“With the web design service industry a $20.1B market in the US alone, and more than 16M new websites added every month, who creates these millions of new sites? More than 70% of websites are created in a professional process by developers using pro-developers platforms. These B2B solutions offer tools for building advanced websites including custom design and CMS (Content Management Systems), such as WordPress, Joomla and Drupal.”
While 70% of websites are built by developers, agencies, and freelancers, only 3% of websites are built by small-businesses with self-serve DIY tools like Squarespace, Wix, and Weebly. The DIY model has barely putting a dent in the website building market, despite aggressively building out features for over a decade.
Businesses have rejected DIY tools
Why do businesses still depend on internal teams or service providers, ie agencies and freelancers, to build websites for them? Can’t these feature-rich self-serve platforms provide powerful, easy-to-use tools businesses need to build a site themselves, without needing to depend on “the web guy?” Shouldn’t building a website be as easy as setting up a Facebook page?
While some websites are simple and any luddite can quickly build them with existing DIY tools, many business websites are extremely complex and are custom built by internal teams and / or digital agencies for hundreds of thousands of dollars. Or millions.
And, many small businesses just don’t want to learn how to use DIY tools, or don’t care to, or have time to. They’d rather focus on their day to day business. Digital marketing is not their forte or interest.
The hybrid product / service approach
For the website building platforms, a potential cure for the stagnant growth problem is to add a services on top of their business model. Can these DIY tool companies provide both the professional design and development that clients demand while allowing customer to edit and update their websites? Can product companies or agency firms scale the agency model and find profitability?
Historically, the hybrid approach doesn’t work. The DNA of the product company is not flexible enough to be good at both product and services. Agencies are service organizations that think in terms of billing hours. Platform companies are product organizations that think in terms of roadmaps and features and sprints.
But research shows that businesses require both a “web guy” and the ability to quickly make changes themselves if a DIY platform. The key to success may be for a vendor to have the DNA of both a product and services company. In a recent survey of 400 small businesses, I found that 52% of respondents prefer the account management or full service vendor model. Only 27% of respondents prefer self-service.
Can existing website building platforms pivot to a hybrid model, or are up and coming startups more likely to leapfrog them by starting with company DNA that makes them strong at both product and services?
Strengths of product companies
Platform companies, like Squarespace, Wix, and Weebly, are product focused. They are obsessed with the user experience — the onboarding flow and intuitive self-serve editing tools. They they are hyper-focused on adding a never ending list of new features that empower businesses to add more functionality to their website. Their goal is to acquire users via search engine optimization (SEO) and scale their customer base with a horizontal set of features.
The holy grail of the platform company is to build an all-in-one website building platform that scales to support millions of businesses.
For these product companies, engaging directly with the customer is an unwanted expense. Yes, they are happy to offer some support and hand-holding, but they would prefer that their customers support themselves via tutorial videos and knowledgebase articles. Or chat with one another in community forums.
The focus on platform
For the product company, the technology and design platform they have built is their contribution. The rest is entirely up to customer who signs up and builds themselves. The goal of a product company is to iterate, improve, and optimize the user flow. Success comes from broadening functionality and minimizing bugs.
To a platform, the hope is that the next big feature gets them to product-market fit, adding a new wave of customers that have been patiently waiting for that magical feature.
Weaknesses of product companies
Platform companies are not good at the high-touch customer model. Or creative services, or project management of client projects. Basically they aren’t good at being digital agencies. And they are generally not interested in becoming agencies. They are in the business of product development, not customer project development.
Platforms in the website building space struggle with churn, despite offering a wide variety of product functionality. Platform companies are so focused on optimizing a product flow that they lose sight of the reality of the customer lifecycle. Small businesses launch and go out of business at an alarming rate. Paying a month subscription fee in perpetuity is not a good fit for them.
For more complex website projects, most of the money is made on the services side, not the platform side. For example Wordpress only makes a fraction of the revenue from each Wordpress project. The majority of the work and revenue goes to the agency that builds on Wordpress.
When a platform tries to become an agency
Platform companies want to help their customers, of course, but for as little time as possible. They rush through customer requests and try to get off the phone as soon as possible. From their perspective, each website build should only take a few hours. This approach won’t work for a high-touch customer. High-touch customers require lots of personal attention and custom coding, and it can be weeks or months before they’re ready to launch.
Platforms often fail if they find that they have to act like an agency for every customer. If every customer is high-touch, then the product is not succeeding as a platform. In that case, the only way to survive as a hybrid product / agency is to charge agency prices. Going upmarket can greatly reduce the number of clients they can acquire. Platform companies get into trouble if they try to charge both a services fee AND a subscription / license fee — the customer feels that they are getting charged twice.
Platform companies are often confused by the goal of adding service. Are services a new revenue stream, a retention tool to help reduce churn, or a sales acquisition strategy? It can’t be all three. Top priority needs to be customer satisfaction. The goal is to provide a solution that solves a real problem.
The next wave of innovation
A few new startups are trying to disrupt the stagnant DIY website builder market by offering automated services on top of a platform. The silver bullet could be just the right combination of product and service. And those services need to scale, so perhaps some degree of automated service is key — like a chat bot or questionnaires or 24/7 phone support. But for now, the website building market has rejected platformization, while the agency model is alive and well.
This post on the website builder market is part of a 6 part series: