Over-servicing

Many companies believe the only way to keep a client is by over-servicing them, and because the client gets used to this level of service, it becomes a vicious circle.  This is especially true in the service sector – the area I predominantly work in.

During a recession, over-servicing becomes standard practice (the customer knows they can demand more) and as we came out of recession it is hard to pull back from this.  Over-servicing occurs on 2 occasions:

Firstly, in order to win a new piece of business, the supplier ‘promises the earth’ without calculating how long it will really take you to deliver it.  They win the project but have already set service level expectations high so over-servicing begins from day 1. Those delivering the service either do a bad job, work through the weekends, or gain reputations as slow workers. The client’s expectations are rarely met.

The second type of over-servicing is where clients put pressure on the executives delivering their project to put in more time, and where those executives agree to do so and are not stopped by their employers. Partly this is a problem of management information systems. After all, it is usually the most conscientious and ambitious executives who are so keen to keep their clients happy. It is up to their managers to keep a close eye on their activities and to rein in any over-servicing.

So how do you stop over-servicing?

There is no one easy answer however, the most important thing is to sell on value not on time (have a read of my whitepaper on this very subject). When negotiating with your customer you have to be super confident on the quality of your work, and therefore expect your client to pay a fair price for it and not be willing to discount (bear in mind that the minute you discount your client starts to devalue the work you do).  Put the issue in the language your customer will understand “if you went to a buy a glass of wine, would you expect them to give you the bottle for the same price”?

Implement good time recording systems – OK no one likes this but you have to do it!  It helps you get your quoting right.  It helps you manage capacity.  It helps you identify if there is an internal training issue (i.e. if someone takes too long doing a task) and when push comes to shove, it helps you justify yourself to your client (not that I recommend sharing time-sheets with a client).

Get super clear at the outset of what you are delivering (and what you are not) and finally, if you do make a strategic decision to over-service, make sure the client is aware of it and alert them to how much it would normally cost to do this (and therefore how much it will cost them next time they ask for it).

Most businesses would be staggered to realise how much money they lose due to over-servicing.  If your business could reign this back in to reasonable levels (+/- 10%), how much more profitable would they be?

This is one of the most common conversations and areas I work on with my clients.  If it’s an issue for you let’s talk!

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