Is saying yes too frequently killing your agency’s profits?
| In: Managing clients
We all prefer to say yes than no - no needs an explanation, a reason, a justification, but yes flows off the tongue, especially when talking to a client.
However, if your agency is saying yes too quickly and too often, and your big accounts have carte blanche to endless amends and little extras, this will be hitting your profits, probably harder than you realise.
"Clients are cute, every agency knows. They subtly ask for amendments here and there, which used to get nodded through for free. But the extra work really mounts up."
Financial Director, Tayburn
Of course, say yes to formal projects that will be properly quoted, but not those “can you just?” requests.
In this blog, we dig into the common reasons agencies say yes to client extras, with some advice on how to start pushing back.
The account is growing
Your client loves you. They have you on tap and see you as an extension of their in-house team. They’re so happy with this relationship that the account is growing at a rate of knots. You don’t want to start saying no now!
But here’s the rub. If this account’s growth depends on your willingness to push through a heap of extra work for free, then this client will likely be less profitable than others. This means it’ll be more expensive for you to deliver this work vs other clients and potential new projects.
Before you plough all your energies into growing an account, check that it’s profitable. Otherwise, it will put a dent in overall agency profits, and it’ll come as a big surprise when your team is working flat out on client work, which isn’t reflected in profits.
Keep checking profitability by client and project type, and go after your most profitable work.
The client is grateful
Of course, they’re full of thanks when you push through a favour. But are they grateful? Do they remember this favour and consider it when they’re looking at your invoices and choosing which agency will win their next big project?
Honestly, probably not. More likely, they’ll just start to see the extras as part and parcel of working with you. Maybe they go as far as expecting it from all agencies, and it’s never even acknowledged as extra work.
Saying yes to clients too often brings a danger of demeaning your very relationship with them. Doing so proves to your client that you're merely a service provider at their command. Whereas being more transparent about where your skilled time is being spent takes you further along the consultancy route into a more strategic partnership where you and the client are equal peers.
And if you want an appreciative client, produce great work. It’s the single best way to seed loyalty and build a mutually beneficial relationship.
We want to impress our new client
Those early months are crucial. Is this new client going to be one difficult project or a long-term relationship? Understandably, you’ll do all you can to ensure it’s the latter.
But if you go about pleasing your new client by doing work for free without acknowledging it, they won’t see this as extra work. To them, this will just be how much work you’ll deliver for X amount of cash. This can cause serious problems when you start pushing back and charging what you should have changed from the beginning.
So, sure, treat a new client but make sure they know you’re doing it. Explicitly tell them you’re willing to do X amount of work for free this one time.
Saying yes is our agency’s culture
OK, this problem is harder to change. You have to want to change, and you have to support your team in this cultural shift.
It is easy for a well-intended, positive, client-focused culture to creep in. Account managers and client services, especially when they’re just starting out, see their major KPI as keeping clients happy. Let’s face it, if agency leaders don’t like saying no to clients, then nor will someone who’s straight out of uni.
But if a junior Account Manager progresses through the agency alongside the growth of a client, then at what point do they start to say no? Truth is, they don’t, and the favours roll on. Then new juniors see senior agency leaders saying Yes and the culture is cemented.
Teach everyone within your agency, at every level, to be commercially aware. Offer junior team members support when they feel they need to say no to a client. Support from senior members and factual data such as timesheet records and ironclad scoping documents will help your teams push back without damaging the relationship. Deal with facts, not emotions, and nobody can argue with that.
So if we start pushing back, is this the end of over-servicing?
If you can avoid a damaging yes culture within your agency it will certainly help. But, this is likely to be only one factor contributing to your agency's over-servicing. If you’re concerned about your agency’s over-servicing, or you just want to ensure you keep it to a minimum, then you might find our article 5 Reasons Agencies Over-Service and How to Avoid it helpful. We take a rounded view of other top contributors to agency over-servicing.