Most agencies accept that some ‘over-servicing’, in other words delivering more work than you’re being paid for, is par for the course.
But Matt Smith, CEO of BDB B2B Marketing Agency, and ex accountant delivers this sobering thought:
- If over-servicing clients is something you do to the tune of 10%, it’s like working for that client for free from mid-November through year-end.
- If you over-service that account by 20%, it’s like working for free from the run up to Halloween through year-end.
- Over-service by 30 percent, you’ve effectively worked the entire fourth quarter for free.
These are five main culprits of over-servicing that we see time and time again. Print this out, share it with your team, stick it in your break room – do whatever you need to do to avoid these traps.
1. Poor estimating
Wrongly estimating how long something’s going to take makes you far less likely to complete it on time. Recording the actual time projects, or elements of projects, take and having this information readily available gives you a solid base for future estimating. Basing your estimates on historic project actuals means you’re referencing exactly how long the same thing took under the same conditions - it’s as accurate as it gets.
(Incidentally, it’s not only about under-estimating. If you over-estimate you’ll suffer from quote bloat, which can make your projects seem very expensive and can hinder you winning work.)
You need to encourage the whole team to understand the importance of the estimate. It shouldn’t be a document that’s produced then forgotten about. It sits at the heart of projects and should be continually referenced.
2. Under capacity resources
Most people would rather be working than idly twiddling their thumbs so over-servicing can happen when people have nothing else to do.
The backbone to agency profitability is having each person and department delivering the right number of chargeable hours. To know what the ‘right’ number is, you need to work out how many hours your team have to sell.
For example, if you have five developers working a 40h week and their utilisation rate is 75% (the utilisation rate needs to include non-chargeable time for pitch work, meetings etc). That’s 150 chargeable hours a week. Multiple this by your hourly developer rate and you know what you should be invoicing for the developers. Compare this with that you’re actually invoicing, and you know how much you’re over-servicing.
3. Using the wrong resource for the job
Having the right skill-base across your agency and allocating the right team members to the right project tasks is key. If you give elements of a project to someone with the wrong skills or too little experience, they’ll likely take longer than anticipated to complete it. Resulting in over-runs. Equally, you don’t want a skilled, high fee earner doing something a junior could handle.
So, when you agree a project brief with a client, the next step should be to break it down into phases and look at the resource required for delivery. As well as looking at your in-house skills and availability, you should assess whether you’re likely to need freelance support. This ensures the right people get booked on the project at the start to minimise delays and help prevent over runs.
4. Misunderstanding or not effectively communicating the brief
Having a solid brief is important. It’s also crucial that it’s agreed with the client and understood internally. The client services team need to be clear on what they’re agreeing to and have open dialogue with the teams delivering the work to make sure everyone understands the requirements.
If the brief is misunderstood, complexities can be missed which means the work takes longer than expected or simply, the wrong work gets done. The client wanted X and you delivered Y so ultimately, this time is just wasted.
This can be avoided with a clear brief and kick off meeting. Strong internal communication and regular progress reviews internally and with clients.
5. Client changes the brief
Scope creep is an age-old problem. If the client is changing the brief and client services are allowing this to happen, it’s likely you’ll start to over-service.
Client services need to pick up on changes as they’re requested. They need a detailed statement of work to reference. Then they need to look at the estimate and see how much time was allocated and assess whether the changes will impact this. If it’s going to take more time, the client needs to be made aware and the estimate needs to increase.
But it’s a juggling act. You also need to consider that, while re-negotiation is taking place, work is not being done. Not only do you want to keep your clients happy and to deliver what they want on time. But the hours scheduled for this project are flying by while the scope/brief is debated.
Building a buffer into your estimate is a good way to combat potential changes. Especially if you’re working with a client who you know struggles to stick to a brief. It’s good practise to work with your client on the brief, help them shape requirements and define them in the brief.