Client over-servicing: is it still an issue for PR agencies?

In many PR consultancies the over-servicing of clients is one of the MD’s biggest bug bears. To those of you not so familiar with the term, over-servicing is when fees are charged to a client for any work that has been done over and above the monthly fee. The recession and the resulting forces of supply and demand (i.e.: there are loads of agencies out there competing for a finite number of PR budgets) mean that the agencies who charge for over-servicing tend to be either the bravest, or the best. That said, unless agencies start paying overtime to their staff (which will clearly never happen) you could argue the whole process is merely an exercise in increasing agency profits, rather than rewarding the staff involved. Either way, in these tough times, I’ve done a straw poll of agency heads and asked whether over-servicing has been made irrelevant by the recession (i.e.: we’ll take any money we can get) or whether it remains an important issue. As you can imagine, when talking to the mighty PRmoment, agency MDs tend to err on the side of “we’re doing great." One thing they all agree on is that the over-servicing issue should be decided by a straightforward conversation between the client and the agency as and when issues come up. If either side attempts to “take the piss” it soon becomes clear and the long term relationship suffers. A couple of agencies mentioned that in the past clients have attempted the “you are 40% more expensive than your competitors” line. And sometimes an agency MD undoubtedly has shaved 20% off fees. But what comes around goes around and after the agency MDs meet for a beer (yes most of them know each other!) it soon becomes apparent that the client has tried the same line with most of them before. So is over-servicing still an issue? In a word yes. But the recession has made many agencies less confident in their fee structure, and therefore they are likely to be putting more hours in per £ now than they were before the recession. Is this unfair? No, it’s life. As a rule the most successful agencies are able to limit this downward yield trend but for their biggest clients you can bet that there is still pressure on the fees. That said, the most successful agency/client relationships tend to be the ones that continue for many years and if clients attempt to drive fees down too aggressively, or without good reason, this relationship can be irreparably damaged.