{"id":324,"date":"2016-05-31T09:49:48","date_gmt":"2016-05-31T09:49:48","guid":{"rendered":"https:\/\/conversion.com\/managed-service-sucks\/"},"modified":"2024-08-14T09:14:20","modified_gmt":"2024-08-14T09:14:20","slug":"managed-service-sucks","status":"publish","type":"post","link":"https:\/\/conversion.com\/blog\/managed-service-sucks\/","title":{"rendered":"Managed Service Sucks"},"content":{"rendered":"<section class=\"c-post-content\" data-ref=\"case-content\">\n\t<div class=\"post-content\">\n\t\t<div class=\"post-content__container container container--medium\">\n\t\t\t<aside class=\"post-content__sidebar post-content__sidebar--links\">\n\t\t\t\t<div class=\"sticky-menu\" data-ref=\"case-content-menu\">\n\t\t\t\t\t<h3 class=\"sticky-menu__title\">Contents<\/h3>\n\t\t\t\t\t<ul class=\"sticky-menu\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t                            \t\t\t\t\t\t\t<li class=\"sticky-menu__item\">\n\t\t\t\t\t\t\t\t<a class=\"sticky-menu__item-link  active\" href=\"#softwareandservicesdontmix\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t<span class=\"arrow\"><svg viewBox=\"0 0 16 20\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M10.6875 9.34375V7.34375L13.3438 10L10.6875 12.6562V10.6562H2.65625V9.34375H10.6875Z\" fill=\"#F6876F\"\/><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t<span class=\"sticky-menu__item-text\">Software and Services Don\u2019t Mix<\/span>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t                            \t\t\t\t\t\t\t<li class=\"sticky-menu__item\">\n\t\t\t\t\t\t\t\t<a class=\"sticky-menu__item-link \" href=\"#softwareandservicedontscaleatthesamerate\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t<span class=\"arrow\"><svg viewBox=\"0 0 16 20\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M10.6875 9.34375V7.34375L13.3438 10L10.6875 12.6562V10.6562H2.65625V9.34375H10.6875Z\" fill=\"#F6876F\"\/><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t<span class=\"sticky-menu__item-text\">Software and service don\u2019t scale at the same rate.<\/span>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t                            \t\t\t\t\t\t\t<li class=\"sticky-menu__item\">\n\t\t\t\t\t\t\t\t<a class=\"sticky-menu__item-link \" href=\"#thecostofscalingservices\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t<span class=\"arrow\"><svg viewBox=\"0 0 16 20\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M10.6875 9.34375V7.34375L13.3438 10L10.6875 12.6562V10.6562H2.65625V9.34375H10.6875Z\" fill=\"#F6876F\"\/><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t<span class=\"sticky-menu__item-text\">The cost of scaling services<\/span>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t                            \t\t\t\t\t\t\t<li class=\"sticky-menu__item\">\n\t\t\t\t\t\t\t\t<a class=\"sticky-menu__item-link \" href=\"#theimpactontestresults\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t<span class=\"arrow\"><svg viewBox=\"0 0 16 20\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M10.6875 9.34375V7.34375L13.3438 10L10.6875 12.6562V10.6562H2.65625V9.34375H10.6875Z\" fill=\"#F6876F\"\/><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t<span class=\"sticky-menu__item-text\">The impact on test results<\/span>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t                            \t\t\t\t\t\t\t<li class=\"sticky-menu__item\">\n\t\t\t\t\t\t\t\t<a class=\"sticky-menu__item-link \" href=\"#theroleofmanagedservice\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t<span class=\"arrow\"><svg viewBox=\"0 0 16 20\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M10.6875 9.34375V7.34375L13.3438 10L10.6875 12.6562V10.6562H2.65625V9.34375H10.6875Z\" fill=\"#F6876F\"\/><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t<span class=\"sticky-menu__item-text\">The role of managed service<\/span>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t\t<\/div>\n\t\t\t<\/aside>\n\n\t\t\t<div class=\"post-content__content\">\n\t\t\t\t<ul class=\"post-content__sections\">\n\t\t\t\t\t                        \t\t\t\t\t\t<li class=\"post-content__section\" id=\"softwareandservicesdontmix\" data-ref=\"case-content-item\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h2 class=\"post-content__section-title\">Software and Services Don\u2019t Mix<\/h2>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-content__section-content\"><h5>Why you shouldn\u2019t buy services from your testing platform.<\/h5>\n<p>&nbsp;<\/p>\n<p>Split-testing software vendors have traditionally relied on their managed service to win and retain clients.<\/p>\n<p>From Maxymiser to Adobe, Monetate to Qubit, the managed service has been essential to their growth. Even today, most companies cite a lack of resource as the biggest barrier in their optimization program \u2013 and a managed service can help overcome that.<\/p>\n<p>Except most managed services suck.<\/p>\n<p>For software vendors, a managed service can throttle their growth and limit their potential. And for their customers, a managed service can lead to substandard results in their conversion optimization program.<\/p>\n<p>And as the optimization and testing industry continues to expand exponentially, this\u00a0is\u00a0only going to get worse.<\/p>\n<p>The core of the problem is simple:<\/p>\n<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-content__index\">\n\t\t\t\t\t\t\t\t<h3 class=\"post-content__index-title\">Contents<\/h3>\n\t\t\t\t\t\t\t\t<ul class=\"post-content__index-links\" data-ref=\"case-content-menu\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-content__index-link\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#softwareandservicesdontmix\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t\t\t\tSoftware and Services Don\u2019t Mix\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-content__index-link\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#softwareandservicedontscaleatthesamerate\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t\t\t\tSoftware and service don\u2019t scale at the same rate.\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-content__index-link\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#thecostofscalingservices\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t\t\t\tThe cost of scaling services\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-content__index-link\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#theimpactontestresults\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t\t\t\tThe impact on test results\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-content__index-link\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#theroleofmanagedservice\" data-ref=\"case-content-menu-item\">\n\t\t\t\t\t\t\t\t\t\t\t\tThe role of managed service\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t                        \t\t\t\t\t\t<li class=\"post-content__section\" id=\"softwareandservicedontscaleatthesamerate\" data-ref=\"case-content-item\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h2 class=\"post-content__section-title\">Software and service don\u2019t scale at the same rate.<\/h2>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-content__section-content\"><p>Scale is crucial to the success of software vendors. After all, most testing platforms have taken significant investment: Qubit has taken $75M, Monetate $46M, and Maxymiser was acquired by Oracle in August 2015.<\/p>\n<p>But it\u2019s challenging when these companies offer essentially two products \u2013 software and service \u2013 that scale at very different rates.<\/p>\n<p>With limited cost of sales, a fast-growth software vendor may expect to increase its sales 3\u20135x in a year.<\/p>\n<p>Look at the rise of Optimizely. Their product\u2019s ease-of-use and their partner program allowed them to focus on the software, not a managed service. And that meant they could grow their market share rapidly:<\/p>\n<h3><a href=\"https:\/\/conversion.com\/wp-content\/uploads\/2022\/06\/testing-market.png\" rel=\"attachment wp-att-650\"><img decoding=\"async\" class=\"wp-image-650 aligncenter\" src=\"https:\/\/conversion.com\/wp-content\/uploads\/2022\/06\/testing-market.png\" alt=\"testing-market\" width=\"599\" height=\"334\" \/><\/a><\/h3>\n<p>Between 2012 and 2015, they\u2019ve grown 8x.<\/p>\n<p>Now compare that growth to a marketing services agency. Even a fast-growth mid-size agency may only grow 50% a year \u2013 or to put it another way, 1.5x.<\/p>\n<p>If you combine software and service in one company, you\u2019re creating a business that is growing at two very different rates. And this creates a challenge for testing platforms who offer a managed service.<\/p>\n<p>They have three options:<\/p>\n<ol>\n<li>Move away from managed service to self-serve and partner-led growth.<\/li>\n<li>Attempt to scale managed service to keep up with software growth.<\/li>\n<li>Some combination of 1 and 2.<\/li>\n<\/ol>\n<p>Most will choose option 2 or 3, rather than going all-out on 1. And this choice threatens the quality of their managed service and their ability to scale through partners.<\/p>\n<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t                        \t\t\t\t\t\t<li class=\"post-content__section\" id=\"thecostofscalingservices\" data-ref=\"case-content-item\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h2 class=\"post-content__section-title\">The cost of scaling services<\/h2>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-content__section-content\"><p>To enable scaling \u2013 and to minimise costs \u2013 software vendors have to exploit efficiencies at the expense of quality:<\/p>\n<ol>\n<li><strong>They strip back the service<\/strong> to the absolute minimum. They typically cut out the quantitative and qualitative analysis that supports good testing.<\/li>\n<li><strong>They rely on cookie-cutter testing<\/strong>. Instead of creating a bespoke testing strategy for each client, they replicate the same test across multiple websites, regardless of whether it\u2019s the right test to run.<\/li>\n<li><strong>They load account managers<\/strong> with 10\u201320 clients \u2013 meaning the service is focused on doing the minimum necessary to limit churn.<\/li>\n<\/ol>\n<p>In short, to keep up with the growth of the platform, they inevitably have to sacrifice the quality of the managed service in the interest of making it scale.<\/p>\n<p>Let\u2019s look at each of these three points in turn.<\/p>\n<h3>#1 Stripped-back service<\/h3>\n<p>At its core, conversion optimization is simple:<\/p>\n<p><em>Find out why people aren\u2019t converting, then fix it.<\/em><\/p>\n<p>The problem is that the first part \u2013 finding out why they aren\u2019t converting \u2013 is actually pretty hard.<\/p>\n<p>Earlier this year, I shared our take on Maslow\u2019s hierarchy of needs \u2013 our \u201chierarchy of testing\u201d:<\/p>\n<p><a href=\"https:\/\/conversion.com\/wp-content\/uploads\/2022\/06\/hierarchy-of-testing.png\" rel=\"attachment wp-att-652\"><img decoding=\"async\" class=\"wp-image-652 aligncenter\" src=\"https:\/\/conversion.com\/wp-content\/uploads\/2022\/06\/hierarchy-of-testing.png\" alt=\"Conversion.com hierarchy of testing\" width=\"600\" height=\"351\" \/><\/a><\/p>\n<p>The principle is the same as Maslow\u2019s \u2013 the layers at the bottom of the pyramid are fundamental.<\/p>\n<p>Starting at the top, there\u2019s no point testing without a strategy. You can\u2019t have a strategy without insight and data to support it. And you can\u2019t get that without defining the goals and KPIs for the project.<\/p>\n<p>In other words, you start at the bottom and work your way up. You don\u2019t jump straight in with testing and hope to get good results.<\/p>\n<p>In particular, the layers in the middle \u2013 data and insight \u2013 are essential for success. They link the testing program\u2019s goals to the tests. Without them, you\u2019re just guessing.<\/p>\n<p>But all of this comes at a cost \u2013 and it\u2019s typically the first cost that managed services cut. Instead of using a similar model to the pyramid above, they jump straight to the top and start testing, without the data and insight to show where and what they should be testing.<\/p>\n<p>Ask them where they get their ideas from, and they\u2019ll probably say heuristics \u2013 a nicer way of saying \u201cbest practice\u201d.<\/p>\n<h3>#2 Cookie-cutter testing<\/h3>\n<p>Creating tests that aren\u2019t based on data and insight is just the start.<\/p>\n<p>To maximise efficiency (again, at the expense of quality), managed services will typically use similar tests across multiple clients. After all, why build a unique test for one client when you can roll it out across 10 websites with only minimal changes?<\/p>\n<p>Break down the fees that managed services charge, and it\u2019s easy to see why they have to do this.<\/p>\n<p>Let\u2019s assume Vendor X is charging \u00a33k to deliver 2 tests per month. If we allow \u00a31k\/day as a standard managed service rate, then that gives 24 hours \u2013 or 12 hours per test.<\/p>\n<p>At Conversion.com, we know that even just to build an effective test can take longer than 12 hours \u2013 and that\u2019s before you add in time for strategy, design, QA and project management.<\/p>\n<p>The cookie-cutter approach is problematic for two core reasons:<\/p>\n<ol>\n<li>They start with the solution, and then find a problem for it to fix. It\u2019s clear that this is going to deliver average results at best. (Imagine if a doctor or mechanic took a similar approach.)<\/li>\n<li>It limits the type of tests to those that can be easily applied across multiple websites. In other words, the concepts aren\u2019t integrated into the website experience, but are just pasted on the UI. That\u2019s why these tests typically add popups, modify the calls-to-action and tweak page elements.<\/li>\n<\/ol>\n<h3>#3 Account manager loading<\/h3>\n<p>This focus on efficiencies means that account managers are able to work across at least 10\u201320 clients. Even assuming that account managers are working at 80% utilisation, that means that clients are getting between 1.5 and 3 hours of their time each week.<\/p>\n<p>Is that a problem?<\/p>\n<p>At Conversion.com, our consultants manage 3\u20135 clients in total. We feel that limit is essential to deliver an effective strategy for optimization.<\/p>\n<p>Ultimately, it reflects our belief that conversion optimization can and should be integral to how a company operates and markets itself \u2013 and that takes time.<\/p>\n<p>Conversion optimization should let you answer questions about your commercial, product and marketing strategy:<\/p>\n<ul>\n<li>How should we price our product to maximise lifetime value?<\/li>\n<li>How do we identify different user segments that let us personalize the experience?<\/li>\n<li>Which marketing messages are most impactful \u2013 both on our website and in our online and offline advertising?<\/li>\n<\/ul>\n<p>Not \u201cWhich colour button might work best?\u201d<\/p>\n<p>Conversion optimization isn\u2019t a series of tactical cookie-cutter tests that can be churned out for your website, while 19 other clients compete for your AM\u2019s attention.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\n\t\t\t\t\t\t                            <div data-target=\"post-newsletter-anchor\" data-device=\"mobile\"><\/div>\n                        \t\t\t\t\t                        \t\t\t\t\t\t<li class=\"post-content__section\" id=\"theimpactontestresults\" data-ref=\"case-content-item\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h2 class=\"post-content__section-title\">The impact on test results<\/h2>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-content__section-content\"><p>It\u2019s not surprising that a managed service with a \u201cone-size-fits-most\u201d approach for its clients doesn\u2019t perform as well as testing strategy from a dedicated optimization agency.<\/p>\n<p>The difference in approach is reflected in results (and, of course, the cost of the service).<\/p>\n<p>But some managed services are misleading their clients over the success of their testing program.<\/p>\n<p>There are three warning signs that the value of a managed service is being overreported:<\/p>\n<ol>\n<li><strong>Weak KPIs<\/strong>: A KPI should be as closely linked as possible to revenue. For example, you may want to see whether a new product page design increases sales. But many managed services will track \u2013 and claim credit for \u2013 other KPIs, like increasing \u201cadd to cart\u201d. While it may be interesting to track, it doesn\u2019t indicate the success of a test. No business made more money just by getting more visitors to add to cart.<\/li>\n<li><strong>Too many KPIs<\/strong>: There\u2019s a reason why managed services often track these weak KPIs alongside effective KPIs, like visit to purchase or qualified lead. That\u2019s because the more KPIs you track \u2013 bounce rate, add to cart, step 1 of checkout \u2013 the more likely you are to see something significant in the results. At 95% significance, there&#8217;s a 1 in 20 chance of getting a false positive. So if you\u2019re testing 4 variations against the control, and measuring 5 KPIs for each \u2013 the chances are you\u2019re going to get a positive result in one KPI, even when there isn\u2019t one.<a href=\"https:\/\/conversion.com\/wp-content\/uploads\/2022\/06\/KPI-table.png\" rel=\"attachment wp-att-658\"><img decoding=\"async\" class=\"wp-image-658 aligncenter\" src=\"https:\/\/conversion.com\/wp-content\/uploads\/2022\/06\/KPI-table.png\" alt=\"KPI table\" width=\"599\" height=\"187\" \/><\/a><\/li>\n<li><strong>Statistical significance<\/strong>: The industry\u2019s approach to statistical significance has matured. People are less focused on just hitting a p value of 0.05 or less (ie 95% significance). Instead, strategists and platforms are also factoring in the volume of visitors, the number of conversions, and the overall test duration. And yet somehow we still hear about companies using a managed service for their testing, where the only result in the last 12 months is a modest uplift at 75% significance.<\/li>\n<\/ol>\n<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t                        \t\t\t\t\t\t<li class=\"post-content__section\" id=\"theroleofmanagedservice\" data-ref=\"case-content-item\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h2 class=\"post-content__section-title\">The role of managed service<\/h2>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-content__section-content\"><p>Managed service has a place. It can be essential to expand a new market \u2013 especially where the product\u2019s learning curve is steep and may limit its appeal to a self-serve audience.<\/p>\n<p>But the focus should always be on the quality of the service. Vendors can subsidise the cost of their service if needed \u2013 whether through funding or the higher profit margin in software \u2013 to deliver an effective optimization program.<\/p>\n<p>Then, their growth should come through self-service and partners. As above, service and software scale at different rates \u2013 and the faster a software vendor champions self-service and a partner program, the faster they\u2019ll grow.<\/p>\n<p>&nbsp;<\/p>\n<p><em>Disclaimer: I\u2019m the CEO of Conversion.com, an agency that specialises in conversion optimization. We partner with many of the software vendors above. While we have a vested interest in companies choosing us over managed service, we have an even greater interest in making sure they\u2019re testing effectively.<\/em><\/p>\n<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\n\t\t\t\t\t\t                            <div data-target=\"post-newsletter-anchor\" data-device=\"mobile\"><\/div>\n                        \t\t\t\t\t\n\t\t\t\t<\/ul>\n\t\t\t<\/div>\n\n\t\t\t<aside class=\"post-content__sidebar post-content__sidebar--form\">\n\t\t\t\t<div class=\"sticky-newsletter\" data-target=\"post-newsletter-anchor\" data-device=\"desktop\">\n                \t<div class=\"post-newsletter\" data-target=\"post-newsletter\">\n    <h4 class=\"post-newsletter__title\">Real-world growth experiments. In your inbox. 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