Sales outsourcing has become very popular among companies of almost all sizes. In the past, businesses were skeptical about entrusting sales activities to third party services as they thought of it as a delicate matter. Nowadays, many have already changed their minds. The main reason for this is that businesses start to realize that outsourcing is better and significantly cheaper than in-house sales. In addition, many CEOs and executives see a lot of competitive advantages in outsourcing due to the speed and flexibility that comes with it.
Many companies used to spend a lot of time hiring highly-competitive employees to do sales. Having a strong sales team requires a serious commitment from management, and getting the right people to be a part of it is a daunting task. The problem gets even worse in cases when management does not have a sales background. To solve this, companies turn to sales outsourcing.
How Sales Outsourcing Works
Sales outsourcing is also referred to as channel sales or indirect sales. It occurs when companies hire a third party sales force. The service provider conducts sales activities such as developing and implementing sales plans, determining target niches and markets, creating sales pipelines, integrating marketing and sales programs, measuring and making adjustments to sales strategies and evaluating results.
Typically, sales outsourcing firms work directly with the company’s sales team. They represent the client’s brand and are accountable for all sales results and activities. End-customers see them as the company’s sales team and not as an outsourcing firm. In addition, sales outsourcing teams rely on the project’s success for their compensation. There are no benefits or base salaries. Through this, clients save a significant amount of money that would have been spent hiring in-house sales employees.
Advantages of Sales Outsourcing
Lower Daily Operational Cost
Businesses that opt for sales outsourcing can save a lot on their daily operations. Service providers such as business process outsourcing companies typically work on the revenue model. This means they do not make money if there are no sales. On the other hand, businesses that have their own sales team have to pay their employees and provide them with benefits even though there are no sales made.
Fewer Departments
Sales outsourcing means there is no need to form another department that will take care of selling the product. Companies that hire outsourcing firms can focus more on the tasks they specialize in such as manufacturing and production.
Availability of Choices
There are plenty of choices for companies who are looking for firms to outsource their sales department. Business process outsourcing companies are growing in number. Each has their own area of specialization. Clients can jump from one firm to another, stick to one or even hire them all.
Morale Boost
Companies that utilize sales outsourcing service significantly boost their overall morale. This is mainly because they provide timely and prompt responses for customers. With this, customers develop trust in the brand and are more likely to patronize the manufacturer. They believe that they are dealing directly with the product manufacturer and not the outsourcing teams.
Sales Activities Commonly Outsourced
• Sales processes like lead nurturing or lead qualification
• Managing segments that are difficult to reach
• Product or service lines launch and sales
Strategies for Successful Sales Outsourcing Buyers
Come up with a clear project plan and schedule.
It may be an obvious thing to do, but many companies tend to overlook the importance of coming up with a clearly-defined project plan prior to outsourcing. Service providers need realistic and accurate proposals in order to come up with a reasonable quote. The client should be specific about the deliverables they expect the external sales force to provide. In addition, the project schedule should also be attainable as this can create a big difference in charges.
Choose sales outsourcing firms in the same way as hiring a full-time employee.
There are numerous outsourcing firms out there today. Choosing can be challenging. With this, clients should evaluate each prospect like they would when they hire employees. It is essential to do a background check through reference validation and obtaining feedback from other clients. Facilitate and engage in conversation and voice out any doubts and concerns. Doing so allows clients and service providers to start a good working relationship.
Carefully match company needs with sales outsourcing firms’ specialization and experience.
Each outsourcing firm has their own specialties. Be sure to choose the one with a strong background in sales. Clients should not take chances in hiring service providers that are new in the field. Go for outsourcing firms that have successfully completed many sales projects.
Never let low prices tempt you.
Many companies are attracted to incredibly cheap service costs. In sales outsourcing, price should never be the first priority. Many companies who have experience with outsourcing recommend that businesses go for neither the most expensive one nor the lowest bid. Most of the time, they succeed in projects with firms they felt have given them a good balance of value and results.
Start with small projects first.
Businesses looking for sales outsourcing service providers for the first time should start with smaller projects. With this, they can evaluate the firm’s capabilities. They can gradually go for bigger ones if the vendor meets their expectations.
Award payments based on milestones.
Clients should always ensure that they can get the best services for the money they spend. Before doing so, it is important that clients have already outlined and clearly defined milestone. They should prepare checkpoint schedules for project review as it progresses. It is best to pay a small portion of the total project cost in advance and let the rest be paid upon milestone completion.
State work product ownership clearly in advance.
Clients should make questions regarding ownership of the work product and other components clear up front. It is important that the vendor understands and agrees on the plan for using the deliverables. Doing so avoids any confusion and trouble for both parties.
Document everything.
Putting all transactions in writing puts an end to any problems that may arise along the way. Clients should be able to document everything from the project’s scope, payment, schedule, deliverables and agreements between parties.
Building Good Outsourcing Relationships
A good outsourcing relationship is the best way for buyers and vendors to benefit from the strengths of each party. Unfortunately, many of them tend to overlook its importance. There are some things that companies should know to ensure success in their outsourcing relationship.
Treat each party as part of the team.
Outsourcing contractors should not only be treated as vendors. They also invest their skills, expertise and knowledge in the project’s success. With this, companies that hire them should treat them as part of the business. Doing so ensures that they can make the most out of their services.
Don’t push too far to get a bargain.
It is understandable that many companies that are looking for outsourcing vendors are on a tight budget. When signing the contract, both parties should feel like the project is worth it. If vendors feel like the buyers are pushing too far to get a bargain, they might end up getting bargain work in return.
Appreciate even the smallest things.
Buyers who want to become excellent clients should learn how to deal with the outsourcing vendor even with simple things like being appreciative for a job well done. Clients should learn how to be receptive to the vendor’s advice and expertise. With this, vendors will keep on doing their best to serve and please clients. The results will be smooth transactions and a great long-term relationship.
Avoid duplicating work.
Once the buyer agrees to entrust their sales activities to the outsourcing vendor, they should stand firm with it. Otherwise, buyers will only be wasting their time, effort and money.
Measure success.
Both parties should be able to understand how success is measured. There must be scheduled reviews for both sides in order for them to asses the progress, identify problems and come up with solutions.
Communicate openly from start to end.
Good communication is always the best way to build a strong relationship. Always keep contractors informed about project needs, objectives and schedules. Open communication should be maintained from the start of the project until completion. Share each other’s good and bad news. Regular check-ins are a great method to evaluate the relationship’s status.
Some Strategies for Outsourcing Vendors
Vendors should prepare their contractual terms beforehand. They should say what they mean and mean what they say. With this, it is important that they craft their terms and conditions while considering potential risks. Otherwise, their contractual terms might work against them.
Outsourcing firms should always send their best teams to handle negotiations. Sending new employees may lead to losing a big deal. This is especially true when it comes to pricing. Remember, clients usually send their best people to negotiations.
The most important thing is to get the best lawyers to protect the company from legal issues. In addition, lawyers should not only negotiate to win or lose. The negotiation should lead to a quality agreement that is required to entrust an outsourcing firm with all the client’s sales processes.