Enterprise Software

Keep your client and yourself happy: Avoid dangerous overquoting

Because of unfamiliarity with the exact terms of a service level agreement and pressure from his firm's accountant, one consultant overquoted a small project and lost the confidence of the client. Find out how he corrected his error.

Working in the field of customer relationship management (CRM), I understand the value of keeping the client happy. Not only must you supply an excellent product, but to separate yourself from the competitors, you must support that product and always treat the client with courtesy and respect.

Often, you have to perform a balancing act. To keep clients happy, you need to give as much as you can for their dollar. To keep yourself happy, you need to maximize the money you get for the time you spend. Recently, I was in a situation where this balance was not maintained, and it was a disaster for all parties involved, especially me.

The situation: Dollar value vs. client value
Bob, who worked for a company dealing with magazine subscriptions, called and asked me to give a quote on some minor customization work. My relationship with Bob was good, and we got along very well. My company had installed a CRM system for Bob’s company, and the product was working well. The system was now at the point where all the major bugs had been ironed out, and we were just tweaking it for the best fit with business practice.

The customization work involved modifying the output invoices from the system to allow for the actual date of generation to be different from the date on the invoice. To spread out the workload, the company often generated subscription invoices over a number of weeks, but to save on postage costs, sent them out in bulk. By fixing the date, we wouldn't make clients wonder why their resubscription forms had taken a month to arrive in the mail.

The work was simple and probably would take me 15 minutes. To cover myself for inevitable delays and the possibility of the client not exactly asking for what it really wanted, I created the quote at 30 minutes. As per our internal procedures, I showed the quote to our accountant for sign-off before sending it out.

The accountant wasn't happy. As is the accountant’s job, he wanted the bottom line to be as healthy as possible. “All our service level agreements allow for a quote to be no smaller than one hour. Bob’s departmental manager knows this and expects as such,” he informed me.

I was uncomfortable quoting what, to me, was four times the time it would take to do the job. The accountant explained that this factored in the time spent creating the quote and the paperwork around it. It sounded plausible, although I believed our hourly rate also covered these factors. I had worked for the company for around nine months, but this was my first statement of work for such a small job since working there. I went ahead and sent the quote through to Bob. What a mistake.

Disaster strikes
Generally, the procedure for sending through the quote was simple. I e-mailed the quote to Bob, who gave it to his department manager, Sharon, who rubber-stamped it. A fax of the signed version came through to my company, and I arranged a time with Bob to go out and do what was required.

So when Bob sent back an e-mail saying they had decided not to go ahead with the work, I knew something wasn't right. I replied, expressing my regret they had decided not to proceed and confidentially asking why Sharon had changed her mind. The response was what I feared. She had felt the work was too expensive.

Now the situation was a no-win for everyone involved. The accountant, instead of getting half an hour of work, would get nothing. Bob would not get the changes made that he obviously wanted, and I couldn’t requote for less time because it would be effectively admitting I had purposely overquoted, damaging my reputation and the relationship with the client. In fact, there was already the potential that the client had an idea that I had overquoted and the damage was already done.

I needed a solution to save face and minimize the damage. Another staff member had requested other work on the client system, so I struck on the idea of combining the quotes. This way, as long as I quoted, say, an hour and a half, and did both jobs, I could encourage the client to bundle work together, saving future problems with the accountant and avoiding having to admit my error in judgment.

Damage control
I sent the quote through and immediately called Bob to say I wanted to do the work and that this was potentially a way to make it happen while keeping Sharon happy. He agreed to see if she would consider signing off on the combined jobs and get back to me. A few minutes later, he rang me back and told me Sharon was adamant that the work was no longer essential for the business. I had to let it go and move on.

Over the following weeks, work came through but things felt a little more formal and frostier than before. This time, however, I made sure I had my facts straight. I went to the archives and dug out the service level agreement (SLA) for the client. To my horror, I discovered that the SLA allowed for a quote minimum of half an hour, not the hour the accountant had told me. And if I did not go on-site, I could quote as little as 15 minutes. I made sure, armed with this information, that I quoted accurately and, where possible, gave the client the benefit of the doubt in terms of time estimation.

The accountant, understanding he had lost work and now being presented with the details of the SLA, gave me the freedom to quote more accurately. Although there were a few jobs on which I underquoted the time and had to wear the cost, the client acted a lot more favorably toward us and work picked up.

The client is now comfortable with us again, and I'm quoting appropriately to both cover any unforeseen circumstances and ensure the cost benefit is there. The accountant is seeing income from the client, and the client is seeing more benefit from the system as features are added.

The bottom line
If you hold the relationship with the client and you're undertaking the work for them, you're the best person to estimate the time it will take and, ultimately, the person responsible for the quote.

Remember that sometimes a damaged relationship cannot be repaired, no matter how much money is thrown at the problem. By saving a few dollars, you may sacrifice many more. Make sure when quoting for a client that you know what the limits are based on the SLA. If you feel the minimum time the SLA allows for the work is still too much for the work required, inform the client and suggest bundling jobs together.

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