How agencies can avoid profit-killing projects

Agencies average 3 profit-killing projects per year. You know the projects: slam dunks that turn into embarrassing misses with you laying on your backside under the hoop.

• Abusive clients who won’t stop demanding work way beyond scope (and are angry even if they get it).
• Unforeseen tech issues that drive costs way over what you’re being paid
• Delays and delays and delays that suck your profit and crush your growth (…but at least there are a lot of meetings, right?).
• Mid-project client crises that cause a domino effect throughout your agency…like when the entire team that you’ve been working with is laid off and the new team has no context but wants it all done now and for less money.

The “3 disaster per year” average is remarkably consistent across agencies and across years.

Why? Because you can never be certain which project will become one of those at the outset.

We can’t fix abusive clients or help you prevent all projects from going sideways…neither can you.

But, our process protects you in a couple key ways…and our community can help you identify the toxic clients and create strong boundaries before the disease spreads.

Here’s how.

To briefly review, our process for Partners has 2 steps:

1. Estimate your project (and with unlimited estimates, you can work up different scenarios)
2. Review your estimate to lock in the deliverables, pricing, and timeline.

It’s during the Estimate Review call that we can help you avoid disaster. The two most common saves we make:

1.  If you eliminate (or change) this one thing, it cuts the price (or time) in half.

We can look at your estimate and suggest eliminating or tweaking the expensive parts if they are not mission-critical. Here are a few examples:

• Web dev: Designers design (and we love that about them). But sometimes they draw very beautiful things that are very complex to implement technically…and have little or no effect on the performance of the website. We absolutely can develop it, but if your client has a limited budget, all that complexity is coming directly out of your profit on the project. We can often suggest simplified ways to achieve a very similar thing for significantly less money – which means more money in your pocket. (An inexperienced dev team might promise to do it without realizing the complexity involved, resulting in a mid-project crisis for them…and then you.)
• Martech example – A lot of clients have shiny object syndrome (or they actually believe the All-In-One SAAS sales hype) and are convinced they need to make a big move and migrate everything. And perhaps they do. But with a little inquiry into the business case, we can often suggest a way to radically simplify the project while achieving the business goal. When they do need to migrate, we can help you avoid getting mired in data disasters or info architecture quagmires.

Here is one outrageous (but true) example: we once had a client who had quotes from their developer for a web platform build out that was slated to take nearly a year and cost nearly $1million. In a 10 minute phone call, we suggested a different infrastructure which would deliver the exact specs for about $5k and take less than a week. Seriously.

No one was being deceitful or extortionate. The developer (apparently) only knew one way to do it, and that way required huge manual effort to create something of the scope required. The client didn’t know any better – and this was their trusted developer – so just assumed this was reasonable.

We still talk about the 10 minute phone call saved a year and $1million.

If only we had value-priced that one, right?

Yes, that is an outrageous and uncommon example. But the principle is significant: insight matters. We routinely create significant additional profit for our Partners by simplifying small elements of their projects.

2. Red flag warning. Protect yourself. 

The people who are buying your services are often substantially ignorant of how it works…that’s why they need your help. That’s not a bad thing, until you discover some seriously bad assumptions baked into their ignorance. When that happens mid project, you have all the makings of a disaster:

• Angry clients and bitter relationships….even though you delivered on your agreement.
• Technical problem areas that become huge cost centers – like when you inherit infrastructure and nobody is entirely certain how it works.
• Subject-matter ignorance – misunderstanding, bad assumptions, or unclear criteria that will scuttle profit.

The classic example of this is the “if you build it, they will come error.” As in, we will get this website built and then have lots of customers. The client thinks that merely having the website will yield customers. That’s a red flag. They probably do need a website. They also need to understand the broader digital marketing landscape. And you need to ensure that they (and you) are clear on what you are delivering and what they can expect from it.

We ask these questions and often spot potential issues during our estimate review calls. However, it’s the additional benefits like office hours calls, peers access, and trainings that can teach you how to surface possible issues in the first place (and how to protect yourself against them).

For instance, we have standard worksheet to help agencies and consultants get on the same page (literally) with their clients about project goals, how they are distinct from project deliverables, and how to surface and evaluate the assumptions that connect the two.

Most red flags are opportunities to lead. If you do it right, you have a lasting relationship and respect.

But, some people are just abusive, too. Businesses can be a comfortable vehicle for narcissists and sociopaths – who feel most free to abuse when they are the buyers. There’s no real solution for this, but you can set strong boundaries, clear contracts, and maintain relational authority. These are skills that you can learn in our community.

The Bottom Line

You don’t have to have those projects that eat your profit and kill your momentum (and probably suck the creative life out of your soul, too).

You are an expert at what you do. Our process can help you protect yourself from where you’re not an expert…or from toxic clients.

Either way, we act as your growth ally, so you can sell with conviction and deliver with confidence.

If you’re interested in exploring partnership, get in touch here.