I wrote this article on LinkedIn, but thought it might be useful to reproduce it here for those who don't use that platform.
According to LinkedIn over 85% of the 28,000 agencies offering web development services in the UK have ten or fewer people. Web development is a fast moving and skill intensive area, so what challenges does this create for these SME developers? Having worked in the industry since 1995 I have summarised the challenges I see into 5Ps:
Any agency is only as good as their personnel. The majority of the agencies I work with have great people in them. The problem is that most small agency’s business model simply doesn’t support enough people to make a complete digital/web team. A ten, or fewer, person team that wants to offer ‘full service’ which includes branding, strategy, creative, print, digital and web is always going to struggle just to cover the bases.
Take a look at the typical skill sets required just to complete a web project:
Again, ten or fewer people are really going to struggle with proficiency in all of these things. Of course, the agency doesn’t need to be proficient in these things, they can just ‘wing it’, but that is just pushing the problem into tomorrow ... at the client’s risk!
The reason why so many small web development agencies exist is that the market exists for web development at a low price point. These agencies work for other small businesses and have to compete with the ‘self-build mirages’ like Wix. Keeping the price acceptable to this market is an existential challenge for most small agencies.
In a market with so many competitors, it is a major challenge to stand out from the crowd. A simple search for web developers in any town in the UK will yield a number of companies proclaiming ‘we build Wordpress websites’. The sites, the offer, the themes, the modules are all very similar, so how can an agency be positioning themselves as different whilst handling all of the other challenges?
It is well known that the cost of acquiring a new customer is anywhere between five and ten times the cost of retaining an existing customer With all of the other challenges, how does a small agency offer continual progression, service, maintenance and innovation to retain their customers? Unfortunately, progression is usually the straw that breaks our agency's back, making customer churn inevitable.
Is there a silver bullet, apart from doubling headcount? Not one, but there are two ‘silverish’ bullets that must be used together to overcome the challenges:
An SME agency must focus, brutally, on what they do well. They should take a long, hard, honest look at what they do and where there are core competencies. More importantly, they should identify, honestly, where they 'wing it'. This can be achieved by asking hard questions associated with the skill sets.
If the answer is not ‘always’, ‘mostly’ or ‘easily’ then they are winging UX.
A no here rules them out of creative and graphics.
If not then front end development isn’t a strength.
System architecture people will know this.
If not then hosting isn’t a strong point.
All hosting and security people will know this.
This type of questioning will help a team focus on what is core, and identify where help is needed. Focus is what is easiest for the business to sell. What is focussed on is the USP of the business.
The definition of partnership needs to be considered when looking at filling the gaps that have been identified from the focus process.
It goes beyond a contract and can be illustrated by looking at how using freelancers or contractors differs from working with a partner.
If system architecture and administration are areas in which an agency admits that they 'wing it', then one solution is to hire a freelancer. That would certainly address personneland, hopefully, proficiency but what does it do to price? The freelance world is project based, it’s what freelancers like, the diversity. Therefore, whilst a freelancer might be cost effective during the project, longer term, where they might be able to influence positioningand progression for an agency, they will almost certainly be uneconomic.
In the same scenario, a partner would provide the same skills as the freelancer, but on a service basis. The difference is that the skills can be bought for the project and beyond for as long as the agency needs them, for an off-the-shelf price. Indeed, a partner will be developing and improving their service continually providing natural progression for the agency and their customers. Good partners are in it for the long haul.
So finding good partners can address personnel, proficiency, price and progression, what about positioning? Surely positioning can only be affected by the core competencies of the agency?
Good partners allow the agency to differentiate in ways that they may not have considered. Selecting the right partner will enable an agency to challenge some of the things ‘they have always done’ or ‘that everyone does’.
There are plenty of professional, feature rich, affordable cloud providers out there, especially if they have a partner skilled with setting them up and using them.
There are many more powerful, scalable and easier-to-use systems out there, especially if they have a partner skilled in setting them up.
With the right partners on board, an SME web development agency can seriously boost their capability and differentiate themselves from their competition.
With 85% of UK digital/web development providers having a headcount under ten there are bound to be challenges in the sector. The 5Ps identified in this article are evident in most of the SME agencies I’ve ever seen (and in some larger ones where web development is only a part of their business). Fortunately, SME web developers can address the challenges associated with their business by focussing on their core competencies and selecting the right partners to work with.
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