4 Ways to Break the Habit and Add Profitable Value
“Too much of a good thing can be bad for you.”
We often hear this when it comes to health and mental well-being, but did you know that it’s also applicable in business well-being too?
Often, business owners believe that by adding more and more features into their products and continually extending their services, they will get further ahead. However, this is not true. It’s no surprise that this is a common misconception as, initially, it does work – but it quickly hits a ceiling.
Unfortunately, this “over-servicing” comes with serious consequences and eventually drains your business’ resources, risking its survival.
What does over-servicing your clients mean?
Over-servicing is when your business provides too much to your customers to a point where they don’t see value any longer. After this point, it becomes unsustainable, either because the incremental additions don’t justify the cost or there’s no real demand for them.
Here’s an example.
Think of a restaurant.
You begin with a small menu when you start out. That’s because you’re the head chef and you have a small team (or you’re on your own). You start to create meals and finally, people come in to eat and they rave about your food. In your excitement, you add more options to give them more choice and drive demand. That works! Suddenly, you correlate menu extensions with more happy customers.
That is, until you hit a point where your menu is 10 pages long.
Now, you have dishes that you buy stock for and prep that barely get ordered, you have to train your staff on a greater variety of dishes which leaves them exhausted and overwhelmed, and your diners can’t make up their mind due to the abundant choice.
That’s when you realise that your customers are really coming for around 40% of the menu and you’ve completely gone overboard. The remaining 60% isn’t bringing in the revenue because your customers just don’t see the value in all of these items.
That’s over-servicing your clients.
So, how do you know if you’re over-servicing your clients?
Great question! The problem is this: it’s very difficult to see it in your own business.
Often, it comes down to looking at “the menu” of your products and services, and the numbers behind your business. Does it all stack up?
I understand that, as a business owner, you want to provide the best client experience and add value to ensure that your customers never even dream of your competitors. However, you must also keep in mind that it’s all about being realistic and keeping your focus on finding the sweet spot.
Remember that you can reach a point where you’re overshooting the mark and even your customers won’t care about the additional service. Think of the restaurant example above: as the head chef, you may be worrying that your diners will be angry when you remove items, but the reality is, 3 menu pages could disappear without them even noticing.
The business consequences of over-servicing your clients
Here are the key signs you’re over-servicing your clients and the costs of doing this.
- Being unrealistic about your goals
If you tend to over-service your clients, the marginal value of your service will diminish. Working outside of your scope and setting inappropriate goals could affect your business and have a negative impact on your trajectory.
- Your profitability decreases
If you over-service your customers just because you are desperate to keep them, then it’s time for you to change your game plan. Unprofitable practises don’t keep you in business. As a rule of thumb, if you have anything under a 10% profit margin, then chances are that your features are costing you too much for the value your clients are willing to pay for.
4 tips to stop over-servicing your customers
As a business owner myself, I understand that it’s in our nature to give more – in fact, I don’t think it’s necessarily bad to want to provide a memorable experience.
However, there has to be a limit. If you are doing an unreasonable amount of extra work or providing excess services that your customers do not pay for (or see value in), then this can hold you back from spending your time with those who do.
I know it can be difficult to break this habit but there are ways to overcome over-servicing. These are:
- Analyse the value you deliver to your clients
Take the time to audit all your features and offerings, and evaluate the value they bring to your customers. Once you identify which services a customer appreciates and they see value in, remove the ones that don’t.
My tip is to test and measure smaller offerings until you eventually find the one that gets the most excitement and demand. The goal here is to simplify the value proposition down to the key features that they find the most value in.
- Plan your projects ahead of time
Businesses tend to over-service their customers when projects are not planned properly.
Throwing in unnecessary services and product extensions without the right pre-planning may cause your customers to get overwhelmed, leading them to find someone who offers the original feature they liked about you.
Plan ahead and set boundaries to avoid this.
- Encourage customer feedback
Knowing your customers’ likes and dislikes will save you from over-servicing and potentially risking your business. So, ask for honest feedback and reviews, and then find the common things they value and appreciate. You can also identify the services and features that they never talk about and remove them.
- Involve your staff
Avoiding over-servicing isn’t just for a business owner to bear alone – each of your employees can be a part of the solution to break the habit too.
Educate your staff and make sure they fully understand how over-servicing customers can hurt your business’ profits. Also, encourage them to observe what they see customers value the most and least.
You also need to avoid exposing your employees to additional service and work hours that they are not paid to do. This way, your staff will feel valued and it will reduce the risk of creating an over-servicing culture.
Are you potentially over-servicing your customers?
As I said – over-servicing is the silent business killer because it’s hard to spot.
But breaking the habit doesn’t mean you need to strip half of your business’ features and services. It’s about keeping the most profitable parts of your operations and cutting the superfluous parts that just cost you resources.
Just remember that value-adding isn’t entirely bad – however, if you constantly provide incremental services, you’ll eventually end up forgetting about your customers by over-estimating what they actually want from you.
How I can help you service your customers profitably
As a Business Coach and Mentor, I work with business owners like you to provide clarity around your goals and guide you on the right path towards achieving them.
Whether you’re struggling with over-servicing, losing focus of your goals or need a fresh perspective to look at your service list, I’m here to help.
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