As agencies find themselves responding to the changing landscape of COVID-19, we’ve noticed that scope creep is creeping up.
Scope creep is indeed real and has been a threat to agencies and project managers for as long as we can remember. As business consultants it’s one of the most common problems we come across.
A recent report by Deltek and Campaign on Creative Agencies In 2021, revealed agency priorities are now:
- New business (77%)
- Profitability (58%)
- Efficiency (52%)
- Cash flow (51%)
This is in direct response to the fact that agencies are seeing lower profit margins year-on-year.
Whilst the current crisis is unlikely to be the sole cause of declining profitability, what we seem to be seeing is agencies panicking, increasing their output and stretching their services. 61% of agencies are producing more work and offering extra services, but 36% are seeing lower profit margins (Source: Reflect, Recharge, Move On: Creative Agencies In 2021).
Unfortunately, this reaction can lead to scope creep, which stops agencies from increasing their profit margins.
Why do so many agencies fall foul to scope creep?
It takes time and effort to plan and scope out a project before you quote a client. And when agencies are focusing on new business and increasing profitability, it may feel like detailed scoping of a project is too much before the contract is even signed.
However, creating an accurate and clear scope of work is one of the best ways to avoid decreased profit margins!
How to accurately scope out your project
1. Start by clearly listing the outcomes of what your client wants
This needs to be detailed, should include KPI’s and always keep the business goals in mind.
2. Ask your client questions
3. Then we come to scope
i)Make sure that the work that needs to be carried out is clearly and unambiguously worded in your agreement.
ii) Make sure that the client has read the scope and is fully aware of what is and what is not included.
4. Scope and Pricing
5. Include the scope and costs in any proposals you send out
That way this is continually reinforced, understood and agreed to by the client. Leaving no space for scope creep at all.
As we navigate our new future and refocus or repurpose what it is our businesses do, we know that accurately scoping out a project is one of the best ways that you can increase profit margins, build better relationships with clients and increase efficiency and cash flow.