Building a sales team takes lots of time, energy, and money. So, sales outsourcing can be the key to boosting your sales volume and unlocking new growth levels.
But, sales outsourcing has its challenges too. For one, good outsourced sales teams are as hard to find. Plus, it means you’re not in control of a core business function.
So, you’re stuck between a rock and a hard place, wondering, “Is sales outsourcing worth it or not?” The fact is sales outsourcing isn’t a one-size-fits solution. But it does work, provided you have a solid plan for making it work.
In this article, we’ll (a) make a case for sales outsourcing, (b) help you decide if you should outsource sales in your company, and (c) share tips to ensure your sales outsourcing is effective.
Sound good? Let’s dive in.
What Is Sales Outsourcing & Who Needs It?
Sales outsourcing is a business practice that involves hiring a third-party company or external salespeople to help manage your company’s sales processes.
It also includes using sales outsourcing software to manage some parts of the sales funnel, e.g., lead generation, appointment setting, etc. But this post focuses on manual aspects of the sales process— phone closing, specifically.
Sales outsourcing is just like delegation. The key difference is you delegate to people that do not work within your company. So, the burden of hiring, training, and managing the sales team rests on the sales outsourcing company. Not on you.
You should consider outsourcing sales if:
- You lack the financial muscle to hire top-tier sales reps
- Your sales team lacks the expertise you need to scale, break into more significant accounts, or handle specific sales functions
- Your lead flow is increasing, and you need to scale your sales reps to handle the lead volume.
The Life-Changing Benefits of Outsourced Sales
Sales outsourcing is more common among small organizations. But all companies can potentially benefit from outsourced sales management.
Below are some of the benefits businesses enjoy when they outsource their sales.
1. Break Past Plateaued Growth
Every solo entrepreneur hits the ceiling eventually. You can only do so much alone.
Hiring the right outsourced sales team gives you access to a pool of experienced and talented salespeople who can blow the caps off your sales numbers. And they could be up and running in a matter of days. So you have zero or minimal ramp-up time.
This is the main reason entrepreneurs seek to outsource their sales.
2. Saves Time and Money
Hiring an in-house sales rep is expensive and time-consuming. Unfortunately, most entrepreneurs don’t have a well-thought-out hiring process that enables them to identify which reps will be successful or unsuccessful quickly. Which means they end up suffering huge losses.
Hiring an outsourced sales team helps you eliminate the money and time implications of hiring and training an in-house team.
3. No Need to Manage Them
If you’re a typical small business owner, you’ve probably tried hiring and training your own in-source sales team. But, you’ve come smack dab against the reality that you don’t have the expertise to hire and train sales reps.
Outsourced sales management frees you of that burden since you’re not responsible for hiring, training, or managing the outsourced sales reps.
4. Lets You Focus On Your Core Competencies
Sales outsourcing frees up your time and makes you less involved in the daily operations of your business. You can spend your time working on your business rather than in your business.
5. Reduces Overhead Costs
There’s an argument about whether the overhead cost per employee outweighs the cost of hiring an outsourced sales team. It helps to look at the outsourcing picture from a broader perspective to resolve this.
Your contract with your outdoor sales company will likely be performance-based, meaning they get paid to the extent they perform.
But if you have an in-house team of commission-based sales reps, you’ll have to cover some overhead when your team doesn’t perform. Your exposure may even be higher, depending on your commission structure.
6. Opens Up New Markets
If you’re taking your product or service to a new geographical area, you may not know enough about the consumer behavior in that region. But a sales company based in a particular area has that knowledge and the talent you need to accelerate your success in the new market.
So, it could make sense to look at hiring a local sales outsourcing company could make sense. This practice is common among large companies when breaking into a new area.
7. Gives You Flexibility
In today’s volatile business environments, businesses must be able to move fast to take advantage of new short-term opportunities. This implies that a business must be able to scale up its sales team size from a team of 5 people to a team of 50 in the quickest possible time.
It’s challenging to assemble a team of that size with an in-source team. But the best outsource sales companies can scale up their sales teams fast. This means engaging and disengaging as many salespeople as necessary without exposing yourself to hiring and firing risks and costs.
Sales outsourcing offers several benefits. But all those benefits lead to the same conclusion— sales outsourcing is a cost-effective way to speed up your business growth.
Sales Outsourcing vs. In-House Sales Management: Which Makes Sense for You?
As mentioned earlier, sales outsourcing is not a one-size-fits-all solution. But how do you determine which solution is perfect for you?
Here are two factors you should consider:
1. Your Business Model
First, it’s important to state that sales outsourcing works for high-ticket offers only. And the reason is simple, low-ticket offers cannot cover the costs of outsourced sales executives (Sales Development Representatives and Account Executives).
That said, hiring an outsourcing agency is okay if your business offers a mix of low and mid and high-ticket offers. In other words, you have multiple income streams, and high-ticket phone closing is only one of those streams.
But you should build an in-house sales team if most of your revenue comes from closing high-ticket over the phone. I believe high-ticket phone close is a core business function. And you should never outsource a core-business function.
Imagine what could happen if the outsourcing sales company walks away. Your sales walk away too!
We once worked with a client who scaled to $250k per month using a Done-For-You (DFY) closing agency. Then the agency had some internal problems and had to fire a few clients, including our client. And just like that, they went from $250k per month to $0.
Even worse, the next agency they hired didn’t deliver. So for about four months, they kept hemorrhaging cash. Eventually, they were forced back on the phone to build up their cash reserves.
We hear horror stories like this all the time.
This client’s business continued in a downward spiral until they reached out to us. Then we helped them build an internal sales team and grew their revenue back to $250k/month. And now, they’re in control of their sales team.
Finally, it’s worth stating that you can hire an outsourced sales team as a temporary solution. And that could help you raise the income you need to further free up your time and build an in-house team. But don’t wait until the worst happens before you build your in-house sales team.
2. Where You Are In Your Business Growth
With the outsourced model, the economics of scale don’t work. Here’s what we mean by that.
Outsourcing sales works if your total revenue is under $50k/month and you’re trying to scale to $250k. But it’s challenging to scale past $500k in monthly revenue if you’re using a sales outsourcing company. Here’s why.
Once you reach the $300-$500k mark, your margin gets crushed by rising ad and fulfillment costs. Meanwhile, your DFY agency takes between 20-30% of your revenue because that’s the only way the model makes sense for them.
We have seen clients 3X their revenues with an agency only for their profits to remain the same.
You won’t find an 8-figure high-ticket company that outsources its sales. They build it in-house. It’s also why we’ve designed our offer around helping clients build their teams internally.
On the other hand, a huge name company can outsource sales if they have (a) massive distribution, (b) a large organic audience, (c) brand authority and trust, and, as we mentioned before, (d) multiple revenue streams— tons of low and mid ticket offers in addition to high-ticket.
For these sorts of businesses:
- Appointment generation is easier.
- They’re not stranded even if the sales outsourcing company ups and leaves.
- Their cost per appointment is cheap, and they don’t run into any economics of scale issues.
How to Successfully Outsource Sales & Transform Your Business
Hiring outsourced sales reps is just as tricky as hiring in-house sales reps.
Does Hiring a DFY Align With Your Business Goals?
You first want to set your business goals – especially the goals you need the outsourced sales team to accomplish. This way, you can better weigh your options. It would also help to keep realistic plans.
This exercise helps you pinpoint the sort of outsourced sales team you need and evaluate them properly by viewing their experience and competence through the lens of your business goals.
Ask About Their Experience
A service provider’s track record can tell you if it is a perfect fit for your company. Find out if they have projects with similar needs and circumstances as your company. You can also check out reviews from previous and current clients to know how they work.
The outsourced sales agency should also provide training and conduct an assessment before the sales representatives take on the role. This will ensure that only qualified individuals can join your outsourced sales team.
The outsourced sales team will handle your company’s and potential clients’ data. So, you have to make sure the agency is trustworthy. Ask if they have data protection tools. Are their systems protected? Are there security measures taken where they conduct the tasks you requested?
The Bottom Line about Sales Outsourcing
Every business is either focused on growth or profitability. And no matter which you’re focused on, there are benefits to outsourcing your sales team.
But ultimately, if you’re serious about building a 7 or 8-figure company, the cons outweigh the pros. And building your own internal sales team is a more sensible route. And probably the only way to go.
So, if that’s your ultimate goal, now might be a good time to book a call with us.