We lost a client recently.
That isn’t that big of a deal – companies lose clients every day and we are no exception. In fact, we keep clients significantly longer than the average coaching program. But what I want to talk about is why we lost the client.
We had a contract with a client to do one thing, and we did that one thing, plus something else, and another thing that was not even mentioned. When we ran into a big problem, we threw TONS of hours at it without ever letting the client know that we spent more than SEVEN TIMES our budget that month.
We didn’t communicate.
We didn’t tell her how much we were doing. We didn’t tell her what was happening in the background. Some of this was head down doing our job and it didn’t occur to us to tell our client every little thing we do. Part of it was a simple failure to communicate on our part.
But here’s the deal, if we don’t tell them what we’re doing, they assume we are doing nothing.
We have been talking a lot recently with our team about staying within budget for clients and not overdelivering. That’s the internal cost. What I’m talking about here is the external cost.
If you are like most of the entrepreneurs we work with, you have hired caring people who want to do a great job. As a result, they see going the extra mile as great customer service. Unfortunately, that’s not always how the client sees it.
What happens for clients when you overdeliver? Most people think clients would be super happy – but it doesn’t always work that way. What you create is a false service level.
And the moment you reign in your people, the moment the service level goes back to what was agreed, the client is unhappy.
Your actions basically renegotiated the contract and now, in their eyes, you are breaking the (new) contract.
You just baited and switched.
And it doesn’t matter that you go back to the original contract and point out the details, the damage is done.
The damage is to your reputation.
The damage is to your referral network.
The damage is your clients talking to each other: “Robert did that for you? John didn’t do that for me – I must be getting screwed.”
The damage is to your revenue.
As CFOs, we are constantly talking about what it costs you in profit when you overdeliver. The external cost is just as expensive but significantly more damaging.
Am I saying never overdeliver? No – because that is often what makes you great.
The solution is communication.
Having those hard conversations with the client.
“This is out of scope. “
“How important is it to you to get this done?”
“Do you want to add this on as a project?”
Are the clients going to be surprised? Possibly. Annoyed? Yes, probably. Just like with anything, when you change the rules of the game (and/or enforce the rules) you are going to get some push back. But clients will also learn the boundaries if you commit to holding them.
The faster you fix this, the quicker you are to have the hard conversations and hold the boundaries, the better it will be for your company – and your clients.