EP. 58: Melissa Hockenberry Reveals Why Client Retention Starts Inside Your MSP
After thirty years building and scaling Australian MSPs, Nick and I have learned that the hardest thing to see in your own business is usually the thing clients experience every single day. You live inside your operation, so you stop noticing the friction points that quietly push your clients towards the exit. It is one of the reasons we launched MSP Mastery: Ctrl Alt Deliver, to bring in voices like our returning guest Melissa Hockenberry, a client retention and customer success expert who helps MSPs build stronger client relationships and lasting business value. With more than twenty years in the industry, including a long career at Autotask, Melissa now leads First Things First Training and Consulting, and her thinking consistently validates the patterns we have watched play out across decades of managed services. In this episode, she reminded us that if you cannot see the messy parts of your client experience, you are already losing ground.
MSP Mastery
9/28/20268 min read
After thirty years building and scaling Australian MSPs, Nick and I have learned that the hardest thing to see in your own business is usually the thing clients experience every single day. You live inside your operation, so you stop noticing the friction points that quietly push your clients towards the exit. It is one of the reasons we launched MSP Mastery: Ctrl Alt Deliver, to bring in voices like our returning guest Melissa Hockenberry, a client retention and customer success expert who helps MSPs build stronger client relationships and lasting business value. With more than twenty years in the industry, including a long career at Autotask, Melissa now leads First Things First Training and Consulting, and her thinking consistently validates the patterns we have watched play out across decades of managed services. In this episode, she reminded us that if you cannot see the messy parts of your client experience, you are already losing ground.
Put the Swim Goggles On and Look at the Friction
We have always told MSP owners that understanding your client experience requires looking beneath the surface, and Melissa brought back the swim goggles analogy to make the point concrete. Those goggles leave a red mark on your face, but they let you see clearly under the water. The problem, as we have seen over and over, is that MSP owners often have a completely different perception of their business than their clients do. When we asked Melissa where owners should look first to stop churn, she did not hesitate. Billing and invoicing are the biggest friction points in managed services. If you are putting the goggles on today, you should be standing right in front of your invoicing.
Her suggestion is one we have used ourselves, and it is remarkably effective. Give ten different invoices to a brand new person who knows nothing about your industry and ask whether they make sense. That person is exactly who actually receives your invoices across the client's side. They almost certainly do not have your technical knowledge, and they probably did not negotiate the contract either. If they cannot understand it, your billing is creating friction whether you intend it to or not. From our perspective, this is not a cosmetic problem. Getting people's money wrong is a double whammy, because it destroys trust in the system and it makes clients wonder what else upstream is unreliable. You need to have the conversation up front and get approval before you send anything, otherwise you are creating customer experience problems and angst for everyone, including your own accounts team.
Get the Language Right and Give Your People a Number in Their Head
One of the most valuable principles to come out of this discussion was about how we manage the detail versus simplicity balance. Melissa described hearing a speaker refer to MSP contracts as silent, and that phrase stuck with her. So many systems and agreements leave too much unsaid, and the words are there to solve problems. We have always favoured a structure where a master services agreement handles the legal terms that apply across the relationship, and then service level agreements sit alongside for specific services. Whether you consolidate to one invoice or separate them, the wording is what either protects you or trips you up when a relationship starts to unravel.
Nick and I could not agree more with Melissa's point that taking the extra time to get the wording right is worth more than burying clients in individual agreements. If you hand a client thirty pages instead of the five they were expecting, they will assume you are trying to hide something. The natural extension of this is to recognise when you are stuck on perfection. We have seen MSP owners delay sending invoices because they are not perfect, when the better move is to pick three trusted clientsainer the conversation, be honest that part of it is accurate, and commit to fixing the rest. That is exactly the mindset we have always championed in our own businesses.
On the flipside, we shared a practical leadership habit that has served us brilliantly. Give your team a number in their head that empowers them to fix problems. If a client is questioning fifty dollars on a two thousand dollar invoice, you waste more than that in overhead and angst by arguing about it. Nick and I would rather empower someone to credit it, thank the client sincerely, and turn that frustration into a story about how responsive you are. The same logic applies to time and parts. Melissa told a story about a client spending four hours fixing a printer that would have cost less than one hour of labour to replaceaine, and that is the kind of thinking that quietly erodes profitability. Teach your people to think in percentages and replacement costs, not just ticket time.
Hire for Relationship Building, Not Just Technical Skills
We have always believed that nobody truly owns the managed service contract, its retention and its profitability, and that is a problem for growing MSPs. When Melissa asked what that dedicated client success manager should look like, her answer lined up exactly with what Nick and I have found after thirty years. The best people in these roles are rarely the techs. They come from places where they learned to talk to people, build relationships, repair trust, and nurture connections. They may have worked retail or banking or at a hotel front desk. What matters is that they genuinely love humansais that the people who love humans get filled up by them rather than depleted.
The interview process for this role is where most MSPs go wrong. You cannot just ask if someone is good with people, because of course they will say yes. You need situational questions drawn from your own business that let you watch how they think. We added our own non-negotiable from years of hiring, and that is listening. Nick and I used to use a simple listening test, a question that starts with a lot of detail and then asks something easy. The people who actually stopped and listened would be the ones who answered correctly, while the ones who were already off on a technical tangent would get it wrong. That is the difference between a client success person and a standard tech.
Melissa made one further point that every MSP owner should write down. This role is not a sales role, so do not put a sales quota on their head. You cannot expect someone to repair, nurtureate and restore relationships while simultaneously chasing revenue targets. Let them be measured on profitable organic growth that comes out of the conversations they are having, not on a number of services sold. And if you are a growing MSP, be careful what else you load onto this person. All the orphaned tasks that nobody else wants will naturally gravitate towards them, and you need to stand fast and defend what the role was designed to be.
Understand Your Real Profitability Before You Panic
There is a reason Nick and I talk constantly about knowing your numbers. It is the freedom that gives you the confidence to make decisions. Melissa touched on this perfectly when she encouraged owners to ask how much time and how much overhead is really sitting behind each client. If your billing people and your client success manager logged their time honestly, would that client still be profitable, or is your apparent margin actually being eaten away by hours nobody captures in a ticket? That is the question that separates the MSPs that grow steadily from the ones that live in perpetual panic.
Nick shared a story from one of his current clients that illustrates this better than anything. They lost a significant chunk of recurring revenue when a major client terminated the contract, and the initial reaction was fear. Then they sat down and did the numbers properly, adding up the engineer ticket time, the account manager time, the vCIO time, and all the hours the owner spent pestering a demanding CEO. It turned out that the client was consuming so much at such a low margin that the business ended up better off. We have been through this ourselves. We lost what we called a whale client, half of our revenue, panicked, and then discovered the next year was more profitable because that client had been consuming everything. The lesson is simple. Understanding your profitability stops you from making rash, panicky decisions, and it lets you see that the client you think is most valuable might not be.
Melissa's suggestion for getting there is practical and low risk. Start by tracking time properly on your top five clients. You do not need to fix everything at once, but get honest data on the relationships that matter most. And give your people the why behind the process. Nick and I have learned that if you just dictate that everyone must log time, they will resent it, but if you explain that you need the data to make resource decisions that keep everyone employed and the business healthy, you get cooperation instead of resistance.
The Safe Space You Build Inside Is the Safe Space You Offer Outside
The thread that tied this whole conversation together was retention, both of your people and your clients. We have always said there is no hope for external retention if you have not figured out internal employee retention, and Melissa expanded on why the two are really the same skill. The leaders doing it best show zero lip service. They are transparent, they have integrity, and above all they have humility. They own mistakes, and they treat their team as engaged humans rather than a resource to manage. When we shared our own story about trying to protect staff from a difficult period and discovering they already knew something was wrong and wanted to help, Melissa validated exactly what we learned. If you do not share the truth, your team will make something up anyway, and their version is always worse than reality.
Nick told a story that shows how this plays out in practice. When a big client terminated a contract, he called an all team meeting within twenty four hoursais, told everyone honestly what had happened, and said he did not know all the implications yet but that business was continuing as usual. The team was calm, the rumours never got traction, and after three weeks the situation resolved without anyone losing a job. That is what trusting your team looks like, and it is exactly why we always say your core values, how you run your business and look after your people, must apply to your clients and your suppliers too.
Melissa gave every listener a simple way to think about this. Do not separate your internal humans from your external humans. The best business owners are authentic in every relationship and do not put on a different face. She described how someone once told her she was the same person on stage as she was in private, and she admitted she simply did not have the energy to track multiple personalities. That consistency is what builds a safe space internally, and it is the same authenticity that keeps clients coming back. Your transparency, integrity and humility translate directly from your team to your clients. The only real challenge is scaling it, and that is where good hiring comes in. Bring people into your fold who share that quality and that empathy, and you can extend the same level of care across your whole client base.
The Lessons to Carry Forward
If there is one conversation that sums up what we at MSP Mastery: Ctrl Alt Deliver believe deeply, it is this one. Put the swim goggles on and look honestly at your billing, your contracts and your client experience, because the friction you cannot see is the churn you cannot explain. Hire people who genuinely love humans and who know how to listen, then protect that role from being buried under unrelated tasks. Understand the true profitability of every client, especially the ones you think are your biggest, so you never have to make panicked decisions. And above all, build the same authentic safe space for your team that you want to create for your clients, because the two can never be separated.
We could not be more grateful to Melissa for returning to the podcast and sharing her insight with such honesty and warmth. Her experience over twenty-plus years in this industry continually reinforces the frameworks we have built over thirty years of running MSPs, and this conversation is proof that the fundamentals of retention and service delivery have not changed. They have simply become more important.
If this conversation hit home for you or got you thinking about your own business, we would love to hear from you. Head over to mspmastery.blog, find the full episode with Melissa, and explore the other resources we have built to help MSP owners grow. More importantly, take a moment to look at your own business through fresh eyes, put on those goggles, and ask where the friction is hiding. When you are ready to talk it through, reach out to us at the MSP Mastery team. We are always keen to connect with owners who want to build a business that is both profitable and fulfilling, and we would be glad to help you on that journey.
