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Overservicing erodes your margins and eats into your productivity. Learn how to sidestep it in our new blog post.
From 2-person upstarts to Fortune 500 behemoths, every agency is guilty of the same thing:
Overservicing eats into resource time, cuts down your profitability, and sets unrealistic expectations for clients. While some overservicing is expected and even desirable, far too many agencies turn it into a habit.
Overservicing is usually a symptom of deeper underlying problems. Agencies don’t do it because they simply feel generous; they do it because they’re battling management issues or thin client books.
In this post, I’ll help you tame your overservicing problem. You’ll learn:
- Why most agencies overservice clients
- How it affects your long-term business
- Seven strategies you can adopt to cut down on overservicing
Why Agencies Overservice Clients
I’m sure your agency, like most others, prides itself on the quality of its service. Often, this means going beyond the brief to keep your clients happy. The success of your clients, after all, is your success.
The problem pops up when going beyond the brief becomes established practice and not just a one-off thing. If clients have come to expect overservicing from your agency, you have a problem.
Overservicing - and limited insight into it - has a massive impact on agency profitability (Image source)
If you want to fix your overservicing problem, you have to first understand why agencies do it in the first place. As I said earlier, overservicing usually indicates deeper problems, such as:
1. Scope management
Overservicing is the natural outcome of projects that go beyond their original scope. If change requests aren’t managed diligently, you have no choice but to go beyond the brief just to wrap up the project.
2. Deadline management
Agencies frequently end up overservicing to compensate for delayed deadlines. The (faulty) argument is that if you’ve missed a deadline, it’s better to throw in something “extra” to make up for the delay.
3. Quality management
Likewise, when agencies aren’t confident in the quality of their deliverables, they tend to sweeten the deal by doing extra work. This “quality for quantity” gambit does little to save the relationship, but it does eat into your profits.
4. Thin client roster
Agencies tend to go beyond the brief when they’re short on clients. A limited client roster breeds insecurity and the belief that you must offer something more just to keep them from leaving. While clients might appreciate the additional effort, they care more about nailing the brief, rather than exceeding it.
5. Resource management
There’s a belief that any idle resource is a wasted resource. Thus, it's better to get them to do something on a project (any project), regardless of their skills or experience.
Usually, this problem presents itself when you haven’t scheduled your resources properly or don’t know what projects are coming through the pipeline.
6. Client fit
A client who can’t be satisfied is a client you usually end up servicing. While this can happen due to no fault of your own, you can often avoid the pain by selecting clients who fit your agency.
A client who has never worked with an agency like yours can be over-demanding and stretch the boundaries of the brief. Simply retaining them means you end up doing more than you signed up for - even if they don’t know your overservicing is not the norm.
Solving the overservicing problem means addressing each of these problems systematically. By fixing your people, schedule, and client management, you can meet the brief without creating additional work for your teams.
Five Strategies to Fix Overservicing
To fix overservicing, you need to fix the underlying problems that cause it in the first place. Below, I’ll share seven strategies that can help you get your overservicing problem under control:
1. Find out if you have an overservicing problem
Every agency overservices to some degree. It’s a part and parcel of the business. Whether it's pleasing a new client or retaining an existing one, sometimes, you have to do a bit more to make people happy.
There’s a thin line between “going beyond the brief” and “overservicing”. The former is often a voluntary altruistic gesture. The latter is a nervous response to paper over underlying quality, deadline or confidence issues.
To spot the difference between the two, you need to turn to your data.
Your project data should be able to tell you:
- What percentage of projects overshot their brief and by how much?
- How did this extra work affect your profit margins?
- How did overservicing affect other projects?
An occasional project that goes 5% beyond its mandated time is par for the course. But if a majority of your projects fail to hit their targets, you have a problem on your hands. This problem is particularly acute if the overservicing also eats into your profitability for each project.
Workamajig’s custom report builder helps you spot overservicing by tracking key metrics like gross income, labor expenditure, realization rate, etc.
2. Manage scope creep
Scope creep, the uncontrolled and unauthorized inflation of the project’s scope, usually manifests itself in overservicing. If informal change requests keep piling up, you have no choice but to overextend yourself just to finish the project.
Most projects experience some scope creep, but when this goes out-of-control, it results in overservicing (Image source)
The first step to fixing this problem is to formalize the scope change process. Every change request, however minor, should go through a formal process.
Not only does this help you track changes, but it also helps you evaluate the extent of the change request. If a request will inflate the scope too much, you can charge clients for it instead of eating into your own budget.
The second step is to change the way you define project scope. If you involve sponsors in the scope planning process and define an expanded scope right at the beginning, your stakeholders won’t feel the need to request changes in the future.
The third step is to create a change management plan. This plan should include:
- A way to collect all incoming change requests for future reference and tracking
- A way to analyze change requests in terms of their impact on the project’s scope, deadlines, and resource requirements
- A way to communicate responses to change requests to all concerned stakeholders
Reining in out-of-control scope can nip most of your overservicing issues before they even pop up. Refer to this guide to learn more about scope creep and how to manage it.
3. Plug resource schedule gaps
Overservicing is often the consequence of idle or overworked resources. In the case of the former, managers plug idle resources into existing projects just to give them something to do. In the case of the latter, managers shuffle resources around, starving some projects and saturating others.
The end result is the same: additional work and wasted resource time.
Fixing the resource schedule problem requires a two pronged approach:
- Getting a bird’s eye view of resource schedules by day, week, month, quarter, etc.
- Planning future workloads based on current project pipeline
While most resource management tools do a good job of charting resource schedules, they offer no visibility into your project pipeline. A big new project might require a ton of resource time, but you have no way of knowing it unless you’re working closely with your sales team.
This can cause resource schedules to go haywire. You might have a lull in one week, an avalanche of work in another. Instead of planning for future projects, you keep plugging resource gaps across existing projects.
The solution is to closely integrate your resource planning and project pipeline. Tools like Workamajig bundle up sales and resource management into the same app.
Workamaig’s resource management tool helps you track availability and utilization rate across the agency
This way, you always know what’s coming down the pipeline so you can plug resource gaps ahead of time.
4. Fix your deadline issues
Deadline overruns are one of the leading causes of overservicing. Agencies feel compelled to do more than necessary if they think they can’t meet the original deadlines.
While plenty of things can derail a project - missing stakeholders, outside contractors, unpredictable risk events - deadline overruns are usually the result of poor planning.
This usually happens when:
- There is poor communication between sales and PMs. Sales might overpromise a deadline just to close the project without taking project managers into consideration.
- Your deadlines do not factor in your historical performance on similar projects
- You have an inflated understanding of the capabilities of your teams
The first step in fixing these issues is better scope planning. As I mentioned earlier, an inflated scope (either through planning or scope creep) ultimately leads to missed deadlines simply because there’s too much to do in too little time.
But you also need to go beyond scope and solve your data visibility issues. If you don’t know how you’ve performed on similar projects in the past, you can’t take remedial actions early. You should have detailed data on:
- Percentage of projects that missed deadlines
- Average and median delays across projects
- Missed deadlines by project type or category
- Individual resource performance across project categories
With Workamajig’s custom report builder, you can generate reports for all these metrics, and more, with a few clicks. Since all project data is collated under a single platform, you always know which projects are behind and by how much.
If you know that all app development projects take you, on average, 10% more time than initially planned, you can start off by increasing your buffer and avoiding overservicing altogether.
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5. Get a handle on your profitability
Overservicing, ultimately, is an attempt to keep clients happy. The degree to which you overservice clients will depend a great deal on how desperate you are to keep the client. And the degree of your desperation will depend on how much money you’re currently making.
Simply put, unprofitable agencies make poor service decisions. When your offers are emptying and order books thinning, you are more likely to go beyond the brief to keep whatever business you currently have.
So while managing scope, resources, and deadlines is important, your ultimate goal should always be to build a healthy, profitable business. A diversified client portfolio, strong profit numbers, and productive resources will help you avoid the mad scramble to retain clients.
This is unfortunately too broad a topic to cover in this space. But if you want to build a healthier agency, these articles should be a good place to start:
- Key metrics you need to track to understand your current productivity
- How to zero in on your agency’s profitability
- How to win more business from your existing clients
- How to retain clients
Over to You
Overservicing is a massive problem in the creative industry. It eats into your margins and wastes valuable resource time on unproductive activities. If you want to be more profitable in 2021, you need to cut down on overservicing.
These five strategies will help you limit overservicing, improve productivity, and ultimately, build a better agency.
One way to reduce overservicing is to get better insight into your current operations. By using tools like Workamajig, you can track exactly how you’re performing, manage scope, plan projects, and track data across the agency.
Try Workamajig today - tap the button below for a free demo!