I’ve been giving a lot of thought to how we can best get a sense of the health of our business at Barrel. There are the usual metrics like inbound leads, deals in the pipeline, and expected revenue from signed clients. There are also in-project metrics like profitability and how we’re tracking towards meeting milestones and deadlines. But the more I’ve explored this, the more I am convinced that the most important metric is one that measures client satisfaction: how pleased are they with our service and how likely are they to recommend us to someone else?

In The Fifth Discipline by Peter Senge, there’s a fictional case study about a company called WonderTech, an electronics maker that releases a high-end computer. The company grows rapidly the first three years only to decline and fall into bankruptcy not too long afterwards. When closely examined, it’s possible to see that even with strong demand, the inability for the company to deliver its products on time led to dissatisfied customers and a loss in reputation. They were never able to fully recover from this, and subsequent sales and marketing efforts became harder and harder.

The following is a “worst case” scenario of the WonderTech case study as applied to Barrel. We’ve lived variations of this over the years and I don’t think I really understood what was going on except stuff just wasn’t clicking.

• We started small and scrappy, taking on whatever work we could. We did our best for each one, happy to be given the opportunity.
• Little by little, we would gain momentum by doing good work for clients, which would lead to more work through word of mouth and the quality of the work we produced.
• Not only would the client give us more work, but we would entertain many new opportunities and take on several new clients. When this happened, it would soon be hard to keep up with the demand.
• Our team members would be pushed to their limits, often working late nights to meet deadlines and juggling multiple projects.
• We would take some shortcuts in hiring and find whoever fit the job description with little regard given to their cultural fit or their concrete skillsets.
• Over time, things might slip here and there. Our long-time clients, fed up with our mistakes or inattentiveness, might reduce their spend with us or take the entire business elsewhere.
• Faced with a loss in revenue, we would panic and seek out new clients, taking on any new engagement as long as it provided cashflow. We often ignored how difficult the client was or how the work didn’t align with what we were trying to be known for as a company.
• This in turn would lead to less desirable projects and work that we wouldn’t be proud to showcase to prospective clients, making it harder to strengthen our reputation and land more clients.
• Even worse, we’d lose talented team members who were not happy working on such client engagements, putting even more pressure on those who were left and also forcing us to use junior talent that then would make mistakes to further disappoint our clients.
• And of course, all this time, the leadership team is in react mode, putting out fires and not spending an ounce of time trying to think strategically for our clients.
• The vicious cycle results in stagnant or falling revenues, diminished profitability, and overall low morale.

It’s a tough place to be in, and one that could have been avoided. The allure of fast growth and increased headcount often deluded us into thinking that we could scale linearly and avoid growing pains. A more prudent thing would have been to weigh the opportunities for growth with what it took to keep our existing clients happy. If we felt that our existing clients, due to budget limitations or misalignment in the type of work we were doing for them, would no longer be treated with the same level of care as new clients, we should have proactively helped them transition to another agency rather than trying to hold on to them in a half-assed way. This way, we could make way for the new clients to be properly staffed and taken care of or make the conscious decision to turn down new business and focus on growing existing accounts.

It all sounds like common sense when I write it out, but in practice, it’s deceptively subtle and the gradual way in which the problem manifests makes it hard to realize when we are making the decisions that will ultimately come back and bite us.

So this is why I feel that a measure for client satisfaction, taken each week, is a proactive measure for ensuring that we don’t make decisions that will hamper us in the long run and fool us into thinking we can handle rapid growth. One approach I’ve been tossing around internally is to ask ourselves: “If asked today, would a client provide us with a positive testimonial that we could publish publicly?” If the answer is yes, then we are doing what we are supposed to do. If the answer is less certain, then we know we have our work cut out for us. If the answer is no, then we need to move on from the account and learn how we messed up so we don’t repeat the mistakes again. The goal of the game is to ensure that we can maintain a roster of clients that would, on a dime, gladly provide us with a glowing testimonial showering us with praise on the way we work and the impact we’ve had on their business. If we can’t maintain this standard for everyone, then we are in trouble.

When a client is satisfied, the vicious cycle I explored above, reverses itself:

• The client tells others about us, bringing us warm leads that convert into new business.
• We do a great job for the new clients, which then leads to more warm leads.
• We’re selective in who we take on and only take on the number of clients we can absolutely do a great job for.
• This self-imposed limit to growth allows us to land even better clients who give us the most interesting projects with budgets that allow us to do our best work.
• Our team feels incredibly motivated and produces their best work. Their happiness and quality of work is a magnet for even more talent, feeding the team with a steady stream of great team members.
• Talented team members require less oversight and projects are completed efficiently and effectively, allowing the company to profit even while compensating the team members very well.

Even when reading through this virtuous cycle, I can see how easily things can derail. All it takes are a string of bad decisions before things spiral into a vicious cycle. Perhaps the leadership team feels ambitious and wants to grow revenues by X% and decides to loosen standards on client satisfaction. What seemed unstoppable can quickly erode.

When I think about the actions that help prop up client satisfaction, a few come immediately to mind:

• The speed of our response and communications.
• The ability to provide useful guidance and information that make the client’s life easier.
• To ask thoughtful questions that help the client clarify their thinking and planning.
• To challenge the client, to the degree our expertise backs us, when they’re making questionable decisions.
• To be on top of our subject domain and be confident in talking about what we’re supposed to know.
• To proactively identify and present opportunities that the client might not be aware of.

There are countless other details that I think would be useful for me and the Barrel team to explore and breakdown ourselves, but the ones above cover a great deal. Beyond this, there is the hard work of truly understanding the goals of our clients and finding the ways in which we can deliver maximum value again and again. I think this is a challenge that any business in the world shares, and one that, if done right, can lead to tremendous success.