65. The True Cost Of Over-Servicing And 4 Things To Stop It In Its Tracks

Over-servicing is a significant problem for business owners. While many believe it is the only way to keep a client, it often has a financial cost that offers little value to you as a business owner. In many cases you would be better off letting a client go and finding a new one that will not consume so much of your time.

Why Do You OverService?

Over-servicing typically occurs when one of two circumstances happen. The first is when you want to win a new contract/acquire a new client. What tends to happen is that you over promise without calculating the time it will take to deliver on these promises. You may win the project but as expectations are high, you have to over-service right from the get-go.

So now we are in a lose-lose position – , you either don’t meet expectations, or have to put in extra time to meet the demands. Whatever the result, promises are rarely fulfilled and the client leaves your business unhappy.

The second occurrence is when an existing client places significant pressure on the client service team to spend more time on a project. The executive, if not properly supported by the leadership team, may submit to the demands of the client. Instead, management should stop this process and curb the keenness of the service team to keep clients happy.

Both of these scenarios lead to moments when customers start to get used to over-servicing and their power to demand more. This can often mean that they push for greater service which consumes more of your business’ time and of course, cost – and therefore profitability.

What Is The Cost Of Over-Servicing?

Sometimes it is easy to forget that time is money. However, you have got to get commercial and immediately think in these terms. Every minute that you have to work on a project where you aren’t earning any more money is time that you aren’t being paid for.

Added up over all clients this can be a huge cost – especially when that time could be spent servicing other clients profitably.

Another hidden cost is that your over-servicing is probably going to adversely affect your reputation. Word of mouth marketing is a very powerful marketing concept. However, if you are continually collecting bad reviews because you aren’t delivering on your promises, then you aren’t going to be getting referrals or growing your business.

This can have significant ramifications for your business further down the line, especially when the client that you are over-servicing leaves.

What Can You Do To Stop Over-Servicing?

Here are our 4 top tips to help you rein in over-servicing and claim back control of your workload:

1. Better Management Controls

If you want your client service team to not over promise (which will lead to over-servicing), you need to ensure there are adequate management controls in the business. This starts with excellent product training, detailing exactly what each product offers and what solutions can be added and for what cost.  Staff should be monitored / measured, so they are encouraged not to offer too much.

2. Sell On Value – Not On Time

Ensure that you aren’t selling on the time it takes but rather the value you are adding. This requires you to be super confident about your pricing and the quality of the work. Don’t be tempted to discount your services; as soon as you do this the client will start to devalue your work – a vicious spiral.

3. Be Clear On Deliverables

At the beginning of your contract with a new client, be crystal clear what you will deliver and when. This stops clients demanding more from you in the future and just expecting it – what might be called “contract creep”.

4. Proactively Get Rid Of Troublesome Clients

In the end, if a client is simply too demanding and you are finding that you are over-servicing them, you need to have the courage to terminate the contract. You might find that your capacity suddenly increases and you could take on two or more (profitable) clients in their place.

Conclusion

Over-servicing is an Achilles’ heel for many businesses. It is insidious and will raise costs and reduce your capacity to take on more work. Take the above 4 steps and you will reduce or completely remove over-servicing from your business. And a pound to a penny, you will have shaken off the yoke of a problem client – you know, the ones who always dispute, pay late, complain and push the boundaries.

To be able to really make a difference here you need to have a very real and timely appreciation and understanding of the time and oncosts of servicing every client. In short, you need data – lots of it. Only then will you be able to really manage and stop over-servicing in its tracks.

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