Value Disciplines in Agency Development

    Agencies, web studios, optimizers and other companies in the Internet services market more often think about positioning the company than a year or two ago. The process of search and formation of positioning is “multi-faceted”, it can be approached from different angles and search for insights from different points of view. Working with clients of the Ruward project group (agencies and studios), we often use the approach of the value disciplines of Tracy and Virsema.

    We used to write about agency positioning rakes and web studio development paths. The “value disciplines” approach offers a similar view of the agency’s market position in three-dimensional space. It was proposed in 1993 by Michael Tracy and Fred Wirsema, who finalized Porter's classic basic models (price leadership, differentiation, and focal strategy).

    Fair value

    Any client of the agency incurs costs in the project, and different employees - different costs. The decision maker spends the budget and time, the project manager on the part of the customer - time and effort. The client also receives some benefits: a working project with good KPIs, promotion, points in corporate struggles. It is important that the client often perceives the benefit, rather than measuring it. For example, when a general website liked a promo site, but the exhaust from the advertising campaign was close to zero.

    When the perceived benefits exceed costs, we can talk about excellent value for the client, otherwise - about insufficient value. Consider a market segment, for example, for a service: website promotion, conducting an SMM campaign, and so on. Among his clients, a certain average idea of fair value is gradually forming : how much a service of a certain quality should cost with certain results. The more developed a segment (for example, web production), the better the fair value concept is formed among customers.

    Three value disciplines

    Tracy and Wiersema proposed three “value disciplines” - the axes along which one can assess a company's market position:
    • Product Leadership
    • Operational excellence,
    • Customer centricity.

    Product leadership in the case of the agent market is the provision of the highest quality services (whatever that means) or unique services. “We can make the most technologically advanced high-load site”, or “We have the coolest UI / UX”, or “Each of our viral videos gets at least X views.” Focus on innovation and R&D. A typical big business example is Apple and Johnson & Johnson .

    In the Russian market, these include Red Keds , which demonstrate "creativity of the highest quality" and confirm this with stories about their creative methods and organization of the creative process, as well as a training program on RBIs.

    Another example that got a sore point is “Artemy Lebedev Studio”. No, not because "long, expensive, oh% ^ € # but." Because when everyone tried to make "sites like Tema's," Tema did industrial design. And when everyone began to do "industrial design, like the theme", Tema took up urban navigation.

    Operational excellence - the provision of services with the maximum margin and minimum transaction costs. Often this means faster sales, unification of a product or service, implementation of operational and financial management systems. Focus on production and delivery efficiency. A typical example of a big business is Walmart and Dell .

    Companies striving for operational excellence include almost all the major SEO-optimizers: Kokos , Demis, etc. They typify and automate their services: from audits and sales to production. Another example is pipelined web production such as 2012 Reaspect or WebCanape . They keep (or held) a relatively low development cost, simplifying the chain of sales and coordination of intermediate results.

    Customer centricity- the provision of services that are maximally adapted for each client. It’s not just “We solve your business problems”. The manager of the client-centric company is able to understand that the task of the project is to increase the size of the “golden parachute” of the decision-maker after the presentation of the advertising campaign to the board of directors, and solves this very problem. Focus on the maximum satisfaction of all project participants, and not the "business" as such. A typical example of a big business is Nordstrom and HomeDepot .

    Surprisingly, we were not able to recall examples of truly client-centric agencies that would clearly state this on the market. Know these - write in the comments.

    For each of the three axes described, the company may be close to zero, or may have relatively high rates. At the same time, high indicators on one of the axes are likely to underestimate the indicators on the other two. An “operational excellence” company cannot be very customer-centric, as customer-centricity raises production costs, increasing the share of management in project costs. A company with a “product leadership” cannot be as “operationally perfect” as it has high R&D and in-house development costs, and also offers fairly high prices for its services.

    Whatever market segment we take, it has some customer perception of fair value in each of the three disciplines. “Fair service” from the point of view of the client has a certain quality of service and final product (“product leadership”), closure of the project at a certain time for a certain cost with certain management costs (“operational excellence”), and sufficiently meets unique requests customer ("customer-centricity"). This fair value for each axis is noted in the illustration above.

    It is important to remember that fair value may vary in different market segments. She is one among site customers for 30,000 rubles, another among brand managers of multinational companies, and completely different among state customers.

    Agency Development Strategy

    • Let's say you did some preparatory analytical work and found out:
    • Target market segment for your agency (range of services, pricing policy, niche in the client industry);
    • Perceptions of fair value in relation to “product leadership”, “operational excellence” and “customer-centricity”;
    • The position of your competitors regarding fair value in these three dimensions;
    • Own current positions that look like in the illustration.

    In other words, you offer a service of approximately average market content and quality, but you meet the deadlines above customer expectations, offer a very competitive cost of services and manage projects more competently than competitors. Unfortunately, at the same time you have to deny customers the opportunity to "play with fonts" or consider five options for a creative concept.

    Most likely, you will choose the strategy of strengthening the strongest side (“operational excellence”) and the positioning associated with it.

    Tracy and Wiersema say that it is impossible to develop along all three axes at the same time. As we said above, the three disciplines are interconnected and in some aspects compete. One can imagine that the company's positions on three axes are “tied with an elastic band”, and as soon as you drag up a mark on one of the axes, it “pulls” the other two down.

    Therefore, the most effective strategy involves choosing one key discipline in which you intend to surpass the market. Usually this is the strongest discipline at the moment. In our example, operational excellence.

    A short-term strategy (for a year) should provide for “reaching” a fair value along two lagging axes while maximizing the preservation of a strong side, despite the fact that the development of lagging axes will pull down a strong position.

    A long-term strategy (for three years) implies maintaining fair value in two minor disciplines, and building up positions in a strong discipline.

    Yes, these are abstract constructions: the market is constantly changing, including segments breaking up, new niches appear, and the client's idea of ​​fair value is changing. However, the value discipline approach is useful for looking at one’s own strategy and bird-eye positioning.

    Some guaranteed fallacies

    1. You can decide that “customer-centricity” is a synonym for “customer-centricity”, therefore the only right approach for an agency or web studio is customer-centricity. This is not true. Many agencies and productions, including those working with large brands, are typical "product leaders." HungryBoys , Freeger , Deluxe , a lot of them.

    2. You can decide that the right strategy is to immediately pump a strong axis. This is not true. You will have a relatively low NPS in the market , because customers will receive less value on the other two axes. It is wiser to position oneself with an emphasis on the strong axis, “pulling up” weaknesses in the short term.

    3. You can decide that the right way is to become leaders in two axes at once. Please write to us as soon as you succeed. This will definitely be the first case on the Russian market.

    4. You can decide that you can choose different leading axes for different products or services (“product leadership” for creative and web development and “operational excellence” for display advertising, tech support or SEO). Most likely, this will not work, because development along any of the axes draws a change in processes, sales, personnel management, planning and reporting, up to the leadership with which schizophrenia will happen.

    Related Links

    This article was prepared on the basis of the materials of the section “Management, Marketing and Sales in the Digital Agency: In Search of the Holy Grail” organized by Ruward at the conference “RIF + CIB '2014”.

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