IT Employment

Increase service agreement renewal rates with these tips

If a client seems unsure about whether to renew a service agreement with your IT consultancy, you should try these strategies for keeping your contract renewal rates high.

All IT consulting clients should be on a service plan. The main reason a client should sign a maintenance agreement is to ensure prompt service. Service agreements also help consultancies determine proper staffing levels, maximize IT investments, and reduce downtime.

Service agreements can be a tough sell, so once these plans are in place, IT consultancies should take the following steps to help ensure clients renew their agreements.

  • Remind clients about the costs associated with downtime. You should remind clients that businesses on service plans receive higher priority from your IT consultancy. Be sure customers understand that, if their agreement lapses, recovery and repair operations could stretch to a couple of days instead of just a couple of hours.
  • Offer lower renewal rates. Clients on service plans may already receive discounted rates (instead of charging $139 an hour, maybe your consultancy charges them $125 an hour), but if your office raised its rates since the last service agreement was signed, you might offer to renew the client's agreement at the prior year's lower rate. The goal should be to show clients you wish to form a long-term partnership, not nickel and dime them.
  • Provide regular checkups for free. Instead of charging for a couple of hours of service every quarter or a couple of times a year to review how well systems are working, what upgrades might be needed, etc., you can provide those checkup services free to contract clients.
  • Discount software and hardware sales. While noncontract clients might pay full retail for software applications and hardware, maybe your consultancy could extend discounts on those purchases to clients possessing current service agreements.
  • Schedule regular preventive maintenance tasks. Approximately 70% or 80% of business-disrupting failures likely occur because a neglected system finally broke. By scheduling regular on-site preventive maintenance trips for contract clients, you can help customers avoid disruptive outages.
  • Review service agreement and update for clients' current needs. Clients' needs often change over time. It's possible a client used to have 30 employees and computers when the original service agreement was signed years ago but has downsized and now only maintains a staff of 10. In such cases, you should rewrite the service agreement to provide fewer monthly service hours at a lower cost.
  • Add services in place of time. Sometimes clients' needs change in other ways. Clients may start a relationship requiring many service hours but gravitate more toward requiring software and annual license renewals once their systems and networks are stabilized. Where it makes sense, offer to leave the agreement's pricing unchanged but reduce the number of hours provided in exchange for your including annual antivirus and QuickBooks (or similarly needed) license renewals each year. The goal should be to determine the client's needs and cover them using a single contract whenever possible.
  • Offer customized reports and recommendations. Once a client has been a customer for a year or more, your organization will have developed a trouble ticket and invoicing history. You should review that history, and note trends and common failures and revise service agreements at renewal to include steps to address and eliminate common issues and failures. You should also present simple summary reports and charts, too, to demonstrate where the client's investment is going (battling infections, troubleshooting recurring telecommunications failures, servicing old machines that should be replaced, etc.). The more you can do to help clients understand where you're adding value and how you're working to service their needs, the better.

What methods do you practice?

Does your IT consultancy use other methods to better service contract clients? Share your recommendations in the discussion.

Also read: Three tips for billing maintenance plans.

About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

4 comments
Erik Eckel
Erik Eckel

We have many clients onboard who use us 15, 20 and even 80 hours or more a month. Do I lower rates for them? I'd be an idiot not to.

Mostafa.Karimi
Mostafa.Karimi

Its useful but i think adding a little spice for delighting them , something unfamiliar with i mean not something like discount for hardware and software but a way to be closer to themselves and their company like they think we are together on this service,should get a service provider a long time agreement and no trouble for renewal the agreement. My suggestions is to increase contact with them as much as possible but not making them uncomfortable.With a good and deep looking into calendar and their profiles we can make some strange moves,but risky,to delight them with our attention to them.

Sterling chip Camden
Sterling chip Camden

Maybe all of your clients should be on a maintenance plan, but not all of mine should be. Second, I don't lower rates to keep a client. So long! I can be flexible and work out an arrangement that meets my client's desires, but not if it means working for less money.

Sterling chip Camden
Sterling chip Camden

Are you sure that you're not missing better opportunities by wasting your time on the low-ballers?

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