I spend the majority of my time doing two things... First, writing this blog. And secondly, working on the business development side of the business, onboarding new clients and getting them started with their custom web design or custom software development projects. Concerning the latter effort, one of the things that have become apparent to me is that for clients, hiring a digital agency isn’t fun. Okay, in blunt terms, it kinda sucks. It’s stressful, not always transparent, and the stakes are enormous.
When you compare hiring a digital agency, developer, designer, or whomever to any other professional service you may procure in other areas of your life or business, you can quickly see how different this industry is, and how unsettling hiring an agency can be. The purpose of this post is to explain some of the differences between hiring a firm like ours and other professional services. Also, I talk a bit about how you can mitigate those risks and place yourselves in the best possible position to succeed with your project.
It’s the Wild West
I’m no stranger to saying it, and I’ll repeat it: the digital agency space is truly the wild west. There are zero regulations and no oversight from any governing body. Developers, designers, and digital marketers all have free reign to conduct their services with almost zero legal or regulatory oversight. Furthermore, their educational bona fides may or may not even exist. Compare this to any other professional service you acquire, and you can start to see how risky this scenario is. Lawyers, doctors, contractors, and even hairstylists require licensing. In this business, anyone with a computer can identify themselves as a web designer or developer. And, clients frequently have no way of knowing for sure what it is they are dealing with.
Why is this so dangerous? Think about what a web developer or designer has access to. First, they have access to all of your own internal business workflows and proprietary information. This means they know everything about your business and how it works. Secondly, developers often have access to proprietary data, and in some cases, personal data about your customers. You need to be ensured that they can be trusted with this access and that above all else, they properly build applications to handle that data. These days, data is exceedingly valuable, and your company’s ability to process this information is a critical component of your success.
Finally, if your business is dependent on staying online, you are risking your livelihood on the ability of an agency to scale, manage, and maintain your website. Sadly, many agencies have no idea what to do in this regard, and when things go awry, clients find themselves with hours and hours, if not days, of revenue lost via downtime.
The lack of an oversight organization or some level of licensing for such an essential set of tasks and responsibilities is somewhat shocking to me, especially when I see just how deep the level of data is that we access from clients regularly.
One last note on this topic. Don't confuse affiliate programs with regulation or oversight. Almost every software company has some level of preferred "partners" or agencies that they recommend. These agencies typically undergo some level of training on the platform offered and in many cases, they receive compensation via referral fees. It's worth noting that these are not oversight programs, but rather simply sales agreements. Even software vendors that offer "certification" programs should be carefully vetted, as most of the time, it's just another way for the vendors to build a network of advocates for their offerings, as opposed to actual oversight. This is just another way that the industry confuses customers by building trust in less-than-honest mechanisms.
No Materials – It’s All Labor and Ingenuity
Let’s talk about home improvement. When you have three contractors bid on replacing your roof, you can understand and control the comparisons. Let’s assume they all bid within 15% of each other. You can see what materials they will use, and you can even extrapolate if they are marking them up, or what the labor costs are. Also, there are limited ways you can put up a roof. You can tear down the subpanels and replace them, or install a roof over an old roof... That’s about it. Judging the amount of work itself and the materials in use all are relatively easy, and market conditions keep costs more or less in line between contractors.
Now, think about doctors. Their costs are definitely controlled – insurance companies have negotiated rates that doctors and dentists must accept. You don’t even use a doctor based on economics, at least not usually. You do it based on reputation and ability. In this case, you want the best, and for the most part, you have removed pricing from the equation.
Enter digital agencies. The variables here are confusing. There are zero material costs – other than software licenses, agencies have almost no overhead on a project. Of course, there are offices, equipment, etc. which I’ll detail in a later section, but individual projects rarely have significant costs related to materials. And in most cases, clients just license things themselves.
Where do agencies vary? Typically, in the area of actual skill and their approach to solving problems. To understand this better, let’s revisit the roofing comparison – unless you are installing the Tesla Solar Roof, almost all roofing materials are similar in cost both from a material and installation perspective. But, with digital agencies, the costs can vary significantly based on how they approach the project and how skilled they are at doing it. All of this adds up to a very confusing situation for a client. Who is taking the right approach, and how good are they at implementing those tools? Let’s dig into that, as well…
Hard to Evaluate Skill
Evaluating skill levels of any professional service provider is difficult. If clients knew every aspect of their project and how to complete it, they’d never hire a professional. And, even when people have a background in the area they are hiring, they rarely are of such an adept level that they can utilize that knowledge positively.
Pretty much the only way you can evaluate an agency’s skill level is by looking at examples of other projects, with the following questions posed to the agency:
- How is this project similar to mine?
- How is this project different?
- What were the challenges in producing the project?
- What unknowns came up during the scope of work?
- What was the budget when the project was bid?
- What was the final client spend?
- Was the project profitable for you? (I think this is important to ask, and an honest agency owner will tell you. If a project was beneficial for the agency and successful for the client – it’s truly a win/win – and that should be the goal of all parties involved)
By asking these questions, you can get to the bottom of the actual capabilities of the agency and how they match your requirements, enabling you to make better decisions.
High Price Divergence
I already described how agencies vary in terms of skill level and price. However, there isn’t much direct correlation between those two variables. Truth is, agencies basically price their services in response to their overhead costs and desired level of profitability, yet rarely on the skill level or experience of the company or assets working on your project. Isn’t that really confusing? How the heck do you know what you are getting?
As it turns out, the experienced developer working remotely in Utah is going to cost you much less than the entry-level developer who is working for an NYC agency and being billed out at 3x the price. So, even though one guy can work faster and more efficiently, the lower-skilled worker costs you more. It makes zero sense unless you see the business end of things. Pricing divergence is often the most frustrating part of the agency procurement process, with some agencies charging $15,000 for work while others may cost $100,000 or more for the same project.
Why do clients spend so much on large agencies? There are a variety of reasons, but one is because they perceive their risk is lower. Now, granted, it’s usually less risky to hire an agency versus a freelancer in a remote location. That’s true, and I’ve covered that topic extensively before. But, in evaluating agencies, clients focus too much on factors that are unrelated to the skill of the group in question. I always say, don’t be distracted by fancy offices, expensive lighting fixtures, and Instagram posts about corporate play dates. Focus on the output – what are the results and how did they get there?
How to Mitigate Risk?
With the above problems identified, what are some things you can do to work around these issues and evaluate your possible agencies more efficiently and safely?
1) Find them via trusted means: The best way to find an agency is through some means that involves a third party that you believe. Referrals are always good – if someone had a good experience, then you are off to a good start. If you can’t get a first-hand referral than pick a medium to trust. I always like Google’s organic rankings – Google works hard to vet the results, and to rank high means an agency is doing something right. Finally, don’t overlook thought leadership. Agencies that write and publish informational content, webinars, or other thought pieces are good places to shop around your project.
2) Start in small chunks: Never sign up with an agency for a large-scale project unless you’ve spent some time with them on a micro-engagement. We like to sell discovery projects, because that allows the client to vet us, and for us to vet the client. With smaller projects, some agencies may do a mini-discovery for free, or low cost. Either way, work together on something to achieve success before executing on a large contract.
Keep things accountable: Structure your contracts with agencies to make sure you receive some level of deliverable value at each milestone. This avoids any future stress if things are not going well. Agencies know when they are being paid, you know when you are paying and what you are receiving in return. It’s a win/win, provided that both parties agree to the milestones, and they are specific and measurable, with actual deliverable assets.
Plan for changes & pivots: Work orders really kill the momentum of a project. Nothing slows down progress and bruises relationships like the dreaded “we can do it, but it wasn’t in the spec” conversation. Clients and agencies should be prepared for the inevitability of changes through a project’s lifecycle.
Stick close to ownership: I always feel that when an agency principal isn’t involved, the best work isn’t being produced. Stay close to ownership, include them in early planning, and have check-in calls routinely to make sure you are receiving the value you are paying for. Owners control what goes in the portfolio, and you definitely want to know that whether you hired a small or large agency, you’ll end up being a banner client for them.
After writing this and subsequently proofreading, I know that some folks will question my intentions. Clients will think this is purposely written to sway people towards our group. Other agency owners will (and I know this is the case because of feedback) believe this is a bit too open and forward in criticizing our industry. At the end of the day, I’m solely interested in better outcomes for both clients and agencies. Bad outcomes result from clients working with crappy agencies and having grandiose expectations. Good outcomes come from informed clients who hire reputable firms. I’ve seen so many clients go in different directions only to come out on the other side without any level of satisfaction, and in the worst cases, complete project failure. Hopefully, by drawing attention to these issues, we can begin to work on cleaning up the industry for the better.