A few recent experiences have prompted me to come back to thinking about how client expectations are managed. In particular, I’ve reflected on a “trap” I think many firms still fall into when trying to manage and guide client expectations. It’s a trap that typically costs firms lots of money – so obviously I want you to avoid it!
The why of managing client expectations is pretty obvious to most. If a client’s expectations are not met then that client may be disappointed and at risk of going elsewhere. If they stay they will be less likely to refer others to you and may even discourage others from coming to you, even if they don’t leave. Not good outcomes and yet relatively easily avoided.
To understand the how of managing client expectations let’s break down expectations into three key dimensions:
- Scope (including quality)
- Time
- Price
As an accounting firm coach, consultant and mentor I see firms don’t always grasp these dimensions of expectations so let me explain them further.
Scope
What are you doing for the client? Exactly, precisely, specifically. What’s in and what’s out? The last thing you want to experience is getting to the end (or at least what you think is the end) of an assignment for a client only to hear “but I thought you were doing that” or “this is not what I was expecting”. Ouch! Talk about the scope of work in detail with your client and spell it out clearly in your engagement letter. If at any stage you become aware that you may not be able to deliver on that scope, contact the client and talk to them about it. Be proactive not reactive.
So far so good. But here is the trap you need to avoid. In my experience many firms are so focused on telling the client what they will do, they forget to spell out what the client is expected to do. The result is usually scope creep and WIP write offs. Clearly not a good outcome for the firm. In your discussions with clients and in engagement letters, please oh please spend time spelling out what you expect the client to do.
Time
On a regular basis I see firms setting themselves up for failure by not proactively managing client expectations about when work will be completed. It seems oh so common to see promises being made by accountants that they know they cannot keep. That’s just dumb! Call it blind optimism if you like. It’s an example sometimes of what I call optimism bias. We forget some of the challenges we may have experienced completing work in the past and although on average it may have taken 2 weeks to complete this task, our brain takes a short cut and just remembers that we did it once in a week, so that is what we tell the client. No! Bad idea.
And let’s not forget that when we are communicating time lines with clients we need to ensure we include the tasks that you expect the client to complete. “If you want us to complete this work by this time for this fee then you have to complete these tasks by these dates and if you can’t there will need to be a change in the timeline and/or fee.”
One more observation regarding timelines. Many of your clients don’t actually need the work done by the date you agreed with them and if they understand why there might be a change, my experience is they are perfectly OK with that change. The key here is communicating with clients as early as possible. For example if you have promised delivery in a month from now and you know a week in that you are not going to make it, that is when you talk to the client. Not a few days out from the previously agreed date. It seems simple right? And yet I still regularly hear of where this has not occurred.
Price
This is the last of the three dimensions for an obvious reason. Put simply, it depends on the other two. There are two elements to managing expectations in respect of price
- Get an agreed price for an agreed scope and time (shorter time might mean higher price for example)
- The minute you see scope creep, stop and have a process to talk to the client and agree on whether they want you to complete the extra work and what the additional fee will be.
I talk a lot about pricing with clients and I’ll write more about this again soon.
At the end of the day I reckon clients want certainty about what is to be done, when it is to be done and what it will cost. Get on the front foot with this and clients will really appreciate it. As soon as you think you are heading off track talk to the client. The longer you wait the harder the conversation is to have.
As I noted earlier, if the client doesn’t deliver what they promised the price may need to increase. When this is clearly articulated in conversations and the engagement letter there is a much better chance the client will do what they said they would do.
Conclusion
Managing client expectations is a foundational part of client relationship management. In your quest to clearly articulate what you will do for the client, when you will do it and for what price, please don’t forget to articulate what the client’s obligations are. Time to review your engagement process and letters to make sure you have this right (and check you have any TASA matters covered if that is applicable for you).