January 11, 2022
New year, new challenges.
Whether your company has ambitious revenue targets, sky-high sales expectations, or grandiose growth goals, the pressure is on. As a sales leader, you want to ensure your sales organization is running on all cylinders right out of the gate. But with limited internal resources, you might be wondering how to ramp up your output. Could outsourcing be the answer?
Think outsourcing is the perfect way to make your lead gen or sales red-hot? Hold up. Before you jump in and start pawning off parts of your sales process, there are a number of things to consider – like figuring out how outsourcing fits into your sales strategy, which sales function to outsource, or how to find the perfect outsourcing partner for your needs. But not to worry, we’ve got the inside scoop on sales outsourcing.
Settle in for the story of two would-be hot dog tycoons and the outsourcing misstep that brought down their burgeoning empire.
Growing up, my partner and his brother realized that fellow latch-key kids who were home alone after school were hungry. There weren’t always snacks available. Some kids weren’t even allowed to use the microwave, let alone go near the stove unsupervised.
The young brothers decided to solve the local ravenous-kid problem with door-to-door hot dog sales. My future husband and his brother would heat up the hot dogs at home and sell them to neighbourhood children. They’d spend the proceeds on penny candy.
Then, the brothers realized that they could make candy money AND spend more time playing video games if they outsourced the most tedious part: the selling. Instead of traipsing around the neighbourhood themselves, the entrepreneurs enlisted a younger friend as their sales rep.
At first, the brothers were practically swimming in candy, despite spending almost all of their time playing video games. That is, until the salesboy’s mother found out and he was forced to quit. Without a salesperson, the burgeoning hot dog enterprise folded soon after.
The moral of the story is, you may, too, have wondered if outsourcing parts of your sales process could give your sales operation an edge without having to hire in-house. But the answer isn’t black and white. Sales partnerships can be a great way to augment your sales effort without the commitment or cost of hiring full time sales professionals, but it’s not a one-size-fits-all solution.
Sales outsourcing allows you to “pass off” activities that you find time-consuming or overwhelming and let someone else handle it. Then you and your internal sales team have more time for things like closing deals and managing your own day-to-day activities.
But, to be frank, there are questions you’ll need to answer before you can decide whether sales outsourcing is right for your sales team, process, and of course, your bottom line. After all, you don’t want to outsource sales activities without forethought and have it end up bringing down all your candy-fueled dreams.
So, let’s jump in.
What is outsourcing?
Outsourcing is the process of obtaining goods and services from a third-party vendor. It is essentially handing off an activity to an outside source, rather than having that activity completed by an internal one.
The term “outsourcing” often carries some negativity, which generally comes from the pervading stereotype that all companies outsource to foreign vendors that take jobs away from local workers, provide subpar service, and add unnecessary complications. But that’s not always true.
What is sales outsourcing?
Sales outsourcing is the process of hiring an external party to take on specific tasks related to your sales cycle. It is often used by companies to increase their volume of sales without hiring or adding internal resources to its sales team.
How does sales outsourcing work?
Companies can outsource their entire sales force or part of it. For example, a company may choose to outsource the sales or customer service aspects of a particular product line or segment. Some, particularly startups, outsource all of their sales as a market entry strategy to start bringing in potential customers as quickly as possible.
To do this, the company partners with an external, third-party company to perform a specific sales function. Because of this, outsourcing sales is sometimes referred to as “rent-a-rep”.
The outsourcing vendor (or sales rep) is usually compensated based on the results they produce, whether that’s the number of sales closed, sales revenue generated, number of qualified leads generated, or another agreed-upon metric.
Why do companies outsource?
Companies choose to outsource activities for multiple reasons, but most rationales centre on reducing costs and required resources, improving focus, and accelerating growth.
Here's a quick look at some of the most-cited reasons for choosing to outsource:
Pros and cons of sales outsourcing
Sales outsourcing isn’t the ideal choice for every company, though. Some CEOs, including Kyle Racki here at Proposify, would disagree with outsourcing sales early on, suggesting instead that startups rely on their founders to serve as sales experts until the cash flow allows them to start building an internal sales team.
Outsourcing some (or all) of your sales process requires relationship management between the hiring team and the outsourcing vendor to make sure the buyer doesn’t realize that the sales rep they’re working with is not an internal salesperson. Here are some of the main pros and cons of sales outsourcing:
Pros
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Outsourcing sales can increase revenue without increasing overhead costs proportionally.
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It can be a good option if your sales team is operating in a volatile or shifting marketplace and you don’t want to hire and fire sales reps as things change.
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You generally aren’t required to pay outsourced sales reps a base salary, as compensation is often based on outcomes or sales performance.
Cons
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There is a reputational risk with outsourcing sales, as a third-party will be handling your client relationships.
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You’ll need to spend time building a relationship with the outsourcing vendor (and outsourced sales team) and managing the contract to ensure you get the quality and results you’re expecting.
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There could be more upfront and/or one-time costs compared to hiring internally, as salary, commissions, and other hiring costs can be spread out over time.
Pros and cons of outsourcing lead generation
Prospecting, cold outreach, marketing, and advertising can be challenging and time-consuming to do in-house. These lead generation activities require lots of research, content creation, tech and other tools, which means they also need lots of resources.
Lead generation can also be a ‘feast or famine’ situation, especially as a company ramps up its marketing efforts, moves upmarket, enters a new market, or changes its target markets. Inconsistent lead generation wreaks havoc on sales quotas.
Pros
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Outsourcing lead generation reduces or removes the ramp-up time that is needed to get business development reps or sales development reps doing outreach.
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Most internally-hired outbound sales reps tend to be less experienced and therefore less efficient at capturing quality leads. A seasoned outsourced sales team may be more productive.
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With prospecting off their plates, your internal sales team can focus on negotiating and closing with existing prospects.
Cons
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It can be hard to find a lead gen outsourcing company that suits your needs and truly cares about your sales team’s success.
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If you’ve relied on inbound leads, you might have blind spots you need to fix before you can outsource a successful outbound campaign. For example, you might not have heard all of the objections that cold outreach can bring out. You might have to dig deeper into market and buyer persona research before you’re able to successfully outsource your lead gen.
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The knowledge base and processes around your lead generation activities would live outside of your department and company, which could complicate things should you choose to bring it in-house later on.
Is sales outsourcing right for you?
Now that we’ve talked about how other companies outsource sales, it’s time to look at your own sales process and determine whether sales outsourcing is a good fit for you. Here are a few things to consider:
Do you currently have what you need to achieve your goals?
Your sales team will have metrics, targets, and quotas to hit. If you don’t have the resources you need to reach your goals, and no way to bring them in internally, sales outsourcing might be an efficient way to get there.
Are you willing to give up some measure of control?
There’s an understandable impulse to keep every sales function in-house and under your direct supervision. It can be hard to trust others to do the work. Unlike an internal approach, you won’t be able to go through every detail with your outsourced sales team.
But as a sales manager, a lot of your results are out of your hands anyway, right? Unless you’re micromanaging, you’re not going to be involved with/on top of every activity your internal sales reps are doing.
What’s your annual contract value (ACV)?
If it’s low, you might not generate enough sales revenue to justify having outside lead gen bringing in those “smaller fish” for you to close, for instance. Same for super-short sales cycles and non-persona targeted sales (i.e.: you’re selling to everyone anyway so outsourced lead gen might not be a help).
What effect will sales outsourcing have on your company culture?
The thought of offloading some of your sales cycle to a third party sounds promising in theory, but might be different in reality. Existing employees might feel like they’re being replaced, that they are doing poor work, or that their position will be next to be outsourced. It could also cause confusion around who is responsible for which tasks and results if that’s not properly communicated from the start.
6 questions to ask when considering working with a sales outsourcing company
If you decide that outsourcing part or all of your sales process is right for your company, finding reputable vendors for sales partnerships is the biggest success factor. Here are the questions you need to ask when you vet a potential outsourcing partner:
What’s their track record?
What does the vendor’s experience history look like? Who else have they worked with and what kind of results have they created for them? Is it quality work?
Much like you would use social proof to sell a prospect on your offering, ask your potential outsourcing partner if they have any case studies, testimonials, or other materials that demonstrate their ability to execute on whichever sales function you’re looking to outsource.
How do they staff and train their team?
Is the outsourced team internal or will the company, in turn, outsource to fulfill your contract? Will people be dedicated solely to you or will they be working on multiple contracts and campaigns at the same time? How do they recruit and train?
What is their usual plan of attack?
What channels will they use? What’s the mix—phone, email, chat? What tactics do they use? What does their sales tech stack look like?
How will your relationship be managed?
What will your relationship look like? How will it be managed? What kind of time commitment will be needed from you?
What happens to the data?
Where does the data live? Do the leads and their contact details, etc. belong to you? Or does this information stay with the vendor, possibly to be re-used with other clients (maybe even the competition)?
What will success look like?
How will you know if the campaign is working? When can you expect reporting from them? What are the specifics the reporting will include? What sales metrics do they rely on? How do they handle sales analytics?
Final thoughts
Much like hot dogs and door-to-door selling, sales outsourcing is not for everyone. However, it does have it’s pros and cons, and many sales teams swear by it. At the end of the day, it all depends on your team, process, strategy, and goals. Depending on your approach, sales outsourcing could be a permanent part of your sales strategy, a convenient short-term solution, or something you choose to steer clear of.
Whatever your conclusion, having all the facts to make an informed decision is number one.
