Outsourcing sales is a growing trend and as a result companies are now able to subcontract any element from its sales process.
This has led to an increase in the number of lead generation companies offering a variety of, sometimes confusing, business models and methodologies with a range of prices and payment options available.
The decision for a company to outsource sales is often owing to its flexibility – it is easier to scale and manage than the hiring of new staff members. It is without a doubt that the recent recession and economic uncertainty have encouraged businesses to turn to outsourced solutions over increasing headcount.
To outsource or not to outsource?
Before taking steps to outsource, businesses need to be confident that the chosen company complements your current in-house sales process. It is vital that the sales company understands the skills and expertise your company holds. As a business, you don’t want to establish an external business development operation that doesn’t have the right knowledge to maintain the same professionalism or demonstrate the same level of understanding as you would internally.
To ensure you’re choosing the right company to take over any of your internal sales processes, firstly explore the market and take note of what costs and metrics other companies in the market are offering.
Taking the time to find the right partner will be very beneficial and avoid the risk of draining your internal resources. For example, if you are passed low quality leads not only is the budget on lead generation wasted but the internal resource is being committed to sales activity which will have little chance of closure.
Even if it turns out a company isn’t right for your business, it still gives you information to benchmark internal performance against, so make sure you explore what is out there!
What to outsource
Once you’ve decided to outsource and found the right partner, the next step is deciding which elements of your sales process are appropriate to subcontract.
This involves analysing your sales process and understanding which areas will be delivered most efficiently in-house and what could be more cost-effectively handled externally. Are there any bottlenecks within the process that take up a disproportionate amount of sales team time and reduce the overall flow of leads and opportunities down the pipeline? What are the skills gaps within the business and are there elements of the process that don’t meet your expectations?
It is also important to consider the opportunity cost – if the sales team displays above average performance at closing sales, but below average performance at generating leads, the lead generation activity is significantly reducing their capacity to close new business and is draining resources away from the areas where they should focus on.
When deciding which processes to keep internal, take into account where in the sales process more technical expertise is required, and therefore best delivered by those internal staff that hold this knowledge.
Finally, while cost is often taken as a deciding factor in whether to outsource or keep in-house it is important to also consider efficiency, flexibility and the kind of coverage that each can achieve. In addition, the managerial costs of training, managing and supporting the sales function are often underestimated, or even completely overlooked in the analysis.
Selecting an outsourcing model
There are a whole host of options on the market when looking at the best model for outsourcing, all with their advantages and disadvantages. When deciding which the most appropriate option is, it is important to take into account your target market, the products and services you are selling, how these are positioned and how they compare to competitor products available in the market – as well as what your objectives are in outsourcing.
An example of this is lead generation, as there is a range of options available – from telemarketing to online. Companies selling leads generated through lead capture websites will be selling this to multiple companies, but as the customer is already in buying mode, you know they will be actively looking at what else is available on the market. This differs to a telemarketing company, which offers an integrated lead generation service, as they should only be providing leads to you. If you are price competitive in a mature, relatively undifferentiated market – such as telecoms – the former can often provide the most cost effective route. On the other hand, while leads delivered from telemarketing may have progressed less far down the sales cycle, the exclusivity provides an opportunity to guide them through the process, thereby standing you in better stead than the competition.
The payment models available also vary – from commission based payment, price-per-lead models and daily rate options. Commission and price per lead models present a reduced risk, although they can result in outsourcing partners forcing through fewer suitable leads or sales. This can dilute your offering, potentially damage brand reputation and even lead to more fraught customer relationships longer term if they have not ‘bought into’ your ethos and values from the offset. Daily rate options present more risk and it is, therefore, important that the supplier you choose has appropriate experience. They should also provide the right assurances that they will get to know your products or services properly.
Finally, if you do outsource, manage the relationship in a way that works for you – for example, if you don’t want to be tied into a long term contract there are more flexible options out there which can work on a project-by-project basis.