While I do my fair share of business reading, I can’t claim to be the originator or title-bearer for what I have termed the “Growth Trap” that entrepreneurs operating in one or another (or all) development: be it online or otherwise. Though, this affects the digital marketing service space the most acutely.
These agencies so often stumble into and never get out of a position whereby they cannot grow because there is not enough revenue to hire employees. It’s not just a lack of revenue that’s the problem, however, the clients they do have are a battle to service while at the same time they cannot increase prices, or they will lose clients. This issue I have heard many times over and have seen many businesses go under due to the magnitude of this issue. Everyone has a break point, and many times it’s core employees who crumble first: full-stack developers, designers, and project managers especially.
I won’t claim this affects every type of business: because it doesn’t: and I also won’t claim it cannot be reversed: because it can; however, it is perhaps one of the most avoidable of all business development issues. If it is understood by the entrepreneurs who are architecting the business, every day they operate it.
To expound upon exactly what I’m talking about, I’m discussing agencies that furnish SEO, Ads Management, Graphic Design and basically anything web-based and either a repeating service involving deliverables or services with complex nuance to them.
Many & Too Cheap
Every business wants more customers, and the easiest way to land more clients is to simply offer lower prices. In some situations, such as SaaS apps, this may work: and even be smart. However, in development, slashing prices is akin to sparking a fuse. Lower prices require more clients, clients have immutable needs, and it’s not difficult to imagine that a huge influx of projects which don’t profit the company enough are, in essence, a trap.
The kind of business that shops price for a website is usually challenging as a client – I’m not saying always and not saying every business that’s price conscious or looking for value will be a challenging client, but as a rule – they are.
There are many reasons behind this, but a predominant theme emerges upon examination. Startup companies with limited funds, small companies with few clients, individuals with web-business-ideas who have no idea what they are asking to be done or what’s possible – and what’s not.
Few & Costly
Another type of client which leads to traps are those gargantuan clients that take up so much time and energy – yet pay so much – that if the company should lose them, the pain would be more than pain – it would mean firing people or going under.
The Clients
It is very typical in our industry for clients to hear what they want to hear. This is common in virtually any situation where there is an intersection between professions – doctors can repair bodies, but perhaps be unable to describe the function of the internal combustion engine. Much has been said of the Dunning-Kruger effect, and it is on display in a big way the higher one climbs the ladder of vertical specialization – unfortunately.
A key reason businesses grow themselves into bonsai trees fighting for life, instead of mighty redwoods, isn’t because they are stupid — it’s often because they are too focused on their trade to notice the incline has turned into a flat plane.
An area which yours truly has had many fights with salespeople over is that of expectation management and responsibility.
Though this is only a tangential topic – managing expectations is crucial to avoid toxic or even litigious clients. Many times, salespeople are hired to try to ease the burden on other, more technically proficient staff, and it ends up being a mess. The salesperson will “yes” the client to death and/or ignore overtly mentioned expectations to land the client – and get paid – only to have this very issue crop up later and turn a deal from handsomely profitable to a rats nest of nebulous claims back and forth about what was to be delivered, by when and so on.
All of us actual veterans of this industry know that, at least in web development, 90% of the time the issue is the client. Building a site remotely for someone is itself not much of a challenge, but sourcing the content for that site – let alone taking responsibility for it, is almost always the client’s responsibility- it’s their business after all.
What winds up happening though is that agencies email clients asking for writing for a given page, imagery or even account credentials only to learn that the client doesn’t have it, can’t find it, doesn’t like what they have or other issues. This can begin a snowball effect where probity is of the utmost concern – the SECOND that this occurs, a meeting needs to be demanded by the agency, and they need to make it clear
Confronting Client Laziness
It is this step, the step of confronting the client directly, that many just can’t bring themselves to do. For many reasons beyond the scope of this post, people are much more apt to blame themselves and take a hit than they are to simply lay down the law and spell out what needs to be done to accomplish the mission in this industry. I’m over 40, so I remember when coders would flip out over spec changes to projects LOUDLY — or even quit on the spot over it — because it’s that big of a deal.
At the same time, the smart entrepreneur has to play devil’s advocate. You can’t always expect a business that hasn’t changed its logo in 50 years to have an SVG file of it, just the same way you can’t expect them to understand that they are just as much a part of the process as you are. This is an area where I have historically done well because I worked in several different industries and have empathy for jobs that literally represent different worlds in terms of what they entail: whoever said work is work didn’t live in the age of the lightbulb, let alone smartphone.
“Just Outsource It!”
I of all people shouldn’t be saying this, but generally speaking, I’m against outsourcing of core services: at least for the web. The reason being isn’t some crazed patriotism, it’s pragmatism and experience. If your business is excellently known for: it’s web development, but your boat-anchors are SEO or Mobile development, then stick to sites! — outsource the rest.
The reason I say to avoid outsourcing core services is the simple atrophy that sets in at businesses that do that. Effectively, your business has transformed from a boutique development house to a sales organization: is that a good thing? For some, yes, for many others, absolutely not. For those businesses which do a good job at selling but struggle to keep up pace with development of sites, outsourcing can be a mixed bag. Though it can cut costs and give your business room to breathe, it can also turn around and bite you when shoddy work goes out the door.
Consistency Woes
Even at the best outsourcing companies in the world, consistency is a consistent struggle. If you’re selling small sites to local businesses, it’s fine to have to give someone back their money or eat the cost of the occasional small website: you can even turn it around and spin it positive with the clients: who often view this kind of ethical behavior very positively in an industry rife with scams and abuse.
Digital Business Chains
The above roughly outlines how businesses wind up in chains of their own making in this space. They sell incorrectly and do not manage expectations, they price themselves too low or too high, and they sometimes outsource to bad companies who cannot deliver for them. This is a rough summary of what occurs, and certainly many will list other, more fundamental business causes – and they are also right. However, this isn’t about how all businesses fail – it’s about how digital marketing agencies do.