Overselling manifests in a variety of different ways. The obvious ones are too much budget for the client to afford and selling the customer more than they need to solve their problem. Less evident, but even more important for technical businesses, is overselling time and talent. The first two can cause frustration and ill-will between you and the client, but the last two can be far more damaging.
Time is perhaps the IT service provider’s most precious resource. Many of your activities, especially project work, generate revenue from time spent on projects. If you run out of time it can cause serious issues. Time is a finite resource that can only be augmented in your business by hiring and training new employees, which also takes time. If you run out of time it not only affects the client at hand but many other clients as well. Trying to speed up and work faster only creates opportunities for mistakes. Mistakes amplify into quality issues, which can also affect your entire customer base. Haste can have an impact on your processes as well. Forgetting to enter time for billing and not properly documenting work can cause problems that directly and indirectly shrink your bottom line.
Skill is another resource that is closely linked with time; it is both scarce and varies widely from employee to employee. Overselling skill is both a factor of time and actual knowledge. If you do not have the skills to perform the work you sold, it can easily cost you a client—or worse, it can incur penalties for not meeting contractual obligations. This is particularly evident in the security space. Claiming you have knowledge and skills in security without the experience and credentials to back them up can have serious financial and legal repercussions. This applies equally to services like HIPPA and similar compliance offerings. On top of that, overselling your skills can also make jobs take longer than expected, eating into profits or causing you to go over the project budget.
How do you avoid getting yourself into these situations? Here are five simple steps you should take:
Whether it’s a quote for a project or a managed services contract, make sure that what you will and will not do are clearly explained. Also, make sure that things like response times, office hours, and after-hours support are well defined.
We all want to make more money, but in the long run, having a client long-term will be more profitable than an extra couple of bucks today.
In your quote, include a safety net of 10-20% extra. It is always better to come in under budget than over.
Pitching for jobs you cannot do is the path to trouble. You cannot always keep highly skilled experts on staff full-time, but you can still have access to skills from an outside source if necessary. Network with a variety of specialists you can call on to provide you with the right skills when you need them. Arrange fees in advance. Test their skills or have them provide verifiable references.
This is a long-term investment that can pay big dividends down the line.
The fact is, overselling and underdelivering can seriously damage your relationships with your customers—both new and existing. You can avoid issues by being careful about what you promise. Importantly, you need to know when to say no. As business owners this can be a hard lesson since we’re always looking for the next piece of business. However, the damage to your reputation because you told a client you could do something when in fact you did not have the required skill can not only ruin your relationship with that client, but can become an issue with acquiring new ones.
Knowing your limitations and setting proper expectations can help you avoid overselling and underdelivering—and help you build trust with your customers.
Eric Anthony is principal of customer experience at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed services provider business for over six years.
You can follow Eric on Twitter at @EricAnthonyMSP
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