Magazine Article | November 12, 2014

Say "No!" To Unprofitable Customers

By The Business Solutions Network

This $7 million MSP walked away from 90% of its prospects while still growing revenue 9%.

In 2013, Eric Gray’s company acquired only four new customers. Not 40, not 14, just four. Before you surmise this to be a story about an MSP (managed services provider) falling on hard times and coming up with a plan to quadruple new business growth in 2014, there are a few more details you must know.

First, there was no lack of leads acquired by Gray’s company, Convergence Networks, last year — in fact, there were nearly 40. Second, nearly 80 percent of those leads were “warm” leads acquired through customer referrals. And third, when this MSP presents a prospective customer with a contract, it closes the sale 50 percent of the time. All of that means that in 2013 Convergence Networks intentionally KO’d more than 30 prospects. Despite acquiring such a small number of new clients, the MSP experienced 9 percent revenue growth over 2012, and it maintained double-digit profit margins per customer.