Not only are agencies being pressured by some unreasonable clients to cut markups, or ditch them altogether, but now agencies also bill too much time.
Some members have reported client questions about the industry-wide practice of billing in quarter-hour increments. Certain clients want smaller increments, like the six-minute segments that attorneys and lawyers use. Unbelievable… can clients find anything else about their agency relationships to pick apart?
But to be honest, in some cases, the client may have a point.
Change Some Billing Practices…
Let’s talk about this a little. Where agencies are on retainer with their clients, it is general practice to assume that retainer fees cover administrative chores, like time spent billing, faxing, making phone calls, and sending or responding to client emails. If you are billing this time as “extra” charges to retainer clients, re-examine your billing policies. Yes, you need to recover as many hours as possible to make up for lost commissions and other price reductions, but the way to do this with retainer clients is to readjust your blended hourly rate to a more appropriate amount.
The same applies to non-retainer clients. If you have to scrape and claw every stray minute into an invoice to cover costs and have a little left over for profit, then you are underpricing your services somewhere. Take a hard look at your balance sheet and monthly financial statements. If everything appears to be in line, re-check your hourly rates. Perhaps you could raise them slightly and still be within a competitive range.
…But Charge Enough for “Big Picture” Work
Let’s return to the issue at hand. Some agencies have switched to a six-minute billing increment. But another principal says they don’t waste time tracking the administrative chores. He said, “We don’t want our clients to feel that the clock has started the minute we answer the phone. That is why I hate to call our lawyer!” They want to be known as the people who are “fun” to talk with, not the people who slap their clients with a $12 charge just to pick up the phone.
And be aware that this searching for cost savings may be a symptom of a deeper problem—a client perception that they are not getting full value for their dollar. A long-time Second Wind member hit the nail on the head when he said it may be time to change the agency’s focus.
“We overlook [faxes, phone calls, etc.] and focus on real work in strategy, planning, creative, production and, yes, project coordination. If you overlook these three- and six-minute charges and focus on ‘bigger picture’ billing opportunities, your clients might be happier—and so will your agency.”
Clients are looking for more from their agencies these days than mere collateral materials. They want strategic thinking, brilliant and memorable creative, innovative ideas, and smart counsel on marketing tactics that will help their businesses grow and prosper. They also want to see return on investment, so agencies need to show that client dollars are being wisely spent and generating measurable results.
Are you giving your clients these value-added services? If not, no wonder they are nit-picking your time-keeping procedures. You have to give value to be perceived as valuable.
