Limiting scope creep from the start

Agency Leadership Podcast

In this episode, Chip and Gini delve into the topic of scope creep in agencies. They discuss the bell curve of profitability and the importance of setting clear expectations from the first client conversation.

They highlight strategies like dividing projects into 90-day scopes to regularly reassess goals and deliverables. The duo emphasizes the significance of internal communication, developing a culture of transparency, and ensuring team members understand project scope and costs.

They also stress the need to build flexibility and cushion into initial pricing to manage minor scope changes and avoid financial strain. Finally, they agree on mastering financial understanding and regular one-on-one meetings for smoother agency operation.

Key takeaways

• Chip Griffin: “As agency leaders, we need to be thinking about scope from the very first conversation that we’re having with a prospect.”
• Gini Dietrich: “Scope creep comes into play when we don’t price projects based on actual numbers.”
• Chip Griffin: “Scope creep tends to happen because you’re not communicating well with the client, but just as importantly, you’re not communicating well with your own team.”
• Gini Dietrich: “When your team is involved from the beginning versus after the contract was signed, scope creep will become less of an issue.”

Resources

• How to stop scope creep before it starts

Related

• How agency owners can avoid scope creep (featuring Steve Guberman)
• Hidden overservicing by agency employees
• How agencies can avoid scope creep with client projects (featuring Ben Aston)

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: I am Gini Dietrich.

Chip Griffin: And Gini, you know, I think we should expand the scope of this podcast. I think we should start covering economic issues and engineering, and I don’t know, while we’re at it, why don’t we do the arts?

Gini Dietrich: Let’s do some politics. I, I’d like to do some politics.

Chip Griffin: Oh, definitely politics. Yeah. Yeah. I think that would be smart. I think that’s really smart. A good expansion of the scope of this.

Gini Dietrich: Absolutely. Yes.

Chip Griffin: But, but we’re still gonna do it in, in just about 20 minutes a week. We’ll choose the topic, we’ll pay ourselves exactly the same amount.

Gini Dietrich: Yes, absolutely. I, I’m okay with that.

Chip Griffin: Okay,

Gini Dietrich: cool. Let’s do it. Cool.

Chip Griffin: Well, so that obviously is a joke. We’re not doing any of those things.

Gini Dietrich: No.

Chip Griffin: Although it might make it easier to come up with topics ’cause some weeks we struggle to figure out what to talk about and if we were covering everything, or maybe that would make it even harder.

Gini Dietrich: Although we could just record our pre-conversation and be done with it.

Chip Griffin: Yeah, we’d probably get in a lot of trouble though, so let’s, let’s not do that. Okay. Can we, can we just agree we’re not.

Gini Dietrich: I’d have to tone down my swearing too.

Chip Griffin: We’re not hitting record before we hit record, so that … not serving any purposes at all.

Gini Dietrich: Nope, I agree. No, not good.

Chip Griffin: Alright, well how about we talk about scope creep when it comes to agencies rather than this podcast.

Gini Dietrich: I like it. I like it. And you just did a webinar on this, so tell us all.

Chip Griffin: Yeah, I mean, look, it, scope creep is, is something that I think just about every agency experiences at one point or another. I think I’ve talked in the past about my theory of the, the bell curve of profitability for agency clients where you tend to be less profitable in the beginning because you’re getting up to speed and then you start to figure it out and you get efficient and you don’t have to ask so many questions to get things done well. And then over time, that’s when the scope creep comes in and starts driving down your profitability.

And, and I think that part of the problem is that as agency leaders, we need to be thinking about scope from the very first conversation that we’re having with a prospect. And so many of the problems that we talk about on this show go back to the first conversation with an employee or a client or something like that.

And so we need to set the expectations correctly from the very beginning because if we don’t, we have no hope of staying within scope over time. But then we also have to set the expectations correctly in the actual documents we’re signing.

Gini Dietrich: Right.

Chip Griffin: So it’s a balancing act because you don’t want to be so specific in the agreement that you’re, you’re constraining yourself from being able to be creative or you’re forcing yourself to do certain things or meet certain objectives that six months later will no longer make any sense.

So you got to have some flexibility in there. At the same time, you’ve got to put guardrails in.

Gini Dietrich: Absolutely.

Chip Griffin: And you develop these by learning from your past engagements. If you do that, then you can set up the protections that you need in order to be able to have reasonable or rational conversations with your clients when scope creep occurs.

Gini Dietrich: And I think we’ve had this conversation before too, in that we tend to build our scope before we really get into the client’s business. Especially when it’s a brand new client right. After you, if you, you’re doing scope after a year or something, it’s a little bit easier, but when it’s with a, with a brand new client, you just don’t know.

You don’t know what their culture is like. You don’t know what access you’re gonna have. And we, we have a list of things like you have to give us access to analytics and the CRM and you know, blah, blah, blah. All your marketing automation, all the kinds of stuff, right? And we tend to add to that list based on what we’ve learned from other clients.

But even still, you still don’t know exactly what you’re getting into. And so building a scope of work for an entire year, like I think most of us do, is really challenging. So one of the things that we started to do is say, okay, for the first 90 days this is what we’re going to do. We got to set you up.

We’re got to do systems all like all this stuff. We’re gonna get some results. These are kind the, these are the tangible deliverables you’ll get in the first 90 days. After that, we’re gonna take a look at things and say, okay, what are the objectives? Where are our benchmarks? What were we able to accomplish in the first 90 days?

And move from there. And we do that every quarter. So we’re really only writing a scope for, for three months at a time. It’s a pain in the butt from a paperwork standpoint. But it prevents the scope creep because we’re able to have that quarterly conversation to say, this worked, this didn’t, we still need this.

We weren’t able to get that. Like, these are the kinds of things that we need to be able to do to move this, the your business forward and it, and it’s less confrontational, so you don’t have to call and say, so we’re running out of hours. Like, you just, you don’t have to have that conversation because you’re, it’s a consistent, ongoing thing that’s part of the work that you’re doing with your clients.

Chip Griffin: Yeah. And, and communication like that is absolutely critical to staying within scope. And it’s the, the communications breakdowns happen at multiple levels, for sure in the worst cases of scope creep. And it, it tends to be because you’re not communicating well with the client, but just as importantly, you’re not communicating well with your own team.

Yep. Far too often, the actual employees who are responsible for the day-to-day work have no idea what the scope is that you’ve committed to.

Gini Dietrich: Right.

Chip Griffin: And they need to know that.

Gini Dietrich: They need to know. Yes.

Chip Griffin: Because are, are they, are they still likely to veer outside of scope on occasion to, to keep a client happy?

Yep. A hundred percent. Yep. I mean, we, we just have to accept that, that that employees are in a difficult spot. And I know that in the past when I was a junior agency employee and I had the client asking for one thing and a boss telling me that I, I, you know, had to stay within a certain parameter of hours or scope or whatever.

I was between a rock and a hard place, right? Because I knew someone was going to yell at me. Yep. And so. The instinct is to try to find some way through, which usually ends up in at least some degree of overservicing. So that will still happen. But what you’ve got to do is you’ve got to make sure that they know that they’re overservicing, because that will curb it to some degree or another.

And when you hide things from your team, they don’t have the information that they need, the awareness that they need in order to help you make better decisions.

Gini Dietrich: I remember, this was a long time ago, but you know, in the early days of my agency, I remember an employee pulling me aside and saying, it’s great that you’re going to these new business meetings and you are, you know, writing the proposals and you’re saving us from all of that work.

But once we transition to doing the work, like we don’t, we don’t have the same knowledge that you have. And so the clients are getting frustrated. We’re getting frustrated. And I was like, oh. And in my mind, I really was saving them from all that like, it’s administrative tedious work. Right. But what it was in, when in fact, and sure, it’s, it’s still tedious and they didn’t enjoy the actual proposal writing and stuff like that, but because they were, they began to become, become involved from the beginning.

They understood what it is that we’ve promised, what we’ve said that we can do, and, and, and to what extent that costs. Right. So it became, that became less of an issue too when I involved them from the beginning versus after the contract was signed.

Chip Griffin: Yeah. And you have to make sure that you’re creating a culture that they will share with you when the client is asking for things.

Gini Dietrich: Yep.

Chip Griffin: They’re out of scope, even if they may agree to it in the moment because it only takes five minutes. They still need to keep you in the loop. And if you are not getting the awareness yourself as the leader for what kind of scope creep was going on, you can’t make a rational decision that’s right about how much to allow. Because I’m not gonna tell you, you shouldn’t allow any scope creep. Because if every time the client asks for something out of scope, you call ’em up and say, we’re not doing this, or you have to pay more, or something like that.

Right? You are going to destroy that relationship. Yes, absolutely. Yes. So you cannot be that kind of of agency. You need to accept that there is going to be some and and, but you need to be aware of it. You need to deal with it sooner rather than later when you’ve crossed that line of into something where it is too much.

Because if you don’t call it out when it’s happening, if you don’t deal with it when it’s small, it becomes really hard to deal with once you’ve got a huge accumulation of it that’s built over 6, 9, 12 months or more. And so you’ve got to be in a position where you’re just addressing it as soon as you possibly can so that you can get things back on track.

Gini Dietrich: Yeah, I mean, a really good example of that that just literally just happened here is a client asked three of my team members to be at their onsite in June for three days, you know, with travel and all that. And I was like, whoa, whoa, whoa, whoa, whoa. We’re not budgeted for that. Like, we’re not scoped for that at all.

We, there’s no travel, there’s no in person anything. And that’s expensive. It’s really expensive to have three people in one place for three days. Yep. So, you know, luckily I, I think I’ve created a culture that it did come up and I was like, okay, great that they want you there, but we’ve got to get a new scope of work or add on to, do an addendum to our, to our contract because that we just, if, if we take that out of our current budget, we can’t do the work. And like my team, I didn’t even realize it, it was just part of the conversation that we’re having as a, as a team update. And they were like, oh. So you like to, to your point, you have to build a culture that people are comfortable sharing that with you and saying, you know, the, this, the client’s really excited to have us there. How do we make that happen? Yeah. It’s like new scope of work, friends.

Chip Griffin: Right? And, and at the same time, in order to deal with sort of the, the less expensive scope creep that can occur, you know, so that you’re not making your client feel nickeled and dimed, you’ve got to build that into your original pricing.

Gini Dietrich: Yes.

Chip Griffin: And so too often just to win the business, I’ve seen agencies kind of whittle that pricing down to the bare minimum just to, to give what’s being asked for. But you have to assume that there’s going to be out of scope requests because I don’t think I’ve ever had an engagement as an agency where the client didn’t ask for at least a little something out of scope.

And we have to stop putting ourselves in this position where we think that the client is doing it for nefarious purposes. They’re trying to get something for nothing. No, frankly, most of the time the person we’re dealing with on the client side doesn’t even know what was agreed to themselves in the beginning.

So they may be completely clueless and, and oftentimes my experience has been when you tell them, oh, that’s not within scope of it, oh, I had no idea. I’m sorry I didn’t, I didn’t mean to ask you to do something that, right. I thought it was quick and easy and was in scope and was fine. But, but make sure that you’re building some sort of a cushion into your price so that you can allow those little things.

Sort of like if you’re renovating your house or something like that, you want to build in a cushion so that when you want to move an outlet or something, you move the damn outlet. Right. And you don’t have to worry about, oh my God, that’s gonna be another 500 bucks to do that. Just plan ahead that these things are going to happen and you’ll be in a much better position to figure out what’s the real scope creep, like travel expenses that you need to deal with.

Because anytime it’s an out-of-pocket scope creep, that’s a real, it’s real. There’s a difference between a little extra time, which is bad. Yes. But direct out of pocket expenses, that’s much worse.

Gini Dietrich: Not happening. Not happening. Not happening. You said something moving an outlet. Shoot. I lost it.

Chip Griffin: I just distracted you by taking it off topic.

Gini Dietrich: It’ll come back to me.

Chip Griffin: Well, fortunately, you know, we’ve, we’ve, we’ve built in a little cushion here in time, so we’ve got little bit of time that we can, where we can back to it. When it, when, when it, it re registers in your mind.

You know, I think the other thing that we have to do is we have to create a culture of trust with the client so that they are open to us coming to them with these conversations. And so some of that’s on the personal level. Some, you know, that that means that, that as, as agency leaders and owners, we need to make sure we’re maintaining relationship with the client even as we’re having other people run the day to day piece of it. Because generally speaking, when it comes to something like scope creep, that almost always ends up being a more senior conversation at some point. If you don’t nip it immediately by the person on the other end saying, oh, I didn’t realize it was in scope, let’s just forget about it.

Let’s move on. When they, when it’s something they really want or and or need and want to push forward, it’s probably gonna be more senior conversation. So you want to make sure that you’ve established that relationship of trust.

But part of that too comes in those early expectations. And, and one of the things that, that I have always said to my clients, in consulting engagements of any kind is, look, you know, here’s the price that we’re agreeing on.

But if at any point I feel like it’s not working for me, or you feel like it’s not working for you, let’s come to each other and we’ll figure out what to do. Do we need to adjust scope? Do we need to adjust price? But I like to set that expectation before anything is signed. And frankly, it’s another reason why I don’t like true ironclad long-term contracts, because frankly, I want the flexibility on my side.

Gini Dietrich: Absolutely. Yeah.

Chip Griffin: To go back and renegotiate when necessary. Yep. And, and I would rather that flexibility than the misguided unquote certainty of a long-term contract.

Gini Dietrich: Yeah. I totally agree with you. What were some of the questions and topics that came up during the webinar that you just did?

Chip Griffin: So, I mean, the questions are, are typically around the logistics of this, right? Mm-hmm. You know, how do I, how do I specifically have this conversation? How do I increase the, the price on someone who’s, you know, really budget sensitive even when I know that what they’re asking for is something that we ought to do.

And I think these are things that, that we’ve touched on a lot in the past, particularly when it comes to raising prices on existing clients, right? Because that’s, that’s the guide that I look to when it, it comes to scope creep. You, you have basically two choices. You can swap something out and so we don’t do this, but we do what you’ve just asked for instead.

Yep. So we, we, you know, it’s a net wash on, on the actual cost. Or we are gonna have to charge you more. But that’s because you see as the client, the additional value coming to you in exchange for whatever additional pay that you’re getting. I, I think that we, we can’t be in a position where we think about scope creep solely in terms of we need to charge you more for this.

Frankly, more often than not we can just, you know, rearrange what we’re already doing for a client. Absolutely. Particularly if it’s scope creep that’s happening over time. Because chances are, if it’s come into the relationship a year or two down the road, there’s something that we were doing originally that we’re still doing.

We could probably just shed that and it would, you know, come out in the wash. Yeah. So, you know, I, a lot of the questions really come down to those logistics of how do you actually have those conversations? How do you figure out how to price it? Those sorts of things.

Gini Dietrich: Yeah. One of my favorite things, approaches is, yeah, yeah, absolutely. We can do this. We’ve been doing this, this, and this. What, what do you want to replace it with? I think we could probably replace it with this and just make a recommendation. And sometimes the client will say, no, I want to keep doing that. What will it cost to add that on?

And other times they’re like, yeah, I, let’s take your recommendation and replace it. So it’s not technically scope creep because you’re just, you’re moving, to your point, you’re moving things around.

Chip Griffin: Right. And, and we also shouldn’t assume that the answer is going to be no.

Gini Dietrich: Right?

Chip Griffin: Because I can’t tell you how many times I’ve assumed that, that if I say this is, this will cost this extra, someone will say, uh, no, I’m gonna, I’m gonna pass on that.

The reality is that, that people say yes to these upcharges all the time. Yep. In some of the photography that I do on the side, I’ve been shocked at that. The people who will pay exorbitant travel fees for me on what is a relatively low cost project to begin with. In some cases, you know, the travel cost may double the total cost of the engagement, and they’re like, oh, that’s fine.

I’m like, okay,

Gini Dietrich: okay,

Chip Griffin: okay. I mean, I figured it was gonna scare you away and I wouldn’t have to do this cruddy thing that I wasn’t interested in, but apparently not.

Gini Dietrich: Okay. You know what’s interesting about the last few episodes we’ve done is much of the things that we’re talking about really come down to understanding your financials and getting that straight.

And I think if you have that foundation, a lot of this stuff goes away, right? Because you know how much things cost, you know what your profitability needs to be, and you know where things stand. And if you have that really strong foundation, and I’m not saying you necessarily have to do it. But you do have to find an accountant who can help you create these kinds of things. Once you understand that all of this stuff gets easier, prospecting gets easier, pricing gets easier, price increases get easier, scope creep gets easier, all of it gets easier. I think too many of us, myself included in the past have just focused on, well, I think it’ll cost this and let’s just throw it in there.

And that’s where the scope creep comes into play is when we don’t do it based on actual numbers.

Chip Griffin: Yeah, I mean, look, the two, the two best solutions are the two best solutions that I recommend for almost every operating problem within an agency. The first is regular without fail weekly one-on-ones with all direct reports.

Yep. Because that’s your line of communication internally, so that you even aware that something, something’s up that, that you need to pay attention to. And the second is project budgeting. Because if you’re, if you’re doing the time tracking that’s required for project budgeting and you’re looking at your numbers, you’ll understand when and where you need to draw the line on scope creep.

And so almost every single internal operations problem I’ve ever encountered in an agency can be, if not completely solved, heavily mitigated by those two things.

Gini Dietrich: Totally agree. Absolutely. Yes.

Chip Griffin: And the vast majority of agencies aren’t doing either.

Gini Dietrich: That’s correct. Because it’s time and uncomfortable and things that you don’t want to focus on.

That’s absolutely right.

Chip Griffin: But both are actually really easy to do and don’t take all that much time. And if you just invested in them, it would make a monumental difference. Yes. In the outcomes. And frankly, it even bleeds over onto the, the business development side because it helps you to figure out what kinds of clients you want to get, how to price them effectively, and maybe even bubbles up some ideas of who to specifically target if you’re doing those one-on-ones well.

Gini Dietrich: Yes, absolutely one-on-ones. Do your project budgeting, so many things will be solved. So many problems will be solved.

Chip Griffin: And on the client side, communications, same thing. I mean, you know, we are in the business of communications and yet we are generally very bad at communicating

Gini Dietrich: very bad, very bad.

Chip Griffin: With clients, with team members.

Yes, with prospects. The only thing we’re good at is advising others on their communications, but, but we need to, to focus on our own shoes a little bit as the cobbler.

Gini Dietrich: We do, yes. As the cobbler needs to do. 100%.

Chip Griffin: So any final words on scope creep or should we try to contain the scope of this podcast?

Gini Dietrich: I think we should try to contain the scope of this episode.

Chip Griffin: Okay. Well on that note then, I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich

Chip Griffin: and it depends.