— August 13, 2019
During an Agency Roadmap milestone call, a client asked if I could do some additional financial analysis.
I said I was glad to add it—but since it wasn’t in the original scope, would they like an estimate on the new work?
The agency owner turned to his business partner and said, “Why can’t WE say that to our OUR clients?”
Everyone laughed… but scope creep is no joke.
We’ve all been there
We’ve all been there: a client asks for something extra… and we just want to say “yes.” Even when we know free out of scope (OOS) work hurts our profit margins, it’s hard to stop.
Why? Because saying “yes” to scope creep meets some important human needs. Due to social and internal pressures, most people want approval and validation—and most people don’t like feeling uncomfortable saying “no” to semi-reasonable (or even not-so-reasonable) requests. Plus, it’s easy to agree to a free item here and there, if you think it’ll help you close a bigger deal. These combine to create a challenge when it comes to enforcing scope.
The solution? Understand the real problem, so you can fix it intentionally.
- If you fix your free OOS work problem, you’ll improve your profit margins and secure your financial future.
- And if you don’t fix it, your agency will die a slow death, wiping out the benefits of running your own business.
Let’s look at why scope creep is a problem, the real reasons why it keeps happening, and how to start fixing this at your agency!
Agency scope creep destroys your profit margins
I have plenty of experience with scope creep and OOS work. As an agency PM and Director of Client Services, I personally managed budgets up to $ 300K. As a consultant and coach, I’ve advised agencies on $ 1MM+ client engagements… and, of course, my own five-figure engagements.
If your agency-level net profit margins are less than 20% and your client engagements tend to go over-budget and/or over timeline… I bet you’ve got an OOS problem.
- Doing free OOS work for your clients costs you five, six, or even seven figures. Not only is there lost revenue on the current engagement, but you’re delaying your ability to start the next paying engagement.
- During OOS-caused delays, you’re still paying your team’s salaries. With team compensation as the biggest category of any agency’s expenses, this delay destroys your profit margins. Instead of 20-30%, you might see 5-10%… or even become unprofitable.
- You risk scope creep on tiny budgets (where it quickly adds up) and on huge budgets (where it adds up more slowly, but then suddenly it’s huge).
I’ve previously shared my key phrase to stop scope creep when you notice it happening—it’s a version of what I told my client above, asking if they want an estimate. But there’s a human psychology catch…
Doing free OOS work makes you feel good… at first
Agency scope creep is insidious, because saying “yes” meets an important human need for you and your client-facing team members. In this case, it’s not enough to know what to say—you need to know why you’re avoiding calling it out.
This advice applies whether you’re still client-facing, or if you’ve delegated that to your team—because your team takes its cues from you, including how to enforce scope creep and make OOS decisions.
Let’s take a closer look at the underlying problem, so you can be more intentional about handling the next OOS… and all the ones that follow.
7 Reasons You Agree to Do Free Out of Scope (OOS) Work
Here are my “seven deadly sins” behind why agencies do free OOS work. The “you” might be you personally, the account manager, or other client-facing team member.
- Obliviousness: You don’t know it was OOS, due to being unaware of the scope.
- Shortcutting: You were intentionally vague when you defined the original scope, so you aren’t sure something’s OOS.
- Regret: You knew it was OOS, but realize the agency should have included it.
- People-Pleasing: You knew it was OOS, but wanted the client to like you.
- Panic: You knew it was OOS, but felt put on-the-spot, so you just said “yes.”
- Guilt: You knew it was OOS, but felt guilty about earlier mistakes and saw this as a “makegood.”
- Expediency: You knew it was OOS, but figured it’d be quicker to just do the extra work than get the sign-off.
I don’t blame you for succumbing to those “deadly sins”—but there are unfortunately consequences.
Easier to say “Yes” than “No”
I get it—you don’t want to feel uncomfortable at work, and saying “yes” is easier than having an uncomfortable conversation. But it adds up—across all of your client engagements, and for this specific client.
Clients get used to free OOS work—either because they know they got a freebie, or because they didn’t realize their request should have cost them money because you didn’t tell them.
What if your agency works on an Agile basis? Aspects of OOS still apply—read on!
What about Agile, where you don’t formalize a scope up front?
If you’re working on an Agile Scrum basis (in sprints, with a “backlog” as your rolling prioritized to-do list), scope is inherently more flexible. But in a sense, you still have aspects of scope creep and OOS work. For instance:
- You shouldn’t add something new to the already in-progress sprint.
- You should tell clients if a new addition is likely to delay another key feature or require dropping it altogether to fit their budgeted sprints.
- You shouldn’t change the user story without appropriate signoff from the Product Owner.
- Your team should feel comfortable sharing about concerns during daily standups and sprint demos, rather than hiding concerns so that the client’s surprised later.
Regardless of how you work, let’s look at root cause(s) and potential solutions to the free OOS problem at your agency.
Root Cause(s) of Agency Scope Creep
These often-interrelated root cause(s) are the “why” behind the “seven deadly sins” above. You likely aren’t experiencing all of them—but for those that are present, they’re likely hurting other areas of your agency, too.
- Your sales pipeline isn’t strong, so you feel pressure to commit to the entire engagement (whether project or retainer) up front, to avoid losing the deal.
- You feel like you can’t say “no” when a big client wants something else, because it would hurt your agency if they leave.
- You feel like you’re charging too much already, so the freebies really just make things “fair” for the client.
- Your agency keeps making mistakes and feels pressure to offer makegoods to keep clients from cancelling the engagement.
- Your team doesn’t understand how to push back… or your anxiety about losing clients “models” that they should never say “no” to a client’s OOS request.
- You love the challenge and excitement of custom client work, but don’t have internal systems to ensure the work stays profitable.
- You like the individual client, and you feel like they deserve something special.
- Your quality expectations exceed what the client expects… and exceed what they’re paying you to do.
- You don’t like having difficult conversations, and it’s easier just to say “yes.”
- You don’t want to come across as a micromanager, so you aren’t monitoring (or even spot-checking) your team’s scope management.
- Your team’s telling you the new feature request is easy, and it won’t really take much time to implement.
- You believe your agency’s value comes in hands-on implementation work, and it’s not fair to charge a client for strategic advice that you can just share in 5-10 minutes.
Do any of those sound familiar? Addressing the root cause(s) is important to finding long-term solutions. Most of those are about self-esteem, and a lack of confidence. Some of that requires a therapist to help you fix, and it might take months or years… or maybe never work, if you’re not ready to change.
But if you and your agency aren’t ready to fix the underlying root cause(s), that’s OK—I know it’s hard. In that case, I recommend applying more tactical solutions to make things better in the meantime—read on!
Tips to Solve Your Agency Scope Creep Problem
Let’s look at this in the context of the “seven deadly sins” I shared earlier. These more-tactical solutions involve a mix of mindset, process, and skills.
Most will map back to the root cause(s) you identified above. Work together with your team to make them happen—since it’s easier when you have everyone’s mutual support. Remember, the “you” here could be you personally, or any client-facing person on your team.
1. Obliviousness: You’re unaware of the final scope.
If you’re running the day-to-day engagement, you should know the scope. After all, you’re responsible for fulfilling what you committed to do.
If you’re not sure about a specific detail, you don’t need an on-the-spot answer. Instead say, “Let me double-check and I’ll follow up.”
If you manage the person running the day-to-day scope, then you don’t need to know all the details. But in that case, default to: “Let me confirm with [AM/PM] and we’ll follow up.”
2. Shortcutting: You aren’t sure, because the scope’s really vague.
Stop doing vague scopes! In my experience, agencies do this because they assume that committing to less means they’ll have less to do. But that rarely happens. Instead, when something’s vague, clients assume that it is included. To be fair—why wouldn’t they think it’s included?
Look, I get that you don’t want to over-commit to a scope during the sales process. After all, the prospect may not sign a contract, and all the scoping work was for nothing.
All the more reason to require a Paid Discovery component first. From that, you can create a better scope for the Phase 2 project and/or retainer… and you’ll also know if you want to keep working with the client.
Include an explicit list of sales exclusions in your Statement of Work (SOW). These are things you are explicitly not including the scope. I recommend excluding any of the possibilities that you discussed during the sales process that the client didn’t agree to pay for. And have clients sign or initial the list, so they can’t claim later they “didn’t realize.”
3. Regret: You realize the agency should have included this in the scope.
Sounds like you need to get better at scoping… and you need to add (or upgrade) your Paid Discovery process.
Clients rely on you to be the expert—so be the expert. Ask the right questions to help you understand the client’s Values, Goals, and Resources (VGR). You do this every day; they likely don’t.
If a new need (or a newly surfaced need) means you need to add something to the scope, don’t take on that responsibility yourself. Instead, say: “From what you’ve shared recently, it may make sense to add [XYZ]. Would you like to explore that?” Then, clients can choose for themselves—whether to add it, swap other functionality, or set it aside.
4. People-Pleasing: You want the client to like you.
We all want to be liked. For for some agency leaders, this extends to becoming a “people-pleaser”—and now it’s a dangerous spot.
People-pleasers rarely say “no” to client requests. This tends to metastasize into a huge set of unfunded commitments… and often ones that the delivery team don’t know exist.
If you recognize you’re a people-pleaser, you’ll want to work with your therapist on that. In the meantime, recognize that if you focus exclusively on keeping clients happy… you’re likely to make your team unhappy.
This might be time to “blame” the PM: “Hey, I wish we could, but [PM] reminded me that that’s not included.” Project managers tend to be low on the people-pleaser spectrum, and they’re often happy to take the “blame” if it means saving the agency from your reckless commitments. But be sure to coordinate this beforehand, so they know it’s strategic rather than reactive.
5. Panic: You felt put on-the-spot, so you just said “yes.”
Recognize that clients don’t always expect everything to be free—your panicked “yes, we’ll do that” isn’t necessarily what they wanted. Add some phrases to your vocabulary to continue the conversation, to dig into the client’s wants… and needs.
A CMO told me how her agency automatically said “That’s not in scope!” when her team requested something. She was frustrated at the agency’s instant and automatic OOS pushback: “We don’t expect it all to be free; let us talk about it so we work through whether to add it.”
Got a needy (or unsophisticated) client who does expect every new thing to be free? Go back to a version of the phrase I mentioned earlier: “Let me double-check with [the PM] on that, and I’ll follow up!”
In my experience, clients rarely expect an immediate “yes”—they just want to feel confident that you’ll follow up promptly, so they can manage their own boss’ expectations.
6. Guilt: You saw this as a “makegood” for earlier mistakes.
If you made a mistake, fix the mistake—that’s where client makegoods come in. But be careful. Monitor whether your continuing guilt is leading you to give clients makegoods they don’t actually need… and may not even want.
When you’re smart about makegoods, you call out that the fix is “strategically free.”
- Initially, that might be: “I’m sorry we missed that; I’ve assigned the team to fix it at no charge to you.”
- But then it might be: “After the earlier issue, I’ve asked the team to go above and beyond. As a one-time bonus, we’re going to XYZ, at no charge to you.”
The makegoods don’t continue forever. If you made a grievous mistake, consider whether your agency can adequately serve the client in the future.
- In my experience, a truly unhappy client never goes from “unhappy” to “happy.” Instead, they might make it from “unhappy” to “neutral.”
- In that case, weigh whether to part ways—you’ll never make them happy [again], and they won’t be a good reference or portfolio piece.
And one more…
7. Expediency: You figured it’d be quicker to just do the extra work.
Extra work always requires extra time—both to do the work and to check its impact on the larger system. By definition, adding something new increases the complexity. As the excellent book Meltdown notes, more complex systems are more prone to failure.
Even if you decide to make the initial change on a “strategically free” basis, get a “zero dollar” change order that notes that if the change has broader implications, you’ll need to charge for those implications.
“Measure twice, cut once.” Don’t just get out the chainsaw and start cutting, or you’re likely to regret it later. “Almost done” is rarely truly almost done.
Moving Forward on Fixing Agency Scope Creep
Whether you focus on root cause(s) first or start with simpler “topical” solutions, you’ll be glad you took action. Indeed, your family’s financial future might depend on it.
Question: From what I’ve shared, what’s behind your agency scope creep problem?