Case Study - over-service project
Challenge
The average rate of over-service in the PR industry is around 20%. Clearly this dents the profitability of an account – and before long has an adverse impact on a consultancy’s profitability. Beyond the immediate financial consequences though are a series of incremental and, over time, considerable effects in terms of capacity planning, quality of service delivery and staff morale. Analysing the capacity planning and actual utilisation data, I identified that the agency was over-servicing by 30% on average across the company. Some clients were managed well to budget, but some accounts were ranking between 100%-300% over-service.
I set myself two objectives
- To reduce over-service levels across the company to industry average in six months
- To reduce over-service levels on two persistently over-serviced clients to 10% in three months
Response
I identified several factors contributing to over-service levels:
- Large/global accounts had budgets set at a global level and local teams had to retrofit campaigns to those budgets
- Large/global accounts used their size as an advantage to demand extra work
- Local PR managers were divorced from the budget process and so were removed from activity vs budget debates
- Account leaders had not tackled the issue with clients
- Lack of processes in place (tight planning and target tracking at the day-to-day campaign management level), training and experience meant account management staff did not have the tools with which to enter into a servicing level discussion with the client
My strategy was to:
- Work with the management team to secure accurate capacity planning data fortnightly
- Work out long term strategies for the structure of account teams to realign resourcing in terms of client fit, staff experience, development requirements and business need
- Develop new PR plans, incorporating acceptable metrics around results for the pilot accounts in the first instance
- Manage clients through a sustained ‘re-education’ phase, raising the budget vs activity debate regularly and appropriately while maintaining service levels
Results
Over-service was cut on the pilot clients to an average of 10% monthly. In addition, incremental revenue was secured through project work as a by-product of the budget vs activity discussions. Revenue ‘lost’ on one persistently over-serviced client in month one of the project represented around £24k for the month. The reduction of over-service on that campaign three months later represented a ‘gain’ of around £22k’s worth of billable hours that could be deployed elsewhere.
The scrutiny on capacity planning and utilisation data had a beneficial effect on the rest of the business with service levels going down. There will always be persistent offenders that remained but the majority of clients were servicing close to budget by the end of the six month period and the company average was down to 20%. |
