Management: Paying the price of overservicing

Overservicing costs time and money, as Helen Gregory discovers. But establishing a few ground rules can help.

How much of this sounds all too familiar: 'Could you do one little favour' or 'you couldn't just do this as well?'. Such requests have always been difficult for PROs to say no to, but the very real problem is that they add up to dozens of unbillable hours. And according to software firm Maconomy, client overservicing is growing.

In a recent survey, Maconomy found half of agencies overserviced their clients by as much as 20 per cent but only 56 per cent of agencies had a timesheet system in place to measure it. A third couldn't say exactly what their account teams were up to, and admitted they didn't realise the extent of overservicing.

The result is less time-efficient agencies, perhaps sending out press releases which will never get picked up, or overcompensating by sending out releases that are not newsworthy. The final indignity is asking clients for more cash - which has mixed results, especially if clients believe it is self-induced.

Why pay extra?

'Overservicing is a bigger problem now than it's ever been,' says Octopus director Jon Lonsdale. For this he blames errant PR agencies: 'Some will say anything to win a client and damn the consequences. They promise results that are unachievable and then produce reports that say they're over-servicing by 50 per cent. Quite rightly clients will say they haven't hit their target, so why pay extra?'

Porter Novelli corporate products leader Jonathan Hemus believes overservicing primarily occurs when there's a problem with the client: 'It's usually a knee-jerk reaction. If you offer good client service and have a good relationship with them, it shouldn't happen.'

One problem is that a client's objectives can change during the course of a campaign, while there are also highs and lows over the weeks or months.

Until an agency reaches the end it might not be sure if the effort has added up to more work than first thought.

Younger staff, in particular, can find it difficult to get the essence of time management and can work all the hours God sends, argues Brighter PR managing director Steve Dunne. It means they feel overworked but are not earning the money to justify it.

Along with overwork, Maconomy cites the example of one agency that regularly overserviced a big client to the detriment of its smaller clients, who all left the agency once they'd realised the disparity. Clients can get pretty shirty if they find agency staff are away dealing with another account and they feel they're not getting their money's worth.

While PR agencies might be reluctant to voice it, the message from in-house PROs is that problems are mainly down to a lack of clear channels of communication.

For Unilever Foods in-house PR manager Helen Park, the fact that she has never experienced these problems is because she believes she is in control from the outset. 'Everything, including terms and fees, is pinned down at the very beginning. We think that's fair as we don't have a finite budget and have to work this way.'

Somerfield PR manager Pete Williams agrees, saying overservicing never happens because weekly agency meetings give him early warning when things are getting expensive. 'Having a good relationship where things aren't bottled up is better than finding out six months later that there's been a problem and the agency wants more money.'

Avoiding overservicing is down to good agency planning and management, which ensures the amount of time and resources employed on a campaign match the fee agreed at the outset of a campaign, says Nestle UK chief press officer Jayne Bassham. 'There is always some flexibility in a 12-month campaign as some months may incur greater or fewer hours than the monthly pro-rata fee charged. However, open, honest and timely communication between agency and client is the best way to avoid any problems.'

But apart from talking to their clients regularly, what else can agencies do?

Perhaps the PR industry should follow the example of lawyers, who charge strictly by the hour, or even minute. Maconomy managing director Steve Hoddinott says if they had the proper systems in place, PROs could track costs better: 'Lawyers are very definite about charging by the hour, but with PR it can be almost expected that a firm will overservice. Some don't bring it up because they're worried they'll show themselves up as not being able to manage their time.'

A firm's own software can prevent agencies going over budget, by automatically notifying it when it is spending too much time with a client. 'All too often the tasks of tracking timesheets, expenses and forward planning, are pushed aside in favour of new business development, evaluating lost pitches and brainstorming,' says Hoddinott. 'If you can show the client clear management reports, proving what time has been spent, it's much easier to negotiate next year's fee. You could even negotiate at an earlier stage to strengthen the relationship.'

Many PR firms are catching on to this idea, whether it's by complex programmes or, as Brighter PR uses, visual graphs. But part of the problem with PR is that it can be unquantifiable. Unless you're adding up column inches, the impact of a good campaign can be hard to measure and bill for. And not all clients understand the concept of time-billing, says Dunne: 'If you tell clients they've bought the equivalent of 30 hours a month, it means nothing.'

But the extra time could be viewed differently, argues Porter Novelli's Hemus. 'We treat it as an investment in the client - you might plan to spend an extra ten per cent of time because you value them.'

Target new markets

And going the extra mile can be a positive, particularly working for a charity. Indeed it can be way of getting into new markets, according to Simon Merrick, PR director at Kent-based agency Zest. 'Clients will pass on an agency's name if they're impressed by its commitment - and that might mean overservicing. Or sometimes you go in like a loss leader in developing the market,' he says.

But whether agencies are prepared to put in the extra time might simply mean deciding if this client is one they enjoy working with and are willing to make the sacrifice for.

'You would explain what had happened and say you would have to increase the level of income next time,' adds Merrick. 'Most people tend to say that's fine, but some might ask "Are you with us or not?", and you have to make the call as to whether it's a client that you want to progress forward with. Sometimes we've had to hold up our hands and say, it's just too much effort.'

HOW TO ENSURE YOUR OUTPUT IS EQUIVALENT TO YOUR FEE

- Find out the facts - Understand at the very beginning of a contract exactly what the client wants to achieve.

- Be realistic - Don't promise the earth in an attempt to win an account and worry about the consequences later - you probably won't be able to achieve it for the agreed fee.

- Be transparent in your pricing - Clients appreciate it if you're honest about charges - have a flat hourly rate for staff so that there's no misunderstanding about charging more if different people are working on a project. And don't have hidden costs.

- Keep in contact - Tell clients regularly - in monthly or even weekly activity reports - exactly how things are going and who's been doing what.

- Flag up problems as quickly as they occur - It's harder to negotiate an extra fee at the end of a campaign.

- Use visuals to get your point across - Regularly demonstrate the hours you have agreed to work - in graph form - alongside the hours you're actually working. This is a clear way of showing clients if you're doing too much.

- Keep an eye on staff - Make sure everyone's accounting for their hours - it's no good having someone doing 50 billable hours in a week which can also cause stress. And make sure younger staff aren't needlessly burning the midnight oil.

- Negotiate (nicely) - If you find your agency is doing too much, don't be combative. Suggest that you're happy to overservice for the first six months but then will drop back a bit, or ease back from one month to the next as time allows.

- Install computer software to track projects - Integrated systems can track a project from beginning to end, and keep a record of everyone's hours - letting you know when you're spending too much time on a client.

- Go ahead and overservice - The client might commend your good work to potential new contacts, but measure this effect.

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