Is it better to have a high-touch or low/no-touch approach when using sub-contractors in a service business i.e.should they speak to clients directly?


I have had very little success allowing subcontractors to talk directly to clients. As much as it's annoying to play telephone, typically the subcontractor has less skin in the game, less communication skills, etc., and it reflects poorly on you.

Answered 8 years ago

Working in this space, I can elaborate on this a little bit.

If your business model is around competing on price and all your competitors are very close to you in price point, you need to differentiate yourself. Providing a high touch service could be one way of doing it.

In terms of deciding whether or not the sub contractors should provide the high touch service, I would ask you the following question: are the sub contractors given any incentive to go the extra mile to provide that high touch service? If the answer is no, you should see if you can incorporate a customer feedback component into their compensation in the form of a kicker.

When you answer the first question about differentiation and the second question about the sub contractor incentive structure, I think you will get the answer that's right for you.

Answered 8 years ago

I work extensively in this space. I'd be interested to know how you progressed since writing the question since it has aged so much.

Answered 6 years ago

Hi David,

Thanks for your reply. There has been interesting progress in our business. When looking at the competition in my niche, almost all have stalled for growth at 2-3 subcontractors whilst we now have hundreds. My guess is that the admin of trying to be the "middle-man" was too much of a load and they didn't have the systems in place or a competitive enough revenue structure to sustain additional growth.

We do have a small amount of work that is lost due to subcontractors working directly with clients but the flip-side is that the rest of our workers feel trusted and stay with us for years.

Another factor we need to constantly consider is the amount of value we provide vs the percentage that we charge. People do have an innate sense of fairness and if they see you doing X amount of work and getting paid XX, then they feel more pressure to bypass the system. We tell our subcontractors and clients that our main role is to provide as much value as possible in the areas that we're good at in the transaction, providing the best systems we can (so the transactions are as smooth as possible) and then stay out of the way so they can build a relationship.

I hope this helps give an update. I've put together a course on marketplaces on Udemy that addresses more marketplace factors as it's been so interesting finding what works and doesn't work for us.

Answered 6 years ago

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