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:
Here are the five main culprits of agency over-servicing that we see time and time again.
Accurately estimating how long you think a job will take is notoriously tricky. But underestimating can lead to budget and schedule overruns.
Recording the time projects take and basing your estimates on past projects means you’re referencing how long the same thing took under the same conditions - it’s as accurate as it gets.
Incidentally, it’s not only about underestimating. If you over-estimate, you’ll suffer from quote bloat, making your projects seem expensive and hindering your winning work.
Top tip: You need to encourage the whole team to understand the importance of the estimate. If creatives aren’t given parameters for a job, they’ll likely spend much longer on it.
Learn more: How to improve agency estimating and job costing
Overservicing can happen when people have nothing else to do. Most people would rather be working than idly twiddling their thumbs.
The backbone of 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.
Learn more about managing your agency peaks and troughs
Having the right skill base across your agency and scheduling the right team members to the right project tasks is key. If you give work to someone with the wrong skills or too little experience, they’ll likely take longer than anticipated. 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 overruns.
Having a solid brief is essential. 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 an open dialogue with the teams delivering the work to make sure everyone understands the requirements.
If the brief is misunderstood, complexities can be missed, meaning the work takes longer than expected or the wrong work is done. The client wanted X, and you delivered Y, so this time is wasted.
This can be avoided with a clear brief and kick-off meeting. Strong internal communication and regular progress reviews internally and with clients.
Scope creep is an age-old problem. If the client is changing the brief and client services allow this to happen, you’ll likely 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 how much time was estimated 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 work is not being done while re-negotiation is taking place.
Building a buffer into your estimate is a good way to combat potential changes, especially if you’re working with a client who struggles to stick to a brief.
Top tip: Work with your client on the brief, help them shape requirements and define them in the brief.
The Finance Director at a marketing agency said their 30-strong team were constantly busy, but it wasn't reflected in the bottom line.
“Previously, our time wasn’t integrated with revenues. We couldn’t track capacity or client profitability. We used lots of spreadsheets. Information was never up to date.”
But with Synergist, a key revelation quickly surfaced. “Synergist showed us we had been heavily over-servicing.” Not just over-servicing, but heavily over-servicing.
They faced two challenges:
When they saw the reality of the numbers, the management team dealt with the first point diplomatically. “We had to reassure our team that we needed to know these things. It’s not a reflection on them. We need the facts to make informed decisions. The information empowers the team, and Synergist is here to help them."
Another big bonus was in discovering previously-hidden patterns. “We also see patterns in the over-servicing now. For example, by client type. Very Useful. Smarter client conversations take place today.”.
So, can over-servicing be turned around?
She told us that not only is the answer "Yes", but it’s feasible to do a complete 180-turn on it. What's the opposite of over-servicing? Upselling.
“Upselling takes place now. Before Synergist, we wouldn’t have been able to achieve that. Having the data makes all the difference.”
Could this be you? It’s not hard to see how it can happen. You probably have your suspicions. But suspicions aren't enough: to act, you need to know precisely where it’s taking place and to what degree.
Synergist can show you the actual costs vs revenue and the profit and margin for each project phase. Filter by client, account handler, job or phase type to see patterns or differences. And, when you need a deeper dive into the data, you can run detailed project reports and see complete job histories to get to the root of the problem and take learnings for future jobs. Want to know more, book a call with one of our agency management experts.