Are you spending too much time over-servicing your retainer clients?
Read time: 6 minutes
Every retainer client in the world wants to receive over-servicing by their agency. Why? Because over-servicing means they’re receiving value-added services at little or no cost. And while every agency in the world wants to deliver additional value to all their clients, there is a fine line between value-adding and over-servicing.
The two big problems with over-servicing your retainer clients
There are two big problems that arise from over-servicing your retainer clients. The first problem is that profitability starts to erode. The bottom line is that time invested by you, and your team, in servicing a client that has not been accounted for in the retainer agreement instantly reduces profit. It is non-billable time. Yet the work delivered in that time has to be paid for by someone. That someone is you. And not only are you not being paid for work but that precious time is also no longer able to be used on a client who is prepared to pay for your time.
The second challenge that develops from over-servicing your retainer clients is unrealistic client expectations develop. Clients who know you’re prepared to skip a timesheet here or there as a favour, or for whom you don’t periodically increase your rates, will come to expect those favours as business-as-usual. Once those patterns have been set, tough client conversations lie ahead. So tough that you may risk losing the business because the client goes elsewhere, or you may be forced to walk away from the client because it is no longer worth your time.
How to understand if you have an over-servicing problem
The first step in turning a retainer client over-servicing problem around is becoming aware of the situation and quantifying how expensive the situation has become. We have three pieces of advice for agencies to figure out if they have an over-servicing problem.
Reporting. Real-time, operational insights are an agency owner’s best friend. Whether those insights inform an agency owner about which job types are the most profitable, which clients are the most demanding or which employees are the most efficient, there is a wealth of data available inside an agency to inform decision-making. Converting that data into meaningful formats through reporting is a vital step for agency owners to take to ensure over-servicing doesn’t occur.
Function Point provides real-time, data-based insights to help agency owners optimize their business. With 26 pre-built reports available out-of-the-box and visualizations driven through business intelligence, turning your data into actionable insights has never been easier. Reporting can be customized in minutes to deliver the insights you need to improve your business. Real-time visibility into hours invested in retainer clients means you’ll never again be surprised at month-end.
Time management. Getting to grips with exactly how much time your agency spends on a client each month is vital to reversing an over-servicing trend. Time tracking software is the ideal solution to track where the minutes are going. Taking it one step further, when you can map those precious minutes to cost, you’ll quickly understand precisely how much time spent on a client is costing you. Real-time aggregated views of all jobs and deadlines will also help, as will a deep dive into the detail on how much billable and unbillable time is marked up against retainers each month.
Function Point agency management software provides best-of-breed time management and tracking capabilities. Our solutions provider built-in time management tools, including a timer, manual time entry field and standard fifteen-minute increment time slots to help teams keep accurate, consistent time. We also integrate time management workflows with agency billing software and expense information. This delivers agency owners a real-time view into the cost of time invested in each client. Successful time management is one of the most effective practices to reduce hours spent over-servicing retainer clients.
Deadline alerts. Agency life is a constant blur of switching between deliverables to meet different client needs. It’s easy to lose track of deadlines when there are so many to meet. Critical to understanding where client retainers are being over-serviced is knowing when the amount of time allocated to each client is getting close to being used up. A minute of work over the cost of the retainer is a minute your agency has to absorb as lost profitability.
One sure-fire method to help ensure you never spend more than the agreed time on a client retainer is automated alerts notifying you that the time is nearly all utilized. Automated alerts are customizable so you can create alerts as frequently as you may need: 5, 10, 20, 30 (or more) days in advance. Fast, accurate and available on-demand, automated alerts give agency owners the data they need to either pause work or the relevant context to speak to the client about extending the hours and cost, for the relevant delivery period.
Function Point provides a wide variety of system-based alerts to ensure you never miss a deadline, or any other important milestone, again. Easy to configure, monitor and adjust, automated alerts guarantee you will never unknowingly over-service a client retainer.
What to do to turn an over-servicing problem around
Once you have the data at your fingertips to size your over-servicing problem and have put tools and processes in place to ensure it doesn’t happen again, it’s time to take action. This includes educating your team on how to work in the future to ensure over-servicing doesn’t recur. Explain your expectation for the team to use time-tracking tools and alerts. Share the reporting views you use to monitor retainer health. Speak to the offending clients and re-set their expectations. Be clear and firm that while value-adding is sometimes appropriate, you can no longer work for free or for less than market rates. Use documentation to be specific about all deliverables, and estimated costs and to ensure clients and account managers share the same understanding.
Discover how Function Point’s centralized agency management software helps ensure your agency will never over-service a retainer client again by requesting a demo.