no, it's that, it's that, and that's it, and that's it. You're either going to pay you out or you're gonna get nothing. You'll go to court and you'll be just dragged on forever. So see if you can find some common ground that works, and and sometimes you need to give a bit to get a bit.
SPEAKER_02Okay, so let's go back to this whale client. So I'm interested in how I like what you said about getting out of the operational and into biz dev. So talk us through that. What did that look like in those first few, because it's a long-term process. You can't make half a dozen cold calls and sign up three clients. What did that look like?
SPEAKER_01That's a very good question. I think the first couple of weeks was finding the right spaces between our existing clients. It was a restart of our sales cycle from choosing a new CRM. And I always had in my mind, this is what I want to do. I want to do this channel, I want to use this channel. So we realized, okay, what are the top three channels which can give you 80% of your target? And we quickly realized that these are the three top channels. Take an example, asking customers for reference, because that's the best way. Like their business, you like their personality, and you know that the referral they are going to give out is going to be very similar to them. So that worked. But putting it out as a sales process, we use channels like emails, you know, getting regular touch with our customers who haven't worked with us in the past, who've done one project who haven't worked in the past as well. We look at what are the other white space we can find in their contract or in their current arrangement where we can upsell them something or provide them more productivity. So that was for us like that, those were the first two weeks where we already had documented as who we are going to approach, what discussions we are going to have as well. After that, I think once you start having that mindset of you have to really be careful with the time that you're spending as well. So I do remember talking to one of my colleagues, and I said, your first four hours, I just need you to start calling our existing clients and ask them for referrals. So we can just start looking at, okay, what's the new pipeline that's coming in? I think once you start identifying and you get the momentum, then automatically everything comes in. And it was just a matter of letting go of that client where we could free our time a lot. And then third month, we were just getting like new clients coming in, and we were talking new projects and completely new energy. That's exactly what happened over here. And I wish even today, like I feel like I'm putting a lot of lot more work on operational. It doesn't require me as a business owner, but I feel like I should be separating myself and just keeping it simple. Keep it simple, keep your daily timetable simple. Once you get the momentum, it's easier.
SPEAKER_02Yeah, what do they call that? The the flywheel. One thing that Nick and I now have the advantage of sitting outside and looking into other people's businesses. And we often will have a conversation of this person's way too operational. They need to, you know, get out of their team's way of things being constantly delayed and rescheduled and that sort of thing, because, oh, you know, we've got a client issue that I'm dealing with. And I get that sometimes you have to do that. But I think sometimes it's something like this situation, losing that big client, that's kind of forced you to go and do what you should have been doing.
SPEAKER_01And it is a wake-up call because at the same time, you would never want to have your business that one client leaves and you're putting your business at risk. What would you need to do? And I'm not against having whale clients. I think everyone should have well clients because it's a complex environment. You learn a lot more in a complex environment than a smaller environment. But also just understand that a whale client does involve a lot of meetings, like you will have weekly meetings, you have to provide the report as well, you have to write down their project outline as well. You have to do the change control as well for every and yeah, you have to provide all the operational what you got in your arrangement as well, the day-to-day basis as well. So the amount of time it takes as well. But at the same time, I mean Australia itself is, I think, 80% of small businesses. So there is a lot of relationship happens with the business owners as well. And you would be able to identify, okay, even if you're if you've got one client who's got 30 or 40% of revenue, you have to recreate your business in a way. You have to, and for us, it was a wake-up call because we didn't want it to be in this situation ever again. So we have to find out a way, how can we make so everybody knows us, whether it's via social media, LinkedIn, or outreach, they should know us. So when they are ready, they should be approaching us. And I think just pivoting itself and just having a think about what can I make it so I can stand out right now. And I think that's what really made the difference for us. And just with our timetable as well, I mean I think with our day-to-day activities right now, as I remember back in the year I had put it down for me, I'm gonna be making 15 calls before 3 p.m. to everyone that ever met. And I will talk to them and I'll figure it out, you know, if there is anything I can do to help. And having the discipline to do it, that's what really stands out, you know, from a business where you are ready to have that fear, you've lost a big client. Are you going to survive? Or you're just gonna have the positive. I've just had like 15 people I've spoken to today, and I can see two or three people are gonna come in future. And I think that's regularly exercising that one is how you get regular your whole pipeline pretty much as well for future.
SPEAKER_03Yeah, that's that's what I was going to ask you. Is of your experience, and it sounds like it really worked. Is there you did say there was like three channels you focused on? So was that the current client referrals and upsell to current clients? Then was it web SEO? Was it LinkedIn, email marketing, outbound, telemarketing? What was uh that's what the listeners want to hear. What was what worked, mate? Because everyone's all these marketing people are telling you to do all this different stuff, but what actually worked for you?
SPEAKER_01No, that's a good question. Referrals 100%, because one of the big clients actually came from a referral. They did tell us, look, I'm going to be starting a new business in three months. Would love to have you guys up. And I remember that came from a referral as well. LinkedIn outreach, 100% works, like talking to business owners, but not putting the like, don't do automation on LinkedIn outreach. You have to do it carefully as well. I think getting into local SEO, I'm a big firm believer of local SEO because a lot of our clients, I think we got two or three clients, small clients. They came from local SEO, but I didn't define your Google business profile, making sure your reviews are better than your competitors, genuine reviews as well. Then also making your website SEO friendly as well. So that's also another channel as well. Cold outbound marketing is long-term. It does work. It has worked for us. But if I have to define what our top four channels would be, the low effort will be LinkedIn because you can easily identify Nick. This is your friend. How do you know Nick? That sort of a thing. Email marketing, because you can do a bit of homework before you send the emails out. Trying asking your client for a referral, I still believe it's the best one. And then, yeah, the cold outbound would be my fourth one. I still a bit hesitant to say cold outbound, but I think if you're doing it for a long term, for a long time, and you have uh proper CRM touch points and all, it will work. But if you're gonna just gonna do poll outbound, just making a call on one day and not following up in the next few days, I think it will die.
SPEAKER_03Yeah, cold outbound calling is not to get appointments, it's to introduce them to the business and put them on some kind of marketing nurture campaign. Yeah, ringing up, getting someone to commit to a meeting, it's like the hardest thing on the planet. Like when was the last time you actually agreed to do a meeting from someone boning you up? There, bowl up 100%. And it does work.
SPEAKER_02Or invite them to an event. That's something that we had a lot of success with lunch, a lunch, a breakfast, uh whatever it may be, but invite a reason for them to want to invest some time. And I just wanted to touch on websites there for a second because this is something that fascinates me. That I look at a MSP's website and think this this looks like something that a technical person did in 1994.
SPEAKER_03That would be what the DWM website was.
SPEAKER_02Yep, exactly. Exactly. But at Otto with the merger, we invested a lot of money in the uh in the website then. And I think it's something that we forget about and not looking at it from a your own perspective of knowing what you do. But if you've got a website and it hasn't been updated for a while, ask a couple of family and friends to have a look at it and give you some honest feedback because it's the old I remember years ago we were living in Puntry of Victoria and we had done, I don't know what, we built a fence or something, and it was literally out of a few bits and pieces. We had to put a fence up. I don't know if we'd got a dog or something. And I drove up and down that road and I saw that fence every day. And then for some reason one day I saw it and actually wasn't what it was, which was eight different colours, I think. And I came home and said to Nick, that thing's gotta go. But I'd seen it so many times that I didn't see it anymore. And I think sometimes we do the same thing within our businesses to get some external perspective, ask some other people what their feedback is and do something with it.
SPEAKER_03And it's interesting because I did a workshop just recently with a client, and I think now it's more than 50% of web traffic is from AI bots. So it's very unlikely that someone's going to go to Google and type in, oh, I'm unhappy with my MSP, tell me which IT companies are in my local area. They're more likely to go to their agent and say, hey, go do some research. Give me all their last two years of projects, reference clients, bits of and compare all this stuff and give me a top list that's three to call. So go check yourself out in the AI chats, and that's what your website needs to cater to.
SPEAKER_02Ask AI, if I was looking for this, would I come up? And if not, what do I need to do to fix it? So I do.
SPEAKER_01Yeah. It's a constant improvement on your website. I think I did spend a bit of time and getting feedback from other, and I do remember giving feedback to other people as well. Have staff photos, have your recent projects clearly outlined. And what Dicky mentioned about AI or GEO, that sort of search right now. We recently had a client calling us and I did ask them how did you find us? And he said, I just put it on Chat GPT. You know, who's local and who's and he did say that I looked at reviews as well. And I read all your reviews as well. So and I could identify some of the local businesses that you've catered to. So for me, it was just like. And also when they've made an inquiry, we have this that we have to call them back within the first half an hour. Otherwise, we've already lost it. And if you are getting an inquiry, make sure you call within the first hour. It could be it's even better if you call within the first five minutes. Because that's what we'll expect in, you know, when they're seeing your reviews and all. And if you're writing good fast response and you are calling them after two days.
SPEAKER_03Yeah, it's not gonna happen.
SPEAKER_01Very hard to justify.
SPEAKER_03It's 100% right, mate.
SPEAKER_02And unlikely that they've only reached out to you. They've probably reached out to three. And if you're the first one to ring, you're first in line.
SPEAKER_03And the other interesting thing is having having a lot of boring information on your website, maybe even on uh like the old SEO pages, but we need to have the answers to the common question. So you think of what are the top 400 questions that a company's gonna ask about IT? Just have all the answers on your website so that the AI can go find those answers and then serve them up to say, oh, this company said, Yeah, they can fix that, they've fixed that, they've done that. Here's the history. Not just we do cybersecurity and we're a Microsoft partner. That doesn't fix any problem. It's the stories about fixing problems and how you fix the problem.
SPEAKER_02Okay, let's finish up with one last thing. Abby, chips for an MSP owner who is facing the loss of their biggest client. What do they do?
SPEAKER_01Keep the positive mindset, talk to your staff. If you're gonna have three year, fear will follow. I always had this approach, but I think one of the best use of your time is audit your current stack as well. You might be paying a lot for your SaaS agreements and all, which are not required at all. And I do remember we did exactly the same as well. We went through, you know, hey, do we need this? Is this something imparenting? And some of the SaaS applications you probably will be looking at hasn't been used for six months at all. You just had it for the takeoff if something happens. So audit your current software applications that you're paying for it and can't unnecessary spend. And at certain point of time, you know, you will also have to decide do you need that much manpower? I mean, as a business owner, that was for me was the hardest thing to say to any employee if you have to let them go or it's not mutually beneficial at all. And you have to find out what would they you have to make those tough decisions as well. You know, and you have to be part of it. Like you have to believe in it. Otherwise, you're just making, you know, you're doing wrong things by yourself as well. It's more harmful than anything else at all. So be ready for the tough decision. That's what I would say to MSP who's going to be, I don't hope it doesn't happen, losing a real client. But again, never have a real sign. You should disperse your clients out maximum 20%. You should never have a rail client. And if you have a rail client, you need to use that period to get more customers.
SPEAKER_02Grow the business. So they're a smaller percentage, yeah.
SPEAKER_03Yeah, get get more bigger ones, and then they're not they're not wild, they're the normal one. You get more bigger ones.
SPEAKER_01And always be looking to have the tough discussion, you know. The churning is power. Of the business. You can't say to a client, you can't keep a client forever. If they have made the decision to move away. I think as a business, and I remember at certain point of time, we were not able to take new projects because we were so busy in our existing projects. Was it good for the business? Probably for the short term, yes. But overall, it wasn't good for the business as well. Because if you're not bringing new clients, eventually you will have clients leaving. And then it's like a leak in the bucket, right? If you're not filling it, you won't have the bucket at all. You won't have the water at all. If you're going to continue leaking.
SPEAKER_03And it's that safety net of having the pipeline. And it's not necessarily even people you know are going to sign. It's people that know, like you said, people that know who you are. And when they're ready, when they've got a problem, they're happy to have a conversation. That's the thing. If you're going just you're flat out looking after your existing clients and you can't on board two new clients a month, that can change in a heartbeat from a couple of a company gets acquired, a key contact moves on, someone else comes in with their set of friends. And I was having this conversation the other day with someone about it's really interesting how in the managed services world we want to keep our clients forever, but we sometimes we coach our clients to change their accountant every four years, change your insurance broker every four years because you get complacent and you may not be getting the best deal from that place. And it's even with coaches and and stuff, you tend to learn everything you can from a coach in two to three years. Now, there may be other reasons why you stick around. And we have had long-term coaches because we do become an integral strategic partner in their business planning. But the practical, tactical things, generally you're going to learn everything you can learn from someone in two or three years, even if they've got vast experience like Jenny and I have, and you have. If you're working with someone, you basically cover all the bases in that two to three year period. And you've got to think holding on to clients longer than that, where yes, you like them and have a bit of fun, but are you truly adding value? Is it truly a win-win situation? That's when you've got to have those reflections on yourself and say, I need to bring on fresh new clients that I can add the most value to to ensure that we don't lose clients that we've run our course. You know, you're not going to get rid of, don't go and get rid of everyone tomorrow. That's that's ridiculous.
SPEAKER_02Four years is up, out you go.
SPEAKER_03No, no, no, no. We're not saying we're not saying that, but truly reflect on it as a business. Are we adding more value to that client than they're adding to us? And if you think, oh, they're my most profitable client, yeah, I don't care about that. That's adding value to you. How are you adding value to them? Because if you're not adding more value to them than they're adding to you, then that's not a good situation to be in. I would say that client's at risk. Because and we had this parameter that we looked at on our when we got really mature at this, we did the effective hourly rate calculation on every client based on all the people in the business that did all the work. So including sales, pre-sales, admin, meetings, travel. And if the client, we had a band, right? And if it was under $50 an hour, hey, we're losing. But if it was over $400 an hour, then the clients are losing. We're actually not giving them value. But we're making $400 an hour on that guy. Yeah, but for how long? When they figured this out, that's gonna be a different conversation. So we go, okay, we need to add more value to that client. How do we go back and do a bit more strategic coaching with them, invite them to a few events, take them out, educate them on what's going on? Yeah, you've got to have that sweet spot and whatever it is for you, work it out. And there's overservicing and underservic are just as big a risks.
SPEAKER_01Yeah, innovation is always, you know, should be the key part. If you're not innovating, you're almost dying. So and I think there is this unspoken, you know, from all your clients. You are my innovation manager as well, as an MSP. Like you will have to tell us about our business processes as well, how it should be as a trusted advisor. So if you're in not innovating, you're dying. 100%.
SPEAKER_02Okay. Yeah, thank you. Abby, so much more we could talk about, but as always, run out of time before, run out of things to talk about. So thank you. Thanks for joining us and giving us your time.
SPEAKER_01Yeah, no problem at all. Thanks to both of you. Looking forward. Yeah, if you need anything, just let me know. And I hope to see you in Bali. Yeah, absolutely.
SPEAKER_02Yes.
SPEAKER_01Not in Australia, but in Bali. Absolutely.
SPEAKER_02Particularly not in August.
SPEAKER_01Well, I haven't been to Bali for the l since COVID. So I think I need a reason to go to Bali and what could be the best to go by an official, you know, where I can claim my plane tickets.
SPEAKER_03Absolutely. Yeah, we definitely have a living we'll have a leadership summit over here and make it make sure you get invite.
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