To build context for what you are about to read, please take a moment to read part 1 of our experience in outsourcing Martech solutions here: https://sogody.com/updates/sogodys-experience-in-outsourcing-Martech-solutions.
The challenge that first comes to mind when outsourcing services is the high difficulty of market penetration, especially when most of the activities that lead up to a contract or relationship forming tend to happen mostly within that market presence.
For example, if a brand needs to improve its digital shop’s performance, they scout for a company that offers the solution within its vicinity, mainly for ease of communication, trust in the expertise and ability to control from close the progress of such collaboration. Especially this would be true on a Conversion Rate Optimization (CRO) project, considering the set-up costs of an experimentation program, the heavy influence on the brand’s decision-making, and just being able to freely pursue strategies at the risk of impacting end sales. Considering all these factors, Sogody being in an outsourcing model meant our only edge remained the cost-effectiveness, which as every day passes, keeps being less and less of an edge due to an overall increase of costs in tech operations.
Our initial strategy when growing our business model was to seek a D2A2C (Direct to Agency to Client) partnership, rather than a D2C (Direct to Client). When involved with an Agency, we would be only the technical partner to such an offering and would not have to deal with the strategic decision-making, user experience designing, and the promise of uplifts in KPIs and ultimately conversions which would result in higher sales for a particular brand. This strategy was a no-brainer for our beginning since we simply lacked expertise in Strategy, UX, and data-reading. We were only competent to get experiments coded for production.
This proved rather a great strategy from a simple sales perspective, but it was limiting in the sense that we were only able to deliver as much as the capacity of the strategist at the Agency to come up with ideas that we would then implement.
But how would we have complemented the strategist from an outsourcing position? A strategist is rather key to the decision-making in the lifecycle of a CRO project, making it a very valuable role hence it made sense for the strategist to be someone on site that would work closely with the marketing teams or the CMO of a brand that is doing experimentation on their e-com.
In the D2A2C model, through our UX/UI Lead, Shkumbin Maxhuni, who in many cases did take temporarily a vacant strategist role with our clients, we tried to push the idea for an outsourced strategist who would act as a right-hand to the strategist teams but with additional responsibility, the delivering of high-fidelity designs for each experiment. Even though this enticed many of our clients at the beginning, with the passing of time, we found our idea would get relegated to only the UX/UI portion of the contribution, rather than giving a full-fledged strategic input. (Side note, Shkumbin gave great insights at optimizing UX here https://sogody.com/updates/ux-friction-how-to-avoid-the-mistakes-and-optimize-your-ux)
Noticing the trend, we found that in working with Agencies, the core service we would be able to outsource was mainly our expertise in the development and even this might put a question mark if such an agency decides to adopt a combined development effort with the end-client.
Surprisingly enough, with a growing base of clients with who we work without an intermediary, known as D2C, we found ourselves to be able to outsource most of our internal expertise, including strategy, user experience design, development, tag management and analytics.
That is because compared to an agency with pretty infinite internal resources, a direct approach with a client meant we could extend our services to the point where we would work on the entire CRO project lifecycle. We found that by working with the entrepreneurs directly and involving them in the strategic findings and decision-making, contrary to the Agency model, they would have ownership over the entire experimentation process, which would not only serve them an uplift in KPIs which results benefited the business, it would also equip them with the knowledge of understanding their online store a little better each time we would launch a new experiment, which has an even greater impact in the longer run. You can read the D2C case study of a successful experiment we strategized and delivered for Every. for increasing the Average Order Value, linked here: https://sogody.com/work/aov-increases-through-conversion-rate-optimization.
Even though in this model you’d think we would be able to sell more of our internal expertise stack, it would come only natural that D2C experimentation programs would have a way smaller scale than those we deliver for a larger end client through an Agency.
From a business perspective, when comparing the 2 models, you could still make a pros vs. cons argument against both. One thing in common is that neither model is truly activating and absorbing all of Sogody’s expertise stack. Therefore, we’re left with the conscious decision that outsourcing Martech solutions, which to us involves the entire lifecycle of delivering marketing programs powered by technology for companies, either be it email or CRM automation, experimentation or data dives is simply not going to be a one shoe fits all and we will continue having the constant problem of juggling between our limited in-house talent to fit certain client needs.
So what’s next for Sogody’s Martech involvement? Is offering a hyper-focused solution an optimal method of growth for us? I will be exploring this and our inadaptability to body-leasing in the next series.
Lorik Mullaademi, Executive Lead at Sogody
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17 July 2023
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