A couple of weeks ago Kevin was a guest on The Sales Engagement Podcast to chat with Joe Vignolo, Content Managing Editor at Outreach.io, about the factors a business must consider when deciding on whether to outsource or hire an in-house sales development team.
Outsourcing your sales development isn’t necessarily a good fit for every organization. While it has the ability to save time and money for some, it simply doesn’t make sense for others.
Kevin breaks down markets into three categories:
- Small and Medium Businesses (SMBs)
These three categories make deciding on in-house vs. outsource a bit easier.
It was a great conversation and we thought we just had to share it with The Outbound Sales Podcast listeners as well!
PRESS PLAY above to listen to Kevin share with Joe discuss these three markets and their considerations when it comes to outsourcing or hiring a sales development team.
(Taken from original blog post found here.)
For enterprises, Kevin doesn’t necessarily recommend outsourcing sales development because it’s a hard game to win. At this point in your business, you’re likely going after different funding goals, growth goals, and you have a lot of stock placed on investment by having headcount. Outsourcing doesn’t usually make sense here.
When it comes to mid-market businesses, you have to consider what is going to be better long-term for your organization. Where are you heading and what tools do you need to get there? According to that, does it make sense to invest in an in-house team or outsource?
Finally, outsourcing is a no brainer every time for small and medium businesses. Kevin has never come across a situation where outsourcing sales development and lead generation in an SMB wasn’t a good, strategic approach.
SMBs aren’t usually in a position to pay salaries to a large sales development team. Some don’t even have the funds to pay sales reps, so Founders do the groundwork. One thing that every business has in common is a need for more customers. Very few businesses are content where they are.
So choosing becomes a matter of how much you can afford. If you can’t afford to bring in a VP of Sales then you probably can’t afford an SDR whose entire job is to create opportunities. You can benefit from qualified leads an SDR brings in. But here’s the thing: If you hire a team member to execute on that goal, making a bad hiring move could cost you a lot in money, effort, and time lost.
If your company is already struggling with not bringing in leads, making one wrong hiring move could cost your business its longevity.
How to Find the Right Outsourcing Agency
The average SDR is only with a company for 1.5 years, and it takes an average of 3-5 months to get them trained (and build their pipeline). On average, it costs $140,000 to have one SDR employed for one year because of the hidden costs that people overlook. Things like salary, benefits, taxes, technology costs, LinkedIn subscriptions, training time, etc. When you’re not in a position to make that risky move, it’s time to look for an outsourcing agency.
There are three things you should look out for when vetting an agency:
1. Vendor reputation
An agency needs to be able to execute on what they promise, and that’s hard to find. Because of a low barrier of entry and high margins, you end up with too many subpar agencies in the marketplace.
Our inboxes are inundated with organizations that want to do lead generation and source data and leads for us. So it’s your job to put that vendor through the same process you’d put an internal hire through. Don’t expect it to be a 2-day close. Do multiple rounds of interviews, talk to their former clients, and check out some of their work. You’re adopting an outside team, so take the time to find out who they really are.
When you get on a phone call with a potential vendor, have them discuss their proposed strategy with you. You’ll know very quickly whether the vendor is just about the margins. Ask questions like: do you have any experience in my market? How would you approach it with us and how is that different from how you approach it elsewhere?
If the person on the phone can’t speak heavily to strategy, it’s a red flag. Don’t go with them because outbound sales and outbound lead generation is 100% about the strategy.
3. Restricted to Databases
If the vendor your vetting only works with databases, what happens when you’re targeting ideal customers who don’t exist in that database? The outsource vendor shouldn’t be limited by a database, otherwise they will be limited in what they can deliver.
They should be able to go beyond a database. So find a vendor who’s backbone is data sourcing who are able to apply a strategy to that sourcing. Find the agencies with human researchers who can refine what they look for to fit your exact needs.
Sometimes You Just Need Both
If you’re still not sure whether you should outsource or hire an in-house team, let us challenge you to consider doing both. If you have the resources, don’t choose one or the other.
Find your in-house sales development team, but bring on an outsource team as well at the same time. Why? The outsource team can not only help get your team ramped up but they can also get a headstart on the SDR’s pipeline as you train your in-house team members. In that scenario, no time is lost. It happens simultaneously.
Having both is also a great safety net when it comes to in-house turnover. Remember that stat: The average SDR is only with a company for 1.5 years. Whether you have multiple people leave at the same time or if you just bring on an outsource team while you ramp up your new team members, the outsource team helps ensure your pipeline never stops expanding.
Thank you for listening!