Understanding the Real Cost of Business Services
‘Unfair competition’
I was discussing a business opportunity involving the introduction of companies to Cloud based enterprise software with a friend and fellow business consultant recently. Whilst considering how it might benefit our consultancy services he made the observation that “businesses prefer buying things to services”. This got me thinking about how businesses make purchasing decisions, in particular decisions services such as web design and copywriting, and even closer to my heart, relating to the buying in of business advice and business support services. It has always surprised me that these seem to be made on a completely mistaken view of the real cost of the service to the business.
Words no web developer, copywriter or business consultant wants to hear
I have a lot of empathy for web design companies and copywriters because of the ‘unfair’ competition they face. I don’t mean competition from other web designers and copywriters, but rather from the sons, nephews and second cousins half removed of business owners. These relatives have usually ‘done a course at college’ and claim to be able to design commercial websites or write marketing copy at a fraction of the cost. I have written dozens of marketing plans over the past twelve or so years and for many clients the plan will include the need for a new website or improvements to an existing one. Nothing fills me with more despair than when during my follow up conversation with my client I hear those fateful words: “I needed to save money so I wrote the copy and my nephew is doing the design for me”.
I ‘ve got a cousin who can do that!
I have a client who owns a hi tech business producing highly specialised equipment for the medical instruments industry. They are probably the best at what they do in the UK and yet they have no website and this is seriously hindering their growth, not to mention damaging their credibility. They should have a website as I developed a marketing plan for them nearly three years ago and it included a detailed brief for a website. I also recommended three highly competent web design companies and two copywriters*, all based in Brighton. Then came the intervention of the dreaded relative, this time a long lost half cousin several times removed who my client met by chance at a family wedding. She worked in the marketing department of some company not exactly well known for its exciting marketing campaigns. She advised them to go with a company who had mailed them with a cheap offer, one with a portfolio of websites so devoid of imagination and with copy so clunky that I begged my client not to use them. But blood is thicker than water as the saying goes, the half cousin won, and after eighteen months of grief and hassle my client still has no website.
*For a heartfelt Blog on the subject of undervaluing copywriting services see Helen Keevy’s excellent piece on her Blog.
Cost is a relative term
The root of the problem seems to lie in how businesses evaluate cost, seeing it as an absolute rather than a relative term in the context of their business. To calculate the actual cost to the business of a website you need to take into account the return on investment and value added to the business by the website. A website designed by a relative or friend of the family that costs £1,000 and which brings in no additional customers and hence no additional revenues has cost the business £1,000. In fact if the site is really poor it can actually cost the business even more as it can be detrimental to the business’s overall brand. Not only is there no return on investment there is also a negative impact on the value of the brand.
On the other hand a well designed website with good copy which costs £5,000 but which brings in additional revenues of £20,000 and enhances the business’s brand, far from costing the business £5,000 has provided a sizeable return on investment and added value to the company overall.
In fact the cost to my client of trying to save money on his website is even higher, because the web design company has wasted hours of his time over the past eighteen months and there is also the opportunity cost of his company having no website for that period and the lost sales and lost credibility that has entailed. Taking the advice of the long lost second cousin has been a disaster*.
*This is slightly off message but for a hilarious video on the subject of clients undervaluing the services of designers check out Graphic Designer vs Client on YouTube.
And even closer to home
Similar decisions based on an erroneous approach to business costs lead many business owners to eschew the services of business advisors or consultants on the basis that they are too expensive. They are seen as an absolute cost, rather than a resource, which will provide a return on investment. Those same owners will then quite happily pay thousands of pounds for an advert in their industry journal or local paper, without any strategic reason for doing so and consider it money well spent even when it (inevitably) leads to zero additional sales. Or they will put their life savings into a new venture without any market research or clear business strategy and struggle for years blaming everyone and everything for failure but their own lack of forward business planning. Oh well at least they saved the cost of bringing in a business consultant.
Of course quite the opposite is true. A good business Adviser will add value by filling in gaps in expertise, experience and knowledge and providing an objective overview and perspective to the challenges and opportunities faced by the company. In fact I would go so far as to say that a good business adviser should not take on a client for whom they could not add value. Enlisting the help of a consultant to help with developing a marketing strategy in scenario one above, or a business plan in scenario two would not have cost money in any absolute sense, but rather have helped them to use the funds available in a strategic way, minimise the risk of failure and ensure a return on investment for the business. In so doing the business consultant would also have ensured that there was a return on investment over and above their cost also.
It’s not all Relative
‘Keeping it in the family syndrome’ can also be the curse of the business adviser as a colleague and I found recently after providing two hours of our time free to a prospective business. They too discovered a long lost relative who runs a business and promised to provide them with free advice, hence “saving the expense of engaging a business consultant”. It would be interesting to know how many of these ‘kissing cousins’ style relationships end in tears as Uncle George or Cousin Annie realise they are too busy running their own business to help their relative or that their experience managing a pick ‘n mix franchise has little in common with growing a manufacturing business or design studio. Upholding family values is one thing, but that doesn’t mean you necessarily get added value from family.
Cost may be a relative term for a business buying in services, but that doesn’t mean you should bring in your relatives to provide them. As the old saying goes: ‘you can choose your friends but not your relatives’. My advice is to also choose your web designers, copywriters and business consultants!
Coming Soon:
First we take Manhattan: my business journey from a Brighton bedroom start-up to international business with offices in Brighton, New York and San Francisco.
Hi Barclay,
Great article and very well written, we’ve been in business for almost twenty years and have seen this type of scenario being played out time and time again.
‘Graphic design vs Client’ youtube clips have been around for quite a while now but still makes me laugh every time I see them.
Also we know so many businesses that once a really successful corporate re brand, direct mail campaign, website etc..etc.. has been achieve with successful, positive and profitable results any future marketing materials etc. are taken in house or a cheaper route found.
i.e. the client or a member of staff suddenly become a graphic designer over night especially if they have access to ‘micro soft word’
Kind regards Tony
Hi Tony, thanks for the feedback. I think you have sown the seeds for another blog!
More and more we see half cocked and ill put together plans by the ‘kid next door’ who has worked for nothing and of course knows nothing – that’s why they were cheap, and business owners thinking they have it right when clearly it is wrong. I personally don’t think that any website, any graphic, any copy or adwords campaign solves a business problem. However together, with a little congruency it’s possible to make a proper plan.
And that is what surprises me in this present environment. Many business owners are looking for cheap, they then get the same as a the masses, competing on price in a competitive area (Woolworths springs to mind) = The Poorhouse.
Lets look at Adwords for example, we have recently been working with a few small firms that have had campaigns put in place, with no targeting, no end result in mind and no specific content for that highly targeted traffic and they wonder why ‘adwords’ doesn’t work for their business.
For the two firms I am working with currently we have increased turnover by 30% in less than three months, by following a process and by going against the herd, oh and by following a reasonable process without doing anything ‘on the cheap’.
I agree whole heartily with the frustration that comes with “we need a professional website” tons of research and planning for the client to go “my son knows how to do websites so well use him” however.. Weren’t we all at some point that kid stealing your job?
When I first started many times I heard “you know photoshop, do us some cards for a tenner?” and it’s brilliant.. It made me realise how much I love designing and pushed me to start running my own business.
If that ever happens I try and persuade the client why I’m better than a kid with an illegal copy of photoshop – and if they still don’t see the benefit.. Don’t waste your time on someone who won’t appreciate your training and work.
Brilliant post.
Thanks for the comments Jake, much appreciated. I agree designers have to start somewhere and a talented relative can do a good job. I also agree if a designer, copywriter or consultant can’t add value over and above the relative then best to back off. Ironically, the incident which inspired the blog wasn’t actually a relative doing the job, but a relative telling my client who he should use to do the job! The result has been an expensive, time-wasting disaster – and it would probably be unprofessional as well as discourteous to tell him I warned him that it might happen.
Good article, plenty of us suffer at the hands of the not so gifted amateur. What adds to the issue though is the fact that most businesses still think that internet marketing = online brochure, and that all you need to do is to invest as little as possible, because it won’t actually generate any ROI for you anyway, or not that you can measure, so do it to “put ourselves online, that’s all we need to do isn’t it?”.
Some of the answer (not all) lies in education of the business owners that marketing through the internet is about more than this. The web has changed in the last 10 years, when an online brochure might have been relevant, into something where the buyer seller relationship has changed immensely, brought about by ubiquitous information available through Google (et al) and the two-way nature of the best these days, aka user-generated content and social media.
If businesses want to use it for marketing, they need to think differently, and then the role / objective of the website in a wider internet infrastructure of tools for brand building, comms and lead generation mean that the passive brochure is even more of a waste of money, time and effort. Business consultants have as much of a role to play in this in advising their clients to know better – there are many of those who seem to share the same belief.
The internet trade itself hasn’t done much to help itself either by making many of the tools free at the point of use, so it’s easy for the inexperienced to think that they can take a DiY approach, or why spend money on the consultant when I can do it myself?
You may interpret that I’m on a mission to rid the nation of brochure websites, and I am. But it does need the client to at least have the marbles to realise there is more to it than putting a brochure online to achieve an ROI for the business. I’m not interested in pushing water uphill.