Jun 5
Posted 11:28 am, 5th Jun 2008 2 Comments

A number of years ago, I had an idea. I wasn’t going to take the usual route of getting a good, formal education and then setting off on a long, winding career path for the next forty or fifty years of my life (maybe more as the state of pension schemes in this country go from worse to worse still). I didn’t fancy that.

I decided I’d rather be a multi-millionnaire by the time I was twenty, whose biggest concern in life would be where to moor up the yacht in Moncao harbour. How was I going to do it? I was going to start my own web design business. What I life I was going to have - jetting all over the world, first class, visiting my lucrative clients. That’s right; New York, Paris, Sydney - the world would be my oyster.

Of course, none of this actually happened. The closest I got to jetting off to the Big Apple was when visiting a small business in Coventry, courtesy of a standard fare GNER train ticket. The millionnaire thing never quite took off.

The reasons for this? Naivity was one, that’s for sure. More importantly, I had a distinct lack of understanding about how to win, deliver and ultimately keep business.

I ultimately failed in this episode of my life, and swiftly moved on. To tell you the truth, I’d almost forgotten all about it until I bumped in to a young man recently - he reminded me very much of myself all those years ago. With a little more experience and nouse under my belt these days, I thought I’d offer a few words of advice to anyone else who may find themselves in a similar position. Here goes…

So, this young fellow I met recently; let’s call him John. Now, John’s been working as a freelance web site designer for the last five years, and doing pretty well in the process too. He’s highly skilled, having graduated with flying colors from a prestigious University, not to mention courteous. There’s no job too big, nor too small, for good ol’ John.

But just recently, it seems as though he’s hit upon a snag. A rather big snag as it happens. All of his prospective clients are deciding to take their business elsewhere. Worse still, many of his existing clients are following them out the door. Where are they going? Are they opting to work with a bigger, more established design agency who can offer a better quality of service? Far from it.

His clients are taking the cheap option. Seemingly out of nowhere, a raft of part-timers and amateurs have crawled out of the woodwork offering web design services for a third of the price John charges. And who can blame them. After all, a web site’s just a bunch of text and images slung loosely together; a kind of electronic leaflet. A web site’s a web site, isn’t it?

Of course, both you and I, with the benefit of being in the midst of the web design industry know that’s just not true. But John’s clients didn’t. Nobody told them. John certainly didn’t tell them, he just got on with the job of making the best web sites he could.

And therein lies the problem. His clients weren’t provided with enough tangible information required to make a decision based on anything other than price. Generally speaking, when presented with the choice of two things I can only perceive to be the same, I would always go with the cheapest. In that respect, John’s clients are no different to me. They made a choice based entirely upon the only criteria available to them.

Does this, perchance, sound a bit like your own business? If it does, don’t fret.

Fortunately, it’s very, very easy to stop this from happening and to take your business to the next level and beyond, and beyond. First things first, stop selling ‘web sites’. Seriously, stop it, right now. Instead, start selling ‘marketing tools’. The potential goals of a so called web site are many and varied - it’s very difficult to define, in a nutshell, ultimately what a web site should do. The primary goal of a marketing tool however is very clear - to make money.

And that’s a powerful thing, right there. Your clients might never fully understand web sites and the internet, however much you try to educate them, but I’ll bet you something; they understand money. So stop talking in HTML, PHP and JPG’s and start talking in cold, hard cash.

There’s a reason that there are larger, more profitable web design agencies out there than John’s. There’s a reason they’re not being undercut by teenagers, sat in their darkened bedroom, building ugly web pages in Front Page 2000 for next to nothing. There’s a reason they’ve got the business of the big juicy, ‘million dollar’ clients who spend in excess of $100,000 a year with them.

One simple reason. Because they take the time to accurately demonstrate ROI - Return On Investment. And there’s a reason that these big, juicy clients would rather spend $100,000 with these successful agencies than spend $1,000 with John or $75 with the enthusiastic but rather spotted.

BECAUSE THEY GET MORE MONEY BACK!

Let me show you an example:

A. John wishes to charge $1,000 for a web site / marketing campaign / whatever. For every $1 the client spends, he’ll get $1.20 back. This makes him a total of $200 profit.

B. The successful design agency wishes to charge $50,000. However, for every $1 you spend, you’ll get $5.00 back. In this case, you make a profit of $200,000.

Assume for a second that you’re the marketing director for a large organization with a large budget - which option do you take? The cheap option, or the one that makes you 10,000x more? I’ll let you answer that one for yourself.

The question is, how do you demonstrate this to your clients? You can try just telling them if you like, but there’s a good chance they just won’t believe you. Instead, you could back your case up with facts and figures. If there’s one thing my experience with large organizations has taught me, it’s that they like facts and figures.

Of course, design is a subjective and very visual beast, but it can be converted quite easily into numbers. When pitching for the project, make sure you get as much information as possible, particularly traffic volumes, average sales values and conversion rates. If you cannot get this information, make a realistic estimation based on any industry information you can find through research (Whatever you do though, don’t just guess!).

Let’s pretend that a potential client has come to you to talk about doing business with you, and has provided you with the following information:

- 10,000 monthly visitors
- Conversion rate is 2.5%
- Average sale value is $200

From this we can understand that they make the following:

- 10,000 visitors converting @ 2.5% = 250 sales / month
- 250 sales x $200 (average sale value) = $50,000

Review their site in detail, make sure to note down every element which could impact visitor levels and conversion rates. Go back to them and explain that with your expert design services, they can expect that conversion rate to increase to 5% (or whatever you feel is realistic based on your own abilities).

With just a marginal increase in conversion rate, the client will make the following:

10,000 visitors converting @ 5% = 500 sales / month
500 sales x $200 (average sale value) = $100,000

They’re now making an extra $50,000 per month, simply from a site re-design. You can be sure that the part-timers and teenagers and won’t be taking this approach. They’re now irrelevant. Their pitches of $75 or $300 are no longer important - the client now understands that to make the most money, they must spend a bit more in the first place. And because of their newfound understanding, spend they will. In abundance.

With those competitive bids now out of the picture, you can bid effectively what you like. Let’s be conservative, instead of your usual $1,000 quote, go in at $25,000. A lot of money? Not at all. The client’s new web site now makes an extra $50,000 a month, so that initial $25,000 stake is entirely recouped in just 15 days!

And trust me, everybody’s happy with that. Especially John. His biggest worry in life now is whether he picked the right colored Ferrari. Ain’t life tough?

Comments: 2 Responses
  1. Eric
    2:12 am on June 12th, 2008

    I absolutely love this article. As a new freelancer who started my own agency only months ago I find the advice greatly valuable. Thanks so much - Eric

  2. mark
    11:36 pm on June 17th, 2008

    Great article. Think I’ll try it myself. Very interesting stuff.

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