The Labor Illusion in Agencies
How Operational Transparency Boosts Value
Having worked freelance and in agencies for 8 years, I’ve recently moved into an operational role, focused on improving processes and efficiencies. I learned fairly early on within freelancing that a great deal of work could be automated, optimised or templated without hindering the outcome, and in fact enhancing it. By not working from scratch every time, I had more time and effort to put into tailoring an end result. I was able to work with more clients, with less headaches _.
As most freelancers do, I started by billing hourly and then later moved on to billing based on projects. However, as I continued to automate, template and generally get quicker at things through practice, I found myself hiding these parts of the process from my clients. I wanted there to feel like a lot of love and effort had gone into each piece of work. It almost felt like I was cheating to be completing things so easily!
Now operating an agency, I see the exact same issue occur but on a larger scale. Often the easier you make something look or sound, the more potential clients will try and talk you down. In fact, we’ve recently had a client query a £700 bill for a piece of e-commerce functionality. The delivered functionality hit all criteria we established the client needed, was tested to spec and custom designed. So what was their problem? Because we used an app that they could have installed themselves. The situation here very similar to a fable of a locksmith being asked to itemise their £10k bill by an business owner who resented paying his fees for what seemed like so little elbow-grease;
“For turning a screw: £1. For knowing which screw to turn: £9,999.”
How is this used in UX?
This effect is known as the Labour Illusion, which says that people trust and value results that are shown to them after a delay, and based on the amount of effort that has gone into them. It’s seen very prominently as a feature being used in UX currently – the reason why at the end of a customised quiz on your diet you have a screen to say ‘working on your plan’ for 10 seconds before being displayed results.
The Labor Illusion effect has been tested in numerous experiments. On a website for booking trips, one group of participants saw the outcome right away without seeing the method. The other group was required to wait for 30 to 60 seconds, but after that time, animations on the screen of the website retrieving information for the user demonstrated the work being done by the website. Users ultimately preferred the second site due to the perceived transparency of being able to see the work being done, even though both returned the same search results.
Users need to feel like progress is being made in order to wait, so waiting alone is not sufficient. The Labour Illusion places a strong emphasis on showing activity and advancement. Grammarly promote the phrase “we are comparing your work to billions of webpages. It might take some time”. This conveys the idea that every word is carefully scrutinised. The customer then has a tendency to have more faith in the outcomes.
Though it may seem that people are less content when you make them wait a long time, this isn’t always the case. If a customer has to wait, they are more likely to be satisfied than if the outcome is immediate. They are better able to understand the value of their purchase.
How do I apply this to Agency strategy?
There are several ways to weave the Labour Illusion in to your agencies processes, and do so ethically. This needs to occur throughout the process – from sales right through to delivery. Although, like with the above example of the trip booking site, a faux mask of effort can be created, it’s important to not tread the line between not undercharging for having built the expertise and process which deliver the same results quickly and in outright lying about the amount of effort or man hours it will take.
Value based pricing:
Priced based on value Instead of billing by the hour, base your fees on the value you provide to the client. Why punish yourself after gaining enough experience to be able to work twice as quickly?
- Ensure your team are tracking time against tasks to get a measure of how long on average something takes
- Make sure to factor ‘risk’ into project pricing – even if something only takes 10 hours on average, if it’s a piece of work that may have complications, make sure to reflect this in the pricing
- Understand the figures – if you’re improving a form that converts £1.5mil of revenue a year, try to calculate what the estimates return of improving it by X% is
Show the value:
Understand the pain points your product or solution solves. First, frame the conversation around the value resolving this issue will take, rather than the process of achieving this. For me, part of the value of what I provide as well as what Wiro champion is, is the ease of process. We’re saving our clients time and therefore money through us making the process easy and as hands off as they like.
- Detail out the core value proposition of your product or solution – Specific to that client, what pain point have they come to you with? How much is it worth to them?
- Identify ways your agency adds value to the process and deliverable – What have you simplified? What have you alleviated from the client?
- Set the goalpost – agree on what is justified as a ‘good result’. By being transparent upfront with exactly what will be delivered and when, you can ensure the client is happy the cost is justified and on a mutual level of expectation.
Expose the Process:
This is key throughout! Too often I’ve seen teams working away in the background for weeks, but not communicating the progress throughout, so the client flips out and is angered by lack of it simply because they are no longer seeing or hearing about it. It’s super important to give clients clear overviews of the process for the broader project, and what to expect from the ‘what’s next’,
- Give weekly updates – even just a couple of lines goes a long way.
- Visualise the stages of the process in a dashboard for the client to understand at a high level where they’re at.
- Show sneak peaks – it’s worth getting your clients excited even when things aren’t quite ready!
- Do a project summary at the end to get feedback on every step – Understand more of what clients want to hear more about vs hear less about
- Champion your teams’ expertise! You’ve built a team of experts in order to make things easy
Summary
In many ways, the Labor Illusion promotes transparency and good communication – which are always the backbone of healthy client relations. Whilst it should not be extorted, by over-egging the amount of effort or time something will take in a faux attempt to justify more cost, agencies and indeed freelancers shouldn’t be afraid to include markup for their time efficiencies that have come from optimising
At the end of the day, everyone wants a good result for a good price. But that process of getting from A to B is super important. There’s a reason clients don’t hire 12 bunch of graduates for the same cost with the promise that they’ll get to the same result eventually – it’s a headache! They’re with you for the piece of mind that you know what you’re doing and that the effort and expertise is matched. So shout about it!
