In an increasingly competitive world, outsourcing has become an important strategy for companies looking to cut costs, improve productivity and streamline specific business processes. Netpique COO Cindy Campbell looks at the pros and cons.
Not to be confused with the oft-maligned offshoring (a transfer of jobs to cheaper locations overseas), outsourcing involves contracting with an outside company that specialises in performing specific processes or jobs such as billing, software development or tech support.
In recent years, sales outsourcing has been a valuable addition to the list of possibilities, allowing companies to reach new markets, carry out better cost and production forecasting, and compete more successfully even in challenging sectors and industries.
Here are seven ways sales outsourcing can give your company the edge.
1. Competitive intelligence and test marketing
Do you have a new product you'd like to test before pulling sales people off your current initiatives to sell it full time? Is your company in need of market insight and competitive intelligence? Because they are experts at the process of selling, sales outsourcing companies are uniquely positioned to provide this type of real-world data. A sales outsourcing company can take your new product out into the marketplace, test how it is received, and speak with potential customers about their needs, frustrations, and why they're buying from the competition.
Using complex metrics developed over years of experience selling in different markets and customer segments, a sales outsourcing company can help you fine-tune your product launch strategy and create a well-crafted feedback system that helps you understand what's happening in your market, and how to position your company's sales initiative for maximum return on investment.
The availability of relevant, reliable information prior to the launch of a new product or market can make the difference between wild success and embarrassing failure. Even if you've never written it on the schoolroom blackboard 100 times, the old truism works: knowledge is power.
Whether you go with a sales outsourcing company or do the work of intelligence gathering on your own, don't be left in the dark without the tools you need to make that sales launch you've been planning into the grand slam it deserves to be.
2. Improved focus on accountability
When the sales department isn't performing like it should, wouldn't you like to simplify things by narrowing it down to just one neck to throttle? Contracting with an external company allows you to take concerns to one responsive contact rather than acting as chief problem-solver for a bevy of sales managers.
Your outsourcing company gives you a single conduit to the sales force, streamlining your ability to effectively translate your goals into sales. Rather than worrying about the details of how to motivate sales people or improve productivity, you can talk high-level sales strategy with a knowledgeable consultant, and then sit back and let your outsourcing company work for you, while regularly monitoring sales results and comparing them with detailed prior projections.
When before there were disappointing results, you had to go hunting for complex internal causes and listen to increasingly creative excuses, with a sales outsourcing company you can go straight to the source. Accountability is implicit and unambiguous. It's the difference between being treated like an exigent boss and looked after like a valued customer.
3. Predicting and controlling costs
Do you know your company's cost of acquisition for each new customer? It is common for businesses to underestimate this number because it involves a complex interplay of so many different types of costs, fixed and variable, including the less obvious ones such as customer service, billing and collections, and customer IT implementation.
However, some of the least predictable and most expensive of those costs are associated with the instability of maintaining an in-house sales force.
When you employ in-house sales staff, poor producers create extra costs in several ways: salary and benefits while not producing, unemployment or disability claims, recruiting and HR costs for replacements, and time (and therefore productivity) lost dealing with the unproductive reps and training new ones.
An outsourcing company takes the guesswork out of financial projections, because you pay a fixed cost per sales rep in the field, and the company's focus is on maintaining full, productive headcount. Poor producers are quickly and efficiently replaced at no cost to you, and with no interruption in team productivity.
The outsourcing company would also absorb costs for changes in employment law, or new implementations such as Obamacare in the US.
Eliminating your liability for unpredictable costs like these keeps the cost of acquisition under control from the outset, preventing nasty budgetary surprises down the road.
4. Scalability/rapid market expansion
Even when a sales initiative is going well, scalability can be a real bugbear.
It is not easy to rapidly increase quality headcount without an experienced and dedicated recruiting team, as well as a robust, effective training programme. And techniques that worked well in one geographical area or market segment do not necessarily translate perfectly to another, often resulting in costly delays and disappointing sales performance.
One of the major ways that outsourcing can help your business is by enabling speedy and smooth expansion into new markets or products, as well as pain-free downsizing when necessary.
In an outsourcing company, the recruiting team works like a well-oiled machine, constantly reaching out to potential hires and maintaining a consistent "bench" of pre-qualified sales reps who can be hired quickly when needed. The number of reps for your campaign can be easily throttled up or down depending on market conditions.
Because recruitment, HR procedures and sales training are all streamlined and optimised, outsourcing also gives you the quickest time to break into new markets or expand a product line, with potential turnarounds of under 30 days.
When a campaign requires extreme time sensitivity, an outsourcing company can even parachute reps from existing markets into new markets to decrease ramp time, while maintaining full headcount at the old and new locations.
In a situation where first mover advantage is crucial, an outsourcing solution can help you enter a new market ahead of the competition and remain consistently competitive once you get there.
5. Avoiding negative media exposure
It's a CEO's worst nightmare - market conditions are forcing you to downsize employees, and it's only a matter of time until the media get hold of the story and splash it all over the front page. Layoffs can generate some of the worst possible press for businesses, even though sometimes they are simply unavoidable even for solid, responsibly run companies.
An outsourced sales company can shield you from unwanted media attention. When you decide to scale down a sales operation, it's a simple matter of a phone call to your outsourcing company. Since the sales representatives and managers are employees of the outsourcing company rather than your company, you don't lay off a single employee.
The sales outsourcing company takes care of terminating or reassigning its people, and your brand stays completely insulated from bad press. No disgruntled former employees picketing your corporate office or flooding the internet with angry reviews. No reporters calling for a statement on the impact of layoffs to the community. No lawsuits, unemployment claims or legal entanglements.
6. Focusing on your core competency
Your company is great at doing what you do, but you don't have to be great at everything. You likely already outsource some things like landscaping, building maintenance, payroll, or collections, because it doesn't make sense to use internal company resources to do those tasks.
Sales outsourcing is just another important way to clear the extras off your plate so you and your company can focus on what you do best.
It can be very frustrating to run an efficient, productive organisation with an excellent product offering, and then have things fall apart somewhere between when your product leaves the door and when it gets to your customers. The organisation, expertise, and accountability of a sales outsourcing solution can be a particular boon to upper management, who deal with the pressures of taking ultimate responsibility for the success or failure of a particular initiative and must constantly have their eye on the bottom line.
For a sales outsourcing company, sales is their core competency, and they do it better and more efficiently than anyone else.
Hiring a sales outsourcing company allows you to stop pouring resources into sales recruitment, training, and management, and focus on your core competency - running your company better than anyone else can do it.
7. Customised solutions
Outsourcing sales is never an all-or-nothing deal. Most outsourcing companies provide a range of services, from consulting complete turnkey sales solutions.
If your company is in an early stage of deciding whether sales outsourcing is a good fit, starting out with a little consulting can be a risk-free way to determine what benefits sales outsourcing could afford.
You might consider hiring an outsourcing company to give you detailed advice on reducing your cost of acquisition or provide some short-term intensive training to your existing sales force.
Some businesses use sales outsourcing companies exclusively for test marketing, keeping their own internal sales force focused on core product offerings. Others' greatest need is for a recruiting engine that will afford them a steady stream of quality employees, leaving them free to focus on training and management.
If your business needs some serious help in the area of sales but doesn't want to commit to a long-term outsourcing agreement, many sales outsourcing companies offer the option of eventually transitioning the sales force they have built over to your company once it is functioning smoothly.
Whatever your company's unique challenges, it is likely that using a sales outsourcing company in some capacity will help you manage costs, improve performance, and mitigate problems, often before they happen.
Conclusions
Outsourcing your sales can improve sales accountability, give you valuable market insights, and keep your costs predictable. A sales outsourcing company can help you quickly and aggressively penetrate key new markets and avoid damaging media exposure.
Whether you just need a little help with some consulting and training or would like to try a full, turnkey solution to sales, an outsourcing company will take care of your sales headaches, leaving you free to give your attention to all the things you do best.
With over 30 years of experience, Cindy Campbell began her career in sales. She spent 19 years at GTE Corporation, advancing to the position of VP of business information services. Previously she was at Office Depot for 14 years where, as EVP of business solutions, she helped achieve industry-leading growth.
