Because 90% of all startups fail, founders need to make sure their business strategies are optimized for success. One of the things they need to particularly focus on is their sales processes.
Although you can always try to get ever-higher levels of venture capital funding, the most sustainable way to achieve growth is through sales. To accomplish that, you can either hire in-house sales reps or look to outsource your salesforce.
If you’ve been wondering whether your startup should outsource its sales efforts, this article was written with you in mind. It'll guide you through everything you need to know about outsourcing a sales team, including:
- The benefits of outsourcing
- The different outsourced sales models
- How to get started with outsourced sales
Let’s dive in!
Should I hire in-house or outsource my sales team?
To hire in-house, you’ll need an individual with the experience to manage a salesforce. For example, transitioning someone from the development team with this type of keen expertise after the product goes to market.
Say you can't spare a single person from the development team. If none of your remaining employees has the expertise, or you can't afford to hire a dedicated in-house sales team, then consider outsourcing your sales efforts.
Early-stage startup employees have their hands full with a dizzying variety of tasks. In the rush to grow a company, sales often doesn’t get the attention it deserves. By outsourcing sales, you’ll free up time to do what a founder does best, which is growing their company.
Outsourced sales firms offer a complete suite of services to fuel startup growth, including building awareness, getting leads, closing deals, and analyzing metrics. Use them to fill gaps in your team, get specific projects off the ground, or take advantage of the team's comprehensive marketing and sales support.
The benefits of outsourcing
Here are some of the benefits of outsourcing sales:
It’s less expensive
Hiring an in-house salesforce will invariably lead to higher management overhead. If you’re already spread thin, onboarding an internal sales team will spread you even thinner.
As a startup founder, hiring full-time salespeople might be out of your price range. Recruiting, onboarding, training, and ongoing retention costs can quickly add up. It takes three months on average to hire and onboard a typical sales rep. The average length of time these employees stick with the company is only about 1.5 years.
Even if you're hiring entry-level sales reps, the expenses can quickly spiral out of control. In the US, the average salary for a sales rep is $65,408 per year, including a $25,000 cash bonus and $12,000 in commission per year. If you want to quickly scale up your efforts, you'll need to hire three to four new team members. A bad hire can be financially devastating.
Outsourcing your sales team can reduce the expense and risk of hiring in-house. By outsourcing your salesforce, you won’t have to pay for managerial infrastructure or costly overhead, including salaries, rent, and office expenses.
You’ll get a wealth of strategic expertise
Outsourcing your sales process is like onboarding an entire salesforce all at once and gives you instant access to outside expertise. External salespeople bring a wealth of knowledge with them when they start working for your organization.
This includes experience with your type of product or service, market, industry, and types of clients. An outsourced sales for startups firm can handle your entire sales process, from executing a strategy to bringing the sales reps, automation experts, and database managers your startup will need to maximize its growth.
Less than 1% of startups successfully raise venture capital funding. This means that startups who are serious about scaling their business need to generate sales with a repeatable strategic sales plan. An exceptional outsourced sales firm will be able to create one based on their experience with similar companies and your organization's needs.
The ability to scale rapidly
Outsourcing your salesforce allows you to scale rapidly because other external team members can step in when you need them. However, you're also able to "shrink" just as quickly when you need to nimbly respond to the uncertainties of a post-COVID world.
For example, say you’re a company that wants to quickly penetrate a niche market. You hire an outsourced sales development team to get new clients. Let’s also say that within 90 days, you get way more leads than you need.
With the outsourced firm, you can put the contract on pause. However, if you hired in-house, you'd either be stuck with a team you no longer need or a team whose members you'd have to lay off.
With an outsourced sales team, the time it takes to get results is usually much shorter than if you were hiring in-house. That's because your outsourced team has tactics and strategies they’ve tested with potentially hundreds of clients before you.
An outsourced sales firm can build you the tools you’ll need to quickly scale your company. These include the best CRM for your type of business, database marketing to reach your target market, and marketing automation to convert tentative prospects into delighted customers.
Expansion into new markets with minimal risk
Say you're looking to expand into new geographical areas. In that case, it helps to have a partner who can give you expert advice on your go-to-market strategy. An outside sales firm hired locally can help you to gather insights into what works and what doesn't in the market you're trying to enter.
Outsourcing your sales team reduces the myriad of risks that go with building and managing sales teams. If you're expanding to a new geographical area, hiring a local sales team makes it less of a gamble because they're familiar with the region's laws and economy.
An outsourced sales team can quickly build a new sales process to reflect changing circumstances. Because it's cost-effective to do this, you can pull the plug on the project at a moment’s notice. This gives you more leeway to experiment and test new strategies, leading to more innovation.
Outsourced sales models
Here are the two outsourced sales models:
- FULL-STACK OUTSOURCED SALES: The firm oversees the entire sales process from generating leads to closing sales. This model is terrific for startups that don't have the time or budget to hire an in-house salesforce.
- MIXED OUTSOURCED SALES MODEL: A business only outsources a part of the sales process to an external firm.
There are a couple of types of mixed models. The first is the vertical variety. This means that the sales funnel is divided into two parts. One part is managed internally, and the other externally.
For example, an outside company that generates qualified leads the startup then uses. This way, the startup can focus 100% on selling instead of the preliminary parts of the sales process. If this is where the internal team’s expertise lies, this is a smart decision.
The second type of mixed outsourced sales model is horizontal. This means that a business has both an internal and external sales team that operates simultaneously. This model fosters competition between the two teams, motivating the internal team to do its best.
The third type of model is geo-related, something often used by multinational conglomerates. Their internal sales team works on the domestic market while hiring local sales teams to take care of foreign markets. This minimizes risks and reduces costs because local teams know the market better than an outside salesforce would.
How do you get started with outsourced sales?
Define your goals
Unless you know what you want your outsourced sales team to do, you won’t know which firm to hire.
That’s why before you hire an outsourced sales firm, you need to figure out what your objectives are. This could be expanding to a new market, testing a new strategy, or offering a new service or product to customers.
Choose a firm that’s aligned with your goals
Make sure that a prospective outsourced sales firm has core competencies that match your product or service type. This would be a company with expertise in your industry, has excellent reviews from businesses like yours, and has the experience and ability to meet your sales objectives.
Read through their case studies to judge how well they’d fit. Having a good culture fit with your startup is essential even if they’re not in the same office as you.
Questions to ask
Here are some questions to ask when choosing an outsourced sales firm:
- Do you have experience in our industry?
- Can you describe your sales process?
- How do you define results?
- How do you report?
If you’re not sure what realistic results should look like for your company, ask businesses in your industry and look up industry-specific data on the Internet. To ensure accountability, see how often you’ll get a report from them and what data they include.
Consider outsourcing your recruiting process
Working with an outsourced sales team is fantastic for startups that don't have the budget or time to hire an in-house salesforce. By outsourcing your sales efforts, you’ll be able to focus with laser-sharp intensity on what you do best, which is growing your company.
Another way to boost startup growth is by outsourcing your recruiting process. Hunt Club is the best way to do that. We’ll build you a pipeline of high-caliber talent that will help take your company to the next stage of evolutionary growth.
If you need to optimize your recruitment efforts to get the candidates you need to help you build an extraordinary company, reach out today!