The shocking truth about your competition

Written by: Karl Sakas

There’s an old joke about escaping from a bear in the woods: “You don’t have to run faster than the bear. You just have to run faster than the person behind you.”

When you compare your digital agency to your competitors, it can feel like you’re the one running just ahead of the bear, while your competition is out of harm’s reach.

But reality tends to be more complicated than that.

Comparing your agency to other agencies

As a business owner, it’s easy to end up comparing yourself to others and their digital agencies. It can feel like everyone else has it all figured out, while you’re struggling to find good employees, complete projects under budget, and make time to see your family before they forget what you look like.

Maybe you compare yourself to your closest competitors, the ones you keep losing to when you do proposals. Maybe sometimes you win, sometimes they win. Or maybe they always win because they submit bids and jack up the price later. Frustrating, right?

When you don’t win a proposal, you feel like a loser. You might do the “sour grapes” thing, saying you didn’t want the project anyway.

But you should know that a lot of your competitors are pretty messed up, if you were to look under the hood.

Your competitors are NOT doing as well as you imagine

A friend asked me for feedback on two web proposals he got for his company from two digital agencies. Both firms touted being “award-winning” agencies.

The awards obviously weren’t for their sales skills—their proposals were terrible.

Agency #1: Meaningless “custom” advice

One agency had sent a generic proposal that spent 70% of the time talking about how wonderful they were. The remainder was meaningless commentary masked as customized recommendations—like how they recommended building the client’s site in PHP, .NET, or ColdFusion. Really? That’s like saying, “We’ve evaluated your car-buying needs and we think you should buy a Toyota, or a Ford, or a BMW. Yes, one of those will be perfect for you.”

I totally understand not wanting to make recommendations before getting paid, but then have the guts to say it. Say, “We can’t recommend a specific CMS for your project until we evaluate your needs, but we have experience in three of the four major technologies available.” Don’t present generic comments as custom advice.

Agency #2: Reasonable price increases… or bait and switch?

The other agency had met with him several times. They’d succeeded in selling him a $2K starter project, creating a set of functional specs. I’m surprised they didn’t try to upsell him some wireframes, but from a technical perspective, the specs actually weren’t too bad.

The problem was, my friend was frustrated that every time he talked to the agency, they kept raising the project estimate. Their first proposal said it would be $20K. Then they updated that to $35K. After they did the $2K functional specs projects, they upped their proposal estimate to $60K.

He said, “It feels like the longer I talk to them, the more they’re going to charge me!”

I explained that this was common—the more an agency learned about what he had in mind, the more they realized that it was more complicated than they originally expected.

But I do think they lowballed him in their first estimate. His project obviously sounded like a $50K+ website—there’s no way they could delivered his scope for their original $20K figure.

On top of that, they were recommending a blackbox approach to SEO—basically, “trust us… we’ll take care of everything… for $3-5K/month.” I suggested he ask them the tools and approaches they had in mind, to assess whether they were whitehat or blackhat.

“No web PM experience required”

Curious, I looked at some job postings at the second agency’s website. Their Web Project Manager job posting required a few years of prior PM experience but said no web PM experience was required.

Really? If a web agency’s PM doesn’t have prior web PM experience, they’re going to be making all kinds of mistakes on your project’s dime.

Now I was even more curious. The company’s employee reviews on Glassdoor complained that the company provided minimal training while expecting employees to work long hours on poorly estimated projects.

That’s not a winning combination for happy clients or employee retention.

Best Places to Work… or a sweatshop?

Remember, you’re seeing the public face of your competitors, not what’s really going on behind the scenes.

A third agency locally has won a lot of awards, including “Best Places to Work.”

They’re not a client of mine (if they were, I wouldn’t be talking about them here!), but I know a lot about their operations. They also have a reputation for being a sweatshop that surveils its employees, fires people after the slightest misstep, practices unsound approaches to web strategy, and (yes, again) lowballs bids.

A former PM described their approach to me as:

“You sell them the project for $25K knowing it’s going to cost more. Then when you run out of budget, you have to tell them they can walk away with the unfinished project or cough up another $20-25K if they want you to finish what you sold them. Most people end up paying, since they feel trapped.”

That’s a terrible way to do business—for the client and for the agency employee who has to enforce unethical business policies. Poor estimates are fine—they happen. But to intentionally use misleading estimates? That’s just dishonest.

Yet in the meantime, the agency keeps winning “Best Places to Work” awards.

Comparing yourself to others: Catching up, like the bear in the woods

Like the bear in the woods, I think the sweatshop agency’s bad business practices will eventually catch up with them—it’s already hurting their reputation for sales, client service, and employee retention.

When it comes to comparing yourself to others, you might find it reassuring to know that almost any competitors’ private reality is less shiny than its public facade.

Focus on continuous improvement at your digital agency and you’ll beat the bear.

Book Cover: "Work Less, Earn More" by Karl Sakas

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