Studies show that midsize and large businesses that outsource sales gain a competitive advantage over companies that keep these functions in-house. However, sales outsourcing is a business risk, just like any other outsourcing activity. This is why it is crucial to take careful stock of your company’s needs, goals and capabilities before deciding whether to outsource or hold on to sales activities house. To minimize risk and avoid outsourcing problems, beware of these internal red flags:
Vague financial goals for the outsourcing project.
Most companies outsource sales to reduce costs, so it follows that financial goals are communicated clearly to the outsourcing provider. However, many firms fail to do this and realize their mistake when it’s too late, and the outsourcing project fail to produce any improvements in revenues or profit. Sales outsourcing should be driven by ROI when cost is the critical reason for transferring responsibility to an outside firm. CFOs, managers and sales executives should work together to create realistic, measurable and detailed financial goals, and communicate these goals to providers.
Outsourcing for the sake of outsourcing.
Some companies fall into the trap of outsourcing because they know nothing about a certain sales function, like lead qualification. If you have zero understanding about a sales process, it’s difficult to tell whether the outsourcing project is a failure or success. Besides defining success in financial terms, sales managers should make a clear case for outsourcing in terms of specific goals. These goals are unique to each company. Are you outsourcing sales because you need highly-skilled sales reps or because you are expanding into a new, unfamiliar market? Identify opportunities or problems and the resources required to address the issues before signing a sales outsourcing contract.
Unclear performance measurement and monitoring.
A great sales outsourcing engagement delivers added value over time. It improves on past performance, identifies opportunities as they appear, and implements changes as needed. For a third party to deliver added value, progressive review and monitoring of key sales metrics are crucial. Examples of key metrics are number of contracts, number of appointments set, average orders and reorders, etc. Too many metrics and too aggressive monitoring can overwhelm your sales force, however. For example, it can take months to close a lead. Expecting twice-daily performance reports from your sales reps is overkill.
Inadequate training and support.
Many sales outsourcing projects fail because of inadequately trained sales staff. Sales reps, whether in-house or outsourced, require periodic training and support. They need to familiarize themselves with your product, business and market to generate leads and close sales effectively. Make sure that the firm you hire has industry experience and know how to sell products similar to yours. Otherwise, ensure that sales reps and sales leads are trained and receive the support they need to succeed.
Outsourced Sales Service Provider Red Flags
Besides internal warning signs, you should also be aware of potential issues with the service provider. Here are some things to avoid when choosing a sales solutions provider:
Some sales solutions providers promise the world without a clear solution backed by research and analytics. A good sales outsourcing provider understands your business, product and market, and crafts a solution tailored to your needs. Instead of merely providing a service, the outsourcing firm aims to be your long-term partner who shares the risks and rewards of your sales initiatives and delivers value over time.
Focus on cost reduction alone.
Every outsourcing firm promises cost reduction because it’s what companies want. However, too much focus on costs and not on value indicates that the firm is only interested in what they can get out of you. Successful sales outsourcing is a long-term commitment, and a quality sales outsourcing firm will focus on improvements in quality, efficiency and other benefits that they can give you throughout the partnership.
Unclear sales strategy.
Some sales outsourcing firms don’t want to say no to clients even when they’re in over their heads. Avoid these firms, especially if you are a brand new company with no record of sales or revenue. It’s better to partner with someone who has experience with your product and market. Sales strategy is crucial, and it takes time to develop and find the right fit for your business. The first year of selling a product is actually a testing phase for the sales strategy. If the outsourcing firm can’t develop a solid strategy, look for another company.
No metrics-driven reporting.
Avoid sales outsourcing firms that don’t talk about performance metrics or ROI-based measurement of success. Either they don’t make performance a priority, or they don’t have the technology or capabilities to provide data-driven reporting.
Too much focus on lead generation.
If the sales outsourcing firm focuses too much on the number of leads instead of quantity and quality, consider it a red flag. Lead generation is crucial, but the process is just setting appointments for your sales force. On the other hand, generating high-quality leads means higher conversion rates and more profits. The outsourcing provider should have thorough understanding of the entire sales process, but the ultimate concern should be turning leads into sales.
Wrong cultural fit.
People issues are responsible for outsourcing problems as much or even more than any other factor. Ensuring a proper cultural fit between your business and the sales outsourcing provider is most important when the outsourced sales force directly interacts with your customers, either personally or through phone or online. The key is to present a seamless image to your existing and potential customers. Go for a sales provider that offers cultural compatibility and reps that speak good English.
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