Client Over-servicing: How to Check and Break the Habit
Most creative agencies will agree that client over-servicing can be an enormous profitability choker, not to mention highly strenuous on team productivity. Despite this notorious status however, over-servicing continues to be a persistent problem for many.
Agencies struggle with an almost latent fear of losing clients if they don’t over-promise. But this can lead to over-servicing- in other words an overworked team and lost profits.
We’ve recognized specific ways you can switch this dull narrative for your agency to a new scenario that will enable you to protect your agency’s profits and keeping your clients happy.
What Is Over-Servicing?
Over-servicing is like a plague that can run through your company from your client-facing creatives right up to the very top. It’s a mindset issue that can have a severe impact on your agency’s profits, as well as limiting their ability to help you scale up your client base.
But what is the basic definition?
Simply put, over-servicing a client involves providing that client with more than they should be receiving based on what they’re paying your agency. For instance, let’s say you run a web development firm. A client contracts you to build a 10-page website, which you duly deliver. But then, they ask you to add one more page – only a small one – to the package. You deliver that page without charge, all with the aim of keeping the client happy, and you have now over-serviced that client.
If over-servicing were restricted to the occasional one-off, it wouldn’t be a huge problem. Unfortunately, it often occurs because your agency wants to do everything it can to keep a client, especially when faced with the dual barrage of competing agencies and AI tools trying to take that client away. So, you deliver more than you promised, over and over again, until you find that all of your clients are taking a mile for every inch that you offer them.
The problem is endemic in the creative industry. In fact, 90% of PR firms have an over-servicing problem, with similar numbers seen in other sectors. And it’s a problem that you have to get a handle on to ensure your agency is profitable.
Over-servicing is bad for your agency and your client
Running an agency can put owners in quite a tizzy- sometimes the focus on retaining clients is so immense that we forget to ask ourselves, “Is this client even worth servicing?”. Having a client on retainer does not necessarily translate into also having a steady inflow of profits. If you do not have sufficient systems in place to track over-servicing, you’ll never know if a client is doing you more harm than they are good. Your staff could very well be wasting their time and effort in trying to please an unprofitable client, all while losing precious billable hours that could have otherwise been utilized elsewhere, profitably.
Moreover, over-servicing doesn’t just bring with it monetary harm, but potential harm to staff morale as well. For instance, if your team recognizes that a certain client needs constant over-servicing, with time they could view this client as invaluable. Your staff may seize to put in the necessary effort into maintaining a healthy relationship with the client. This could bring into question the quality of servicing your agency offers thereafter, and subsequently, your agency’s reputation.
How Do You Address Over-Servicing Clients?
Addressing over-servicing starts with being aware of the signs that it’s happening in your agency in the first place. After all, the idea that you “deliver more than the client asked for” can be so ingrained into your mindset – and that of your people – that you may not even realize that it’s happening.
So, take a step back and look for these red flags.
Red Flag 1 – Work Often Goes Over Deadline
If you have a one-gallon jug, that jug will overflow if you try to pour two gallons of water into it. The same goes for every project in your agency. If you’ve agreed on a set amount of work to be delivered at a specific time, every new task added to that project is an extra bottle of water you’re pouring into your already full jug.
You’re missing deadlines because you’re trying so hard to incorporate new demands on top of established ones. The irony here is that by trying to keep your clients happy, you wind up making them angry because you’re not able to deliver on what they think the project entails. The cause is simple – you allowed the scope to go beyond what it initially was without adjusting timelines and prices to go along with it.
Red Flag 2 – You Have Tons of Happy Clients but You Make No Money
A staggering 73% of companies perform better financially when they offer quality service to their clients. The logic behind that stat is obvious – happy customers will pay more (and recommend friends) to your agency.
Your business has happy customers coming left, right, and center. And yet, you still struggle to turn a profit on the projects you take on. Why? Poor processes and spending money you don’t need to spend on talent could be part of the problem. But the more likely culprit is all the extra work you’re doing for which you should be getting paid but aren’t.
By the way, this red flag can also be a sign that you’re undercharging for the services you provide. Even if you’re not going above and beyond in those services, this is still a form of over-servicing because you’re undervaluing what you’re delivering.
Red Flag 3 – You Barely Talk to Your Clients
No news from a client is good news, right?
Not in the agency setting. If the only time you talk to a client is when they get in touch to tell you about the new thing they want you to add to a deliverable, you’re at risk of over-servicing.
The reason is twofold. First, regular communication helps you to reinforce the boundaries you were supposed to create when the project began. For instance, a regular update session could see you working from a project map, showing the client how close you are to finishing the job. If anything extra is needed, you physically have to add it to that map – perhaps in front of the client – allowing you to explain how that extra work will be charged.
Second, when you’re not talking to clients, you have no idea if they’re doing the work they’re supposed to be doing on their end. Many of your projects are going to be a two-way street. In our web design example from earlier, your client may be responsible for providing the content that will populate the website. If you’re not chasing up – and explaining why you need that content – you may end up just doing it yourself to get the project finished. That’s an entirely different service you’ve just provided for free.
Red Flag 4 – Time Has Lost All Meaning to You
Your agency’s hours may be 9-to-5, but you don’t remember the last time you stuck to them. You (and your people) regularly stay late to complete tasks, and you’re hopping onto your email before you set foot in the office.
You’re not alone. Forbes reports that employees are working an average of 9.2 extra unpaid hours every week. That’s terrible for morale because your people will start to burn out. But it’s awful for your agency, too – those are billable hours for which you should be charging your clients.
What Are the Strategies to Prevent Over-Servicing?
If you’ve spotted any of the four red flags above, you clearly have a problem to tackle in your agency. That problem may not always be directly related to giving more than you should to your clients. Working unpaid hours could be a symptom of taking on too much paid work, for instance, though it’s more often a sign that your people are handling unpaid tasks.
Still, if you see any of the four, these are the strategies you must build into your agency.
1. Track time!
We can’t stress this enough- your agency needs to track time and do it accurately! Like we said before, if you don’t know where your team is spending their time, you could be losing crucial billable hours or in other words, agency profits, without ever knowing.
It is important to note however, that simply tracking time won’t do the trick- it needs to be done reliably. If your team is still using spreadsheets to track time, it might be valuable for you to consider automating the process. If you’re new to the virtues of time-tracking, here’s a free eBook we recommend you read- you can thank us later.
All you need to know is that the right time tracking system will allow you to track time in abundant detail, make the process uncomplicated, and enable you to identify exactly where inefficiencies lie so you can dig deeper to find out why.
2. Underselling your services
An important consideration is to ask yourself if you’re undervaluing your services. Discounting your services or going the extra mile for certain clients is well and good, but only if your clients truly appreciate it. If they are exploiting your services despite a favorable discount, you might want to revisit your pricing structure (and your generosity!).
Agency managers can look at the average budget spend by account executive. This helps track which account executives are the best at managing budgets and client expectations versus those that may need some support.
Additionally, looking at ‘Profitability by Client’, as illustrated below, will help determine which clients are more valuable than others, to your agency.
3. Lack of expertise causing inefficiencies
It is common for agencies to start out as specialists and then broaden their offerings to accommodate additional services. This is usually a business decision with the hope that the newly added array of services will make the agency seem more desirable to prospective clients and ultimately ring in more opportunity. Unfortunately, more often than not, agencies add services to their offerings that they do not have any prior experience or expertise in. In fact, hiring trained staff for such services is a step that agency owners sometimes decide to by-pass. They instead, have existing staff pick up the new trade.
This can cost agencies heavily. In an effort to please clients, agencies take on tasks they do not have expertise in, which lend to severe inefficiencies in the workflow.
An effective way to identify this at your agency is to determine profitability by job type, like the one illustrated below- you’ll know which job types are making you the most and least amount of money. As a rule of thumb, you would want to maintain Profitability by Job Type at 10% of your Adjusted Gross Income.
Determine what your specialization is and be realistic with your clients about what your team can and cannot achieve. Taking on too much can cost you more than it can add value to your business. If you do intend on positioning yourself as a full-service creative agency, be sure to have sufficiently experienced staff on your team to offer each of the services you promise. At the end of the day, it is better to do 1 thing remarkably, rather than 10, ineffectively.
4. Recognizing Billability vs Utilization
An extension to tracking time is knowing if you’re under-billing your clients. Your clients don’t pay your agency because you are cheap. They pay you because they like you and your team is good at what they do. To make sure that is the case, we recommend you determine of all the time your agency collectively logs in its time sheets, how much of that is spent on doing things that can be billed to the client, versus how much actually is.
The recommended ratio is 75% billability vs 60% utilization. If your agency is trailing behind significantly on these numbers, client over-servicing could be a likely culprit.
This is another reason why your agency needs an automated time-tracking software. For instance, Function Point’s reporting system allows you to calculate the percentage of billable hours of your agency over any period of time without any manual spreadsheet work.
5. Set expectations upfront
The devil might be in the details, but when it comes to setting proper expectations with your client, we like to say ‘God is in the details’.
Over-servicing is one of those mischievous menaces that can sneak its way into an agency’s deliverables if terms and conditions aren’t clarified upfront. We recommend that defining retainer scope clearly and in detail right from the get-go should be a must for every agency. If these aren’t hashed out clearly enough during initial discussion, you leave gray areas for clients to unintentionally (or intentionally) benefit from.
For instance, if you haven’t discussed the number of revisions a particular deliverable will undergo, your team will likely be spending all their time and effort trying to produce the “perfect” deliverable.
6. Organize and Delegate After Setting Expectations
Going hand-in-hand with the need to set expectations with your clients is the absolute necessity of documenting those requirements within your agency. As soon as you’ve agreed on terms with a client, focus on developing a project map – like the one mentioned earlier – that covers every task related to the project.
In that map, you assign specific people inside your company to each task, ideally with an expected deadline based on previous experience. That map is then shared internally – ensuring everyone knows their responsibilities – as well as with your client so they know your plan of attack on the project.
That map then becomes your reference point. Whenever a new task is proposed by a client, you have something tangible to point to when you say “We can do it, but it’s going to cost you X amount and may cause delays here, here, and here.” Think of it as a visual way to highlight to clients – and yourself – the actual impact that doing just that extra bit more can actually have on a project.
7. Incentivize Your Team to Not Over-Service
This can be a tough one.
If one of your people has a long-standing relationship with a recurring client, it’s so easy for them to slip into the trap of doing favors outside of contracted terms. Worst of all, you may not know about these little “favors” until weeks down the line when you see the deliverable offers more than it should.
Still, you need your people to push back when a client asks for more, no matter how hard it is to say “no.” The biggest issue you’ll face here is that your employee doesn’t want to disappoint a client to whom they’ve grown attached. Ease that pain by offering incentives – such as extra vacation days or small commissions on extra sales made that would have been favors granted – to encourage your people to push back when they should.
You can end up making this a fairly easy sell – your people get rewarded for doing less. And in the bargain, you’re able to actually charge for the work they previously did for free.
8. Start with the Outliers and Move on From There
Earlier, you saw that 90% of PR firms over-service their clients. The odds are that most clients within those firms are getting more than what they paid for, but not all will be receiving “more” at the same level. For one client, over-servicing may mean a few extra edits to a press release, whereas others may be receiving full-blown campaigns for next to nothing.
The same might be true in your agency.
Small-to-medium-sized agencies can have anywhere between 20 and 50 clients on retainer. Trying to tackle over-servicing with all of them at once can be counterproductive. The reason being, it takes so much time that you end up waiting for months to see the benefits.
So, focus on the big fish first and work your way down. Using time tracking, call logging, customer management systems, and the analytics you gather for each customer figure out which is receiving the most for free. Those are the clients who need to be the main focus of the strategies listed here, so focus on tackling them first to get some big wins early.
How Do You Stop Over-Servicing Clients for Good?
Therein lies the biggest question, and possibly the most significant wake-up call for your agency:
It’s unlikely that you’ll ever completely eliminate over-servicing. For instance, even with incentives attached, your people may not bother claiming the time for a five-minute out-of-scope change requested on a project. And frankly, you may unduly upset your client if you try to nickel-and-dime them on every tiny request.
Your goal is to minimize the problem to the point where over-servicing never strays into the realm of providing entire services for no money.
The eight strategies you have from this article combine into a full process for preventing over-servicing. The process won’t be perfect. Very few are. But it’ll help you catch the major culprits – the clients who push too far and the employees who deliver too much – so you can establish stronger boundaries with your organization. Ideally, you’ll end up with existing clients who are more able to understand how their requests can lead to scope creep, as well as new clients with whom you can establish clear guidelines from the off.
Remember – even a small victory against over-servicing will add up to time and money saved (or earned) for your business. And with an end-to-end creative agency management platform like Function Point helping you out on the data side of things, you’ll find it easier than ever to prevent the scope creep that leads to over-servicing.
It can be hard to suppress the urge to please our clients and give them what we think is an exceptional servicing experience. That is why you need the right tools to help you check over-servicing and ultimately break out of the habit.