As companies are making their first cautious steps towards a comeback, founders try to evaluate the outcomes of the lockdown as well as the future impact of the economic recession. So, the question is in the air: how to minimize the losses? Outsource sales might be one of the answers.
Outsourced sales at quick glance
Like any business process sales can be outsourced to an external provider either entirely or partially. This practice has a lot of advantages for companies, for example cutting costs. There are, however, many concerns associated with it.
There are two main outsourced sales models:
1. Full-stack outsourced sales model
Providers manage the entire sales process from lead gen to closure. Full stack is great for start-ups especially technology companies that have no time/budget to hire an in-house team.
2. Mixed outsourced sales model
A company entrusts a certain part of a sales process to a provider. There are several types of a mixed model:
a. Vertical.
Sales funnel is divided into 2 parts (stages-wise), one managed in-house the other one externally. As a rule of thumb, the top of the funnel (aka lead generation) is given to the provider that passes qualified leads or appointments to the internal sales team.
Outsourced lead generation is perfect for a rapid go-to-market as well as companies with significant seasonal changes in sales, for example, firms that generate leads predominantly at the events. It feeds internal teams with high-quality leads enabling them to focus entirely on selling.
b. Horizontal.
Companies have both internal and external teams that operate simultaneously. They can share one market or divide markets depending on the needs of the company.
This strategy is great for growth, expansion, testing new products, and sales strategies. A horizontal mixed model is believed to create competition and thus motivate the internal team to do their best.
с. Geo-related.
It is often applied by multinational companies. They have an internal team at their headquarters that works exclusively on the domestic market. However, they hire local providers in order to minimize risks and cut costs.
Benefits of sales outsourcing teams
1. Financial benefits of outsourced sales
Cutting costs has always been the number one reason, why companies decided to outsource. With the 2020 economic recession, this necessity becomes even more crucial.
There are several financial benefits associated with sales outsourcing:
a. Salary
Rep salaries are the first thing that comes to mind when we talk about cutting direct costs. However, the expenses on managerial work necessary for building and running your own team are even greater.
Sales outsourcing teams reduce them by picking favorable locations with lower wages (inside or outside the US). One more way to reduce expenses is to assign several sales project to one manager. Finally, because they have large sales teams, they might create a hierarchical structure with junior and senior reps and build a sales cycle hat enable to manage and control work more efficiently and easily.
b. Rent & office
Location gives a possibility to significantly reduce rent costs, hardware, and office support.
c. Hiring & training costs
The average ramp time of a sales development rep is 3 months and the tenure is 1,5 years. About 15% of SDRs who were promoted to AEs in less than a year after joining a company fail at their new position and get fired.
Meanwhile the average onboarding period for outsourced sales companies is 2 weeks to one month (depending on the scope of work, the complexity of product, etc.)
d. Techstack
The providers of sales managed services have up-to-date software which has become increasingly topical in 2020. They cut costs by purchasing subscriptions in bulk (for large teams) or sharing one account between multiple reps.
2. Expertise
Expertise comes at a price, but not in the case of managed sales services. There are several areas where you get their expertise:
a. Experience with your type of product/service, market, industry, type of clients.
b. Providers have the database of clients they worked with before.
c. Management expertise
d. Sales process: to operate more efficiently, most providers have built sales processes and trained reps respectively.
3. Timesaving
As we mentioned above the hiring and ramping time are high in sales. So is the churn rate. For a business during the recession, this literally means losing sales velocity. You should also take vacation and sick leave into consideration.
Sales outsourcing onboards more quickly. In case of churn, vacation, or disease, a rep is immediately replaced by his/her teammates. The working process goes on.
4. Scalability and flexibility
Being extremely important, scalability is the sales’ Achilles heel. There are many ways to scale sales, but at some point, in growth to sell more you need to hire more professionals which requires time. Sales outsourcing gives you an opportunity to scale almost immediately.
However, nowadays with the uncertainty around quarantine and epidemic waves, it is even more important to be able to “shrink” rapidly. This is next to impossible with hired reps. However, it’s a normal practice for outsourced sales.
Here’s an example. A biotech company wanted to penetrate a small niche market quickly with their new product. They hired an outsourced sales development team to get new potential clients. In a month or so, their sales team got so many leads that they had to stop the cooperation for some time. The company returned to the provider in a year and hired them one more time for 2 months. Needless to say, that they would’ve had to keep an in-house SDR team all this time.
5. Expanding to new markets
Be it a new product, a new region, or a new ICP for your company, an outsourced sales team can build a sales process from scratch within a short time.
Since the costs are low and you can withdraw any moment, you have more opportunities for experimenting and testing a new strategy.
6. Accountability
One of the key concerns around outsourced sales is the lack of control over the external team. However, good providers compensate this with weekly/monthly reports.
7. Risk reduction
Outsourcing sales team will take from you many risks associated with building and managing sales teams, for example, the risk of hiring the wrong person. If you want to expand to a new country, hiring a local provider can be of great help since they know the legislation, local economy, business rules, and all the related risks.
How do you get started with outsourcing sales?
1. Define your goals
Do you want to expand to new markets? Do you have a new product or service? Or maybe your goal is to test a new sales strategy?
2. Choose the model of outsourced sales you’ll be using
Will you use full stack? Or will you outsource only lead generation? It heavily depends on the sales goals of your company.
3. Pick a provider that fits your goals
We suggest picking a provider based on the following criteria:
- Expertise in your industry
- What software they use
- Monthly subscription (in this case you will be able to stop cooperation any moment)
- Outsourced sales model (full-stack or lead gen)
- Reviews from companies like yours
- ROI calculations
Bonus: 3 tricky questions to ask your outsourced sales provider
1. Can you describe your sales process step by step?
It’s crucial that you’re on the same page with your provider. You most likely wouldn’t want to work with a company that takes 3 million contact base and simply calls everyone on the list.
Remember, multichannel outreach, education, personalization and targeting work best in sales these days. Your own impression from the sales process plays an important role too. Do you like how they reached out to you (if that was the case)? Does their sales process include an education curve? Most likely, they will organize your sales process in the same way.
2. How do you define results and KPIs?
You need to make sure that you are on the same page here. It often happens so that clients do not obtain what they expect from providers simply because they didn’t discuss and define KPIs in the very beginning.
Some of the KPIs include number of appointments, number of deals close, the generated revenue.
It’s also important to check if the promised results are realistic. For example, law industry is one of the toughest when it comes to lead generation. The number of leads generated per month by a single rep here is one of the lowest.
Our best advice here is to ask several providers and lookup for industry-related data on the internet.
3. How do you report?
It’s important to see how often they send the reports and what data is included in them. Do they include the KPIs that your company defines as crucial to the report e.g., conversion rate?
Summary
Outsourcing sales is an efficient way to cut costs on the selling process while retaining its quality and the expertise of reps and managers. It helps you test new strategies and market response to a new product. In the COVID turmoil, it can help you rapidly scale your sales up and down depending on the current situation.
