11 lessons learned from a white label failure

‘White label’ is when another business on-sells your service and they get the kudos.

We’ve spent 4 months trying to white label our WordPress support service to agencies, developers and hosting companies.

This post will outline the challenges we faced with white label and we hope it’s useful for you in your business. As a bonus, we’ll reveal our final revenue at the end of the post… spoiler: it’s depressing.

Let’s get started!

1. You lose focus

focus

Trying to be all things to all people will make you lose focus. We already struggle with focus, so when we tried the white label model, we introduced a massive distraction we didn’t need.

Focus is the core reason why our business has started to gain traction.

We’ve locked in our price point, said no to thousands of dollars of web design work that doesn’t fit our model and doubled down on our core offering.

If introducing a new customer type feels like it will be a distraction, go back to what works. If your service solves a problem, you will get customers.

“Lack of direction, not lack of time, is the problem. We all have twenty-four hour days.” – Zig Ziglar

2. You lose simplicity

simple

24/7 WordPress support. Unlimited fixes. $69 per month. Simple!

Each web agency we spoke to had different needs. Some wanted chat support only. Another wanted monthly maintenance and maybe a few fixes. The majority wanted larger project work.

Agency owners have different problems than our core customers. They mostly wanted cheaper development and to pay per project. This transformed a simple offering into a very complex agreement. We struggled with different price points, different needs and articulating exactly who would do what work.

If you can’t explain the problem that your business solves to your customer, you’ve got a problem.

Keep it simple.

“Life is really simple, but we insist on making it complicated.” – Confucius

3. You lose touch with your end customer

customers

A quick way to blow away your assumptions is to ask your customers what they really care about. We do this frequently and it keeps us on our toes.

When you put an intermediary between yourself and the end customer, you don’t get the opportunity to build a relationship or improve your understanding of your customer’s needs.

When you take the time to find out what matters to a customer, you can do more of what makes them happy and less of what they don’t care about. This customer feedback helps us to build plugins and create useful content that people actually use and share.

Your customer feedback loop is critical – don’t overlook it! Understanding what customers want is critical to your success.

“A satisfied customer is the best business strategy of all.” – Michael LeBoeuf

4. You are forced to compromise

compromise

We tried to tailor our WordPress support service to fit agencies needs and by default, were forced into a position of compromise.

When you work in a grey area with a completely different type of customer, your back will be against the wall as you try to force your way out by compromising on your core offering.

When you actively seek your ideal customer, it’s simple: they will pay or they won’t.

You don’t need to be desperate. If you have a good product or service, people will pay.

“Don’t compromise yourself. You are all you’ve got.” – Janis Joplin

5. You confuse the problem you’re solving

confused

We solve problems for business owners. We save them from wasting time on their WordPress site. We reduce their stress. We help them when they need it.

In a white label arrangement, the problem changes. We solve a financial problem for an agency. Most established agencies have developers who fix WordPress problems, but our differentiator is to do it faster and better, because it’s all we do. The agencies we spoke to weren’t interested in our  speed or the quality of our work. They were laser focused on price, because they can keep doing what they do and  retain their customers.

When your core differentiator becomes price, you’re in trouble… unless your name is Jeff Bezos and you run Amazon.

Solve the problems that your core customers have, everything else is noise.

“Don’t fight the problem, decide it.” – George C. Marshall

6. You compete with your customers

horns

There’s a fancy term for making a mess of your own market – it’s cannibalization.

The overwhelming response when we explain our service to some people, but in particular agencies and developers is:

“WTF? How do you actually provide unlimited fixes for $69 per month?”

There’s no secret to our business model, it’s in the open. We focus on WordPress support. That’s it. No SEO. No PPC. No design. This makes some people very uncomfortable, which is OK. If they can’t understand the model, that’s also OK. We’re not going to force it.

The problem lies in the fact that we are competing with the agencies we were trying to pitch to. That’s a hard sell.

Consider how long it takes to establish a good business relationship with a website client who’s had bad experiences and been overcharged by a few dodgy developers. It’s completely fair that agencies wouldn’t hand over their client sites, there’s a lot of trust involved.

Put yourself in the white label partner’s shoes and you’ll quickly realize if there’s product / market fit.

“Competition is not only the basis of protection to the consumer, but is the incentive to progress.” – Herbert Hoover

7. You lose momentum

stop

The sales cycle for a white label customer is waaay longer than for a small business owner.

A white label customer will seek input from their business partners or want to see a proposal. On the other hand, a small business customer will make a decision which is based on whether our service is a good fit or not.

I spent 2 hours on the phone and worked through a thread of 45 emails before I was turned down by an agency owner for a whitelabel agreement.

Our ideal customer visits our homepage, reviews our blog, reads some content and compares our offering to the alternatives. If our service makes sense, the deal is done. BOOM! Instant sign up – they get access to us, we get paid and everyone is happy.

In the early days, our assumption was that it would be much easier to sign up 1 agency with 20 customers, than sign up 20 individual businesses. That was wrong. Dead wrong.

The other area that will be impacted is your motivation – it’s disheartening to spend weeks trying to sign up an agency with no result. Every business owner we sign up brings us closer to our goal and boosts our motivation.

“Sometimes thinking too much can destroy your momentum.” – Tom Watson

8. You want a testimonial? Good luck!

thankyou

Customer testimonials are gold.

Here’s a shining example of a customer testimonial, directly from our amazing client – Selena Tan.

“Ever get driven nuts by niggling website issues or changes you want to make that take up too much of your time, or that you simply don’t want to deal with? Enter WP Curve: Alex & Dan’s team is incredibly friendly, easy to communicate with, don’t hesitate to give their best advice, and follow through on requests without fuss. Simple, expert, done.”

You know what you will get in a white label agreement…”Attaboi”

You’re not put in a position to amaze a customer, so you don’t get to reap the rewards of feeling like you’ve done a good job.

Goodwill and word of mouth is another critical factor for rapid growth in the early stage of your business.

You’re doing the work, so make sure you get the praise!

“Courteous treatment will make a customer a walking advertisement.” – James Cash Penney

9. You devalue your service

cash

We stripped out each service and tried to cost each component on an individual basis.

It also torpedoes the value of your service. It muddies the water of what your  service is and gives an opportunity for negotiation, which quickly deteriorates to haggling.

Our business model is reliant on a high volume of customers at a low margin, so when we started costing individual components – we were on a razor’s edge.

Doing this to your product or service is a terrible idea – please don’t do it.

“Price is what you pay. Value is what you get.” – Warren Buffett

10. You have to manage unrealistic expectations

angry

In a past life, I was a IT consultant for large Australian companies. One thing I learned was that when everything is going well, you don’t hear a peep from anyone, good or bad. However, when something goes wrong – you need to drop everything to fix a non-urgent issue.

Based on our lengthy conversations with a number of agency owners, we realized that supporting agency clients who are paying a substantial monthly retainer would be difficult and is not a position that looks very comfortable.

If you feel like your client is going to have unrealistic expectations, set them up front.

“Personal satisfaction is the most important ingredient of success.” – Denis Waitley

11. You put all of your eggs in one basket

eggs

There is a lot of financial risk borne by a service provider who has one or two big clients.

Financial certainty helps me sleep at night, so if 30% of our revenue was at risk every day… well, I wouldn’t be getting much sleep.

Barring catastrophe, it’s unlikely that a large percentage of your customer base is going to churn over the course of a month, let alone a day.

Try not to be seduced by the siren’s song of a big payday, as you might find yourself on the rocks!

“It is better to risk starving to death then surrender. If you give up on your dreams, what’s left?” – Jim Carrey

Post-mortem

The net benefit to our business was $49 revenue for a single one-off fix for an agency. During that time we signed up 100 businesses for our standard service.

The lessons learned are priceless.

If you’ve read this far, Dan and I would love to hear your thoughts in the comments below, on white label and if it’s worked for you.

“White label is when another business on-sells your service and they get the kudos”. CLICK TO TWEET THIS

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Locking horns Image from here. Thankyou image from here. Customer image from here. Compromise image from here

About

Hi, I'm Alex McClafferty. I'm the co-founder of WP Curve.

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