In this short week, we examine the in-house-vs.-agency debate from a few angles. Today’s: when to outsource (in this case, CRO).
You’ve made it a priority to focus on [insert one of the following]: growth, optimization, CRO, personalization, experimentation. Should you assign this to an internal team, or work with an agency? I work for 3Q Digital, so you might say that I’m a little biased on the agency side, but I feel qualified to write this post because I’ve been where you are now, and I have first-hand experience in what happens if this isn’t done right. Spoiler alert: it’s bad. It costs time, resources, revenue, and worst case, your job or company.
Let Me Explain
In a previous life at a previous job, as a young Marketing Manager, I was tasked with “growth” (interchangeable in this case with optimization, or CRO), by the VP of Marketing. This was to some extent decided in a vacuum, without full buy-in from the other team leads, whose experience was greatly skewed on the product side, not the strategy side.
The company I worked for offered a tool that appealed to a wide audience, from freelance to enterprise, with marketing responsible for revenue numbers for the former and sales for the latter. Purchases were down amongst our self-serve audience, paired with high churn due to:
- Lack of understanding of the depth of the tool
- A buggy interface
- The nature of the projects freelancers work on
It was an unsustainable situation and something needed to be done, quickly. In order to increase revenue, we needed to tackle the following areas:
- Increase free-trial signups
- Increase the CVR of trial signups to purchase
- Decrease churn
As a marketer whose experience was primarily content-focused, I considered this a new, exciting challenge. And boy was it a challenge.
The company was a scrappy group of 75 with limited hierarchy. Both the design and development teams were seated in Europe, with the sales and marketing teams in the US. The project started out optimistic enough but quickly resulted in deadlock. Despite having ideas to test, we were unable to implement any because of lack of development resources, buy-in, clear data, and overall support.
We kicked off and quickly fell into dysfunction. Around the same time, the company decided to completely rebuild the entire platform (back-end and front-end), and the developer assigned didn’t have time to implement the software we needed to test on the site. After months with no progress, it was decided that additional team members needed to be added in (a mix of US and European) to try and push the process forward.
What was meant to ease the process made it even worse. Despite having what appeared to be the minimum skills needed to be successful, we found ourselves in a “too many cooks in the kitchen” situation where there was no shared vision, siloed opinions, and multiple people vying for the role of “project lead” to have final say. Developers were switched in and out frequently as they were pulled onto new tasks. Having team members spread across different time zones, languages, and cultures, with differing department priorities, didn’t help.
When our US-side Data Scientist left the company, things got even worse. Decisions that had previously been determined by data were now made based on opinion. At one point, our VP of Marketing contracted a “Growth Consultant” to help. He listened in on calls for two months, provided no guidance, and was removed shortly thereafter.
Nearly 9 months after beginning our “growth” journey, we were finally able to push through our first real test. We revamped the pricing module, resulting in a 29% increase in ARPA (average revenue per acquisition). A huge win, but it didn’t come in time. Between the high cost of rebuilding the platform, and diminishing sales, the company had to downsize. The end result was a 20% reduction in employees, myself and the VP of Marketing included.
A lot of lessons can be learned from this case study; a million tiny decisions lead to success or failure for a company. However, had we been able to push through more winning tests, I can confidently say the end result would have been very different.
So with that in mind, I’m going to walk through my case for hiring an agency. However, regardless of the direction you are leaning, this post and my failure should help you avoid some pitfalls you may run into.
What Skill Sets Are Needed to Succeed with Optimization?
Optimization requires a wide variety of skills and expertise. You’d be hard-pressed to find one person who possesses all the necessary competencies, and regardless, it’s going to be a team effort. There isn’t one perfect number for team size, but there is a minimum set of skills:
- Analytics & Statistical Analysis
- User Research & Design
- Development & Testing Process
- Copywriting & Messaging
Let’s Talk Money
Of course at the end of the day, the goal is to get the highest return on the investment you make. Let’s break down the cost of hiring a full-time employee compared to a CRO agency, and what you’re getting for your money:
A solid CRO agency can run you in the range of $10-15k per month, or $120-180k per year. When you hire an agency, you’re getting fractional time from a range of different experts including but not limited to:
- A User Researcher (UX)
- An Analyst (quantitative research, test and tool setup, etc.)
- A Data Scientist (post-test analysis, statistical analysis)
- A Designer
- A Developer
- An Optimization Manager (client relationship owner, project manager, coordinator)
On the flip side, you could hire employees to create the team you need. Say you are confident you only need one of the following: a decently skilled UX Designer, Developer, or Data Scientist. As you know, hiring isn’t cheap. All costs considered, including recruiting fees, salary, and the additional benefits that contribute to the cost of an employee past just base salary (healthcare, 401k matching, etc.), you’re already in the same range you’d pay for the agency, for one single additional employee. There’s also the opportunity cost to consider for the time spent hiring that employee. Finding the right person could take months, and having one highly skilled person doesn’t guarantee success. In the end, an agency will cost the same or less than hiring, and you’re getting a much better spread of skills for your money.
There’s More to Consider
This is where everything comes full circle with the story from my previous company. We had all the individual skill sets we needed, but we still weren’t successful. We were missing some fundamental characteristics of a successful optimization program:
Photo Credit: https://imgur.com/ts8QiFV
1. A Culture of Optimization
At my previous company, we simply couldn’t get everyone moving towards a common goal. A good agency has a few advantages:
- Additional Resources: They have people on-hand to pick up development and design tasks. My team couldn’t get consistent development support. We didn’t have someone dedicated, it took months to get experimentation tools in place, and we lost a lot of precious time because of it. We also lost our data scientist, so even if we were pushing tests through how could we know we were accurately interpreting the results? An agency will have these people on hand to pick up the slack.
- Project Management: Agencies won’t work in a vacuum. They will still need support from people on your team, but good agencies offer a well-groomed Optimization or Project Manager who has worked with all different types of companies and knows how to overcome roadblocks, bring everyone together around a common goal, and share winning results that can get your company and executives excited about experimentation. My previous team didn’t have anyone steering the ship. Ego and opinion won out over data. There needs to be a general direction based on optimization fundamentals or chaos ensues, wasting valuable time. Agencies provide that.
Sometimes there are issues that an agency cannot overcome, whether it’s low traffic to your site or cultural roadblocks that are too great. A good agency will evaluate you. If these barriers exist, they will let you know so you don’t sink time and money into a project that will ultimately go nowhere.
2. A Formal Understanding of the Optimization Process
Successful optimization is more than testing. It’s about knowing what to test. It includes a formal process for researching customers (arguably the most important step in the process), hypothesis building, prioritization, and results sharing. A good agency knows how to shift as they go based on what they learn, and re-prioritize based on what will have the greatest impact. With this process, they are able to ramp up faster and push tests through faster.
One of the biggest lessons I learned from my past failure was how fundamental optimization is. As a B2B marketer, I had been used to lead generation. I would punt the ball to sales, and they’d take it from there. I wasn’t used to having such a direct impact on our bottom line. Terms like “growth” or “CRO” make it feel like these constructs are subset of marketing, in the same way content and social media are facets. But optimization is marketing. It’s how you understand your customers and fulfill their needs to buy. Growth is sales. These practices are the difference between surviving and thriving. Optimization is absolutely core to your business and should not be undervalued.
Optimization isn’t something to take casually, especially given the ramifications of failure. You want to create as much success as possible for as little money as possible. If you’re confident you can do this with an in-house team, then there’s no risk. If you aren’t sure, it’s not worth gambling on. Give yourself the best odds. With the right agency, you will get the return you’re looking for.
And hey, if you need a recommendation, I have a great one in mind…