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Overdelivering may be hurting your profitability.

Consider this interesting, and not uncommon, scenario we see with many professional services companies after they’ve implemented a customer experience management program.

Below is the answer scale we use for our Client Feedback Tool. Every question is posed based on this format. By default, each question is pre-answered “Met Expectations”, and the respondent has to actually slide the scale up or down to change the score. There are no accidental scores here.

What Matters?

Notice the following chart. Each bar is the feedback gathered by a different project manager. In each row the black bar indicates the average score, the dark blue bars indicate the standard deviation (where most of the scores are), and the light blue indicates the minimum and maximum scores.

Let’s just look at the outliers. Chris at the top, and Dan at the bottom.

Chris has an average of 6.5, most scores are above 6, and not a single score is below “Met Expectations.”

Dan has an average of 4.6 – still slightly exceeding expectations – almost all scores are right in the “Met Expectations” range. No scores are off the charts, but also, not a single score is below “Met Expectations.”

Which PM do you want to hire?

What happens when we reveal additional information such as each PM’s profitability?

Chris is generating great results with his clients, but lousy results (3% profitability) for his shareholders. Dan, on the other hand, is still creating positive results for his clients, but incredible results (38% profitability) for his shareholders.

Digging Deeper

What is happening here?

Chris is giving away the work! He is operating out of a mode of fear. He’s afraid he’s not worth it. He is afraid if he charges for the extra work clients ask for, they’ll say he’s not worth it. So, when clients ask for extra, he never files a change order. He’s likely “gold plating” everything even without being asked to do so. He’s writing proposals that are too skinny to begin with.

Dan, on the other hand, understands very clearly the value he’s creating for his clients. His clients likely recognize they are paying a premium, and therefore expect better everything. With those higher expectations come lower scores. Again – nothing is below met expectations, Dan is just setting and managing expectations very well, then delivering to those expectations very effectively.

This is a pretty common scenario. We often see an inverse correlation between scores and experience – the more expert and experienced project managers set higher expectations and manage to those expectations better. 

Those expectations are often set not by anything you say or do, but by the way you look. When two engineers walk into a meeting, one with silver hair and the look of experience; the other barely shaving and fresh out of school – clients immediately make all kinds of assumptions about the competence, experience, and capabilities of each engineer. It may not be fair and that’s why we always interpret scores as being about the client. We are measuring their perceptions and revealing them, so you can respond accordingly.

Realizing Value

What can Chris do differently in this scenario? We showed this chart to Chris, and he had an “aha!” moment of his own. Realizing the value he was creating, Chris began writing better proposals. He began asking for change orders on out-of-scope work. Six months later, his projects averaged 18% profit, and though the scores did come down some, they really didn’t drop much at all.

This shows how feedback scores are not typically useful tools for managing staff. Participation in a feedback program, rather than the scores themselves, are much more instructional for evaluation purposes. Looking at this chart – I think we’d all rather hire Dan.

If you’d like to see how using data-driven client feedback can drive more revenue, referrals, and repeat business, schedule a meeting with one of our client experience consultants.