Ask anyone who has worked in PR for any length of time and they will tell you that over-servicing is not a new problem. They will also probably tell you that it tends to get worse in recessions. Graham Lancaster, chairman of Euro RSCG Biss Lancaster, has been through three recessions. He says: 'In tough times, buyers know they have the upper hand and they use that. We can't blame them for it - it's just the way the market works.'
Not all over-servicing is a bad thing. It can be an investment in a relationship in anticipation of future reward. Francis Ingham, director-general at the PRCA, even believes over-servicing can be a useful medium-term negotiation tactic: 'Where budgets have been squeezed, the shrewd agencies have "given extra time for free" rather than changing their fee rates. It is easier to reduce what you are giving as an extra than to increase fee rates.'
However, few in the industry agree that over-servicing should be encouraged. For most people running agencies, over-servicing is a pernicious disease that eats away at profit margins and threatens the very survival of those agencies. As the fog of recession continues to hover over the future, it is more important than ever for the PR industry to shine a light on the murky issue of over-servicing and find a way of dealing with it once and for all.
Planning and estimating
Broadly speaking, there are two types of over-servicing. The first is the over-servicing that is inherent in a deal. Anyone who has worked in a PR agency will be familiar with this problem: an account director returns from a meeting with a client and proudly announces a new deal to promote a product to the media or to organise an event. There has been no proper calculation of how long it will take to do this work. Or, worse, the director has underestimated the time it will take.
It is little surprise these woolly deals result in over-servicing, and few involved end up satisfied. 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. And the director is left wondering why they are losing money on a deal with which no-one seems happy. It is a disastrous outcome, but one that is all too common in the PR agency world.
Sacha Deshmukh, chief executive of Engine Business and its PR unit Mandate, is confident that his team rarely makes this mistake. He says: 'If you're good at planning and estimating, then you shouldn't ever fall into the trap of confusing over-service with excellent service. Everyone involved in a campaign should know from the outset exactly what inputs and outputs are required to achieve the desired result.'
Managing and negotiating
The second type of over-servicing is where clients put pressure on the executives delivering their campaign 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.
Frequently, however, those managers are aware of over-servicing, but are unwilling to tackle clients about it.
Bill Jones, now a consultant but previously co-founder of Lexis PR and its CEO until 2002, has seen this happen throughout his career. 'Not all those at the top of PR agencies have the skills and confidence to have difficult conversations with clients,' he says. 'Very often they just let it drag on, causing great damage to client relationships, profit margins and staff morale.'
Jones believes negotiation skills training is one of the solutions. Neil Backwith, a management consultant, author and PR trainer, goes further: 'The problem is that those at the top of PR agencies tend to lack business skills. They have risen through the ranks by being good at PR, and in most cases they don't fully understand the business model they operate - crucially, that profit matters more than turnover.'
Backwith concludes that agencies should provide business skills training for all those in management positions.
Jones believes that whatever solution an agency chooses, it is vital management recognises the importance of tackling over-servicing. 'It's so easy to fall into the trap, and it's so difficult to climb out,' he says. 'But ultimately it benefits no-one. The fundamental problem is that agency bosses worry they will lose the client if they have these difficult conversations. However, they are almost always better off without these clients.'
Jones should certainly know. He is famous in the industry for being the man who, in 2000, resigned the United Biscuits account. It was one of the largest, most prestigious accounts of its time, but Jones has no regrets about his decision. 'The client was a nightmare,' he says. 'We were over-servicing it and it was still unhappy. It might have been worth more than £500,000 a year, but we were better off without it.'
It is a lead that few in the industry would have the courage to follow, but, until they do, over-servicing will continue to cause problems not only for agency directors and executives, but also for clients.
How I see it
THE CLIENT - Celia Dixon, Senior PR executive, PriceRunner
Before joining price comparison website PriceRunner, Celia Dixon spent several years working at PR agencies. Now she employs agencies, and so has a view from both sides on the issue of over-servicing. She says: 'Neither over-servicing nor under-servicing benefits either client or PR agency. Both can generate a bad relationship, and be something of a grey area when it comes to billing.'
She believes many of the discrepancies that do arise can be avoided by building completely transparent relationships between client and agency. 'The key is to agree realistic targets at the outset,' she says. 'This, combined with a healthy dose of honesty from all parties, means that when it comes to finding the extra cash to pay for additional hours that have gone into a project, it's a lot more justifiable.'
She concludes: 'One way to combat this grey area is to make sure both parties are clear and in agreement upfront about how fees are charged and what exactly they are for, and also to agree a contingency cost in case there is a need to take a project further than originally planned. Agencies need to remember that costs are signed off internally and that extra surprises will not go down too well.'