You had demand: Everyone and their dog needs a website.
You had limited supply: Knowledge of how to design and code for monitors, browsers, and servers was considered voodoo magic by most people.
Being a web designer was considered a specialty. Not many people could do it well, most graphic designers didn’t have an interest in coding, and most marketing firms were still tacking on “websites” at the end of their list of services but making single page Flash microsites.
People who needed a great website hired a local, boutique web design agency or freelancer and were willing to pay top dollar because they had no other choice.
But then things started to change.
It’s become easier to DIY your way to a great looking and great functioning website cheaply or freely through Wordpress themes and software as a service, like Squarespace, Wix and Shopify. That's enough to satisfy most small business owners who just need something quick and basic online.
If they pay anyone, it’s usually a freelancer to customize the website theme rather than re-design it from the ground up. And while I am loath to admit, some businesses use a crowdsourcing design contest like 99designs. I judge them harshly for it, but that's another post for another day.
What about big companies with big dollars to spend? A few things:
- The 2008 global recession left many large businesses frail and looking for ways to limit their spending. In 2014 we’re still feeling the after effects of it. Marketing is always one of the easiest, albeit riskiest, line items to cut.
- Web technology has become simplified in certain areas. Curiously, developers seem to constantly find new ways to make themselves obsolete by writing code libraries and programs that simplify the process of getting a website online.
- Many of the marketing industry professionals like writers, designers, and developers who were laid off as a result of 2008 picked themselves up, dusted themselves off and and started their own web design businesses.
This created a domino effect. Not only do clients have less cash to spend than before, now there’s an abundance of ways for them to either produce the work cheaply in-house themselves, or hire the work out to smaller firms with lower rates. If you happen to be in the middle tier - not a giant marketing agency nor a mom and pop design studio - you’ll feel the effects when trying to pitch work against 20 other equally qualified firms.
But it’s not all doom and gloom. When environments change, all living organisms must adapt to survive, and those that do may come out on the other end thriving. Here are ways that some agencies are reinventing themselves. Learn from them and be your own Madonna.
Specialize in a vertical
A vertical is when you sell your services to one specific industry. Many web design studios fear specializing in a vertical because it may involve turning down other projects, but taking a leap of faith is essential if you want to set your company up for success years into the future.
Why is specializing so important? A friend of mine offered a great analogy:
“If your company just landed the Audi account and you had to shoot images of their new line of cars, do you hire the photographer who also does portraits and weddings or do you hire the photographer who only shoots cars”?
The simple truth is that when you generalize, you’re only ever going to be able to sell a new client based on the quality of your work (which is subjective), your limited geography (many clients like to hire local), or a pre-existing relationship (you better hope it’s good).
On the other hand, when you specialize:
- Clients will seek you out from miles away because you’re the best at doing the kind of work they need. Hiring someone with intimate knowledge of their industry is worth more to them than hiring someone who has to learn it all from scratch. People want to work with the expert.
- You’ll have less competition and a greater pool of clients with a higher likelihood of closing.
- You’ll be able to focus your sales and marketing on one group. Hitting a target is much easier when there’s a single bull’s-eye instead of multiple targets all competing for your attention.
So how do you get started?
First, take a look at your best clients and projects from the past two years. And by best, I’m talking profitable. Enter them into a spreadsheet.
Once you have them all in front of you, take note of any similarities across all of those profitable jobs. Many times you’ll realize that a vertical is already staring back at you from the other side, begging to be noticed. If you find that most of those projects were in a similar market from clients of similar sizes, you might already have your vertical. Bam.
If you realize that there’s a particular industry you serve especially well and already have case studies to prove it, then it’s time to research. How big is this market? What’s the potential? Is there anyone else specializing in it already? Could you offer something more?
If you discover that the market is big, the clients have cash to spend, and you can reach them through a particular channel (say online forums, blogging, or tradeshows,) then it’s time to hone your own marketing materials and brand positioning to match your new target audience. You can always take on other work if it comes to you because the reality is you need it to keep the lights on, but now your effort is spent chasing clients in your specialty area instead of shot-gunning at the world or (gulp) responding to cold RFPs.
As an example of a marketing agency that specializes in a vertical, check out Verb, based in Halifax, Nova Scotia. Verb focuses exclusively on the travel and tourism market and as you can see from their client list, which includes MasterCard, Royal Caribbean and PGA Tour, it’s working. Keep your eyes peeled over the next couple of weeks for a video interview I did with Joel Kelly, the head of social media marketing over at Verb, for more insight into how they work.
Another example is Onboardly, a content marketing agency specializing in working with funded tech startups. I met Heather Carson, one of Onboardly’s co-founders, at Startup Festival in Montreal and it’s clear when talking with her that she understands her target audience (me) more than your average marketer who may also work with, say, government agencies who just don’t think the same way as a startup entrepreneur.
Specialize in a horizontal
If you can’t (or simply don’t want to) focus on just one industry, then consider narrowing your services to just one or two things that you do really well. It’s almost comical to look at some agencies with a list of services a mile long because at the back of my mind I question – and I’m certain I’m not alone in this - whether or not they can really fulfill ALL of those services really well.
The difficult balance with a horizontal is that you have to be specific enough to stand out (i.e.: don’t just say you’re web design) but also not focus on a service with a limited shelf life. For example, infographics used to go viral by virtue of being an infographic, but now everyone is making infographics. That could be good or bad depending on how you look at it. It either means the demand is high or it means it’s a trend that will die eventually.
The key to specializing in one service that you sell to everybody is you have to be really good at that one thing. Mediocre won’t cut it. If you’re going to say that you only design e-books or you only code Wordpress plugins then your work should be able to stand out from a sea of generalists. It’s gotta be kick-ass.
Productize your service
If you’re just selling one-off projects to clients then you’ll always be in a constant state of chasing the next project and the next and juggling cash flow. UGH. When you sell your clients on a retainer that they pay every month to receive services, then you’ll be in a better position to truly grow your agency and become sustainable.
The hard part is how do you convince your clients to pay you every month? To do that, you need to find a way to package your services the way product companies do, then sell based on the value you’ll bring your client over time and prove that their commitment will be rewarded.
Last week we released the first episode of Agencies In Offices Drinking Beer, a monthly series where I interview an agency owner. I spoke with Jeff White from Kula Partners, who described how they invested time and money to become Hubspot certified and make strategic hires.
Now, instead of being a general purpose web design and marketing agency, they use Hubspot’s product and methodology to form the structure for how they sell services to clients. Clearly this strategy has worked as Kula Partners increased their monthly recurring revenue by 1066%. WOW.
Make a product
I’ll be the first to admit that making a product is not easy when you run a service agency, but it can be a way to slowly adapt and grow as a company.
If you already have a large company as a client and a novel idea for how to solve a problem they wrestle with, you can always get in a room with the client and explain it to them. If you can sell them on the solution, they may pay you to build it for them and let you keep the IP. This way you’re getting your product funded by the same group that’s going to validate the fact your product actually works in real-life AND prove that other companies will also pay to have the problem solved. Talk about win win!
No matter how you adapt your web agency, always remember that every business has to keep up with the changing tides, and needing to adapt doesn’t mean failure on your part. The key is to figure out where the industry is going and evolve based on your own unique skills, interests and talents to address a specific market need.