Brands are increasingly moving work that traditionally has been done by external partners to in-house agencies. Strategy, creative, media, social, influencer marketing, production, and experiential work is shifting.
According to an Association of National Advertisers survey, the numbers are significant enough that external agencies need to pay attention. The ANA’s survey of brand marketers showed that 78 percent have at least some in-house operations, compared to 58 percent in 2013 and 42 percent in 2008.
Just as the structure is shifting among brand marketers, professional services companies are also grappling with the question of in-house or sales outsourcing as it relates to their new business program’s outbound sales.
As someone who ran a team of 12 business development directors (BDDs) for the advertising industry’s leading outsourced lead generation company, I know firsthand the pros and cons to each. Although there is not one best way to operate an outbound sales program, this article outlines seven key factors to consider when making a decision.
What is sales outsourcing?
Sales outsourcing is usually done as a cost-cutting measure. Instead of depending on, and paying for, an in-house team, outsourcing uses the developed workforce of an outside organization to perform tasks. Agencies can use sales outsourcing to better focus on the core aspects of their business, such as strategy, creative, and account services. By outsourcing non-core activities, agencies can improve efficiency and productivity.
Within the ad industry, outsourced lead generation firms like Catapult New Business and RSW specialize in servicing agencies and marketing service providers. Generalist B2B lead generation firms play in this market too, and the expertise provided ranges from professional to rogue.
What is in-housing?
In-housing uses existing resources or develops resources within the organization to perform tasks or to achieve a goal.
Here, in-housing means to build a capability instead of using a third-party lead gen firm. Outbound sales responsibilities would be assigned to someone within the firm, or one or more business development representatives would be hired to perform the activities.
Consider these Seven Factors
There’s no right answer on whether to in-house or outsource outbound new business. Discipline, average deal size, client category, and size should be taken into account when evaluating your options. To help make a more informed decision, consider these seven factors that address the pros and cons of each option.
Factor 1: Cost Efficiencies
Effective cost per hour is generally less because you’re not paying a third-party vendor and their value based or “cost plus” pricing.
Sales outsourcing typically reduces the overall cost of the labor package. You’re not responsible for recruitment, onboarding, and training costs; employment taxes and benefits; equipment and software; and have significantly less management time.
Most BDDs at outsourced partners are spread across multiple clients, so while you may be paying less overall compared to hiring in-house, if you take into account the amount of time dedicated to your account, you’re often paying much more per hour when sales outsourcing. Ask the outsourced partner how many hours will be dedicated to your account each month. Divide your monthly fees by that number to determine your effective hourly rate and decide which makes sense for your situation.
Here’s a simple example of the cost differences:
- In-house BDD earns a $125,000 salary, but with benefits and overhead, the true cost is likely closer to $187,500 or $90 per hour.
- Annual outsourced services are $85,000 for a part-time BDD and team support. If you get one-third of their time, the true cost is $255,000 or $122 per hour.
Factor 2: Agency Knowledge
Because the BDD is a part of your team, over time, they will become an expert into your agency’s story, capabilities, and case studies. This more in-depth knowledge can lead to more thoughtful strategy, more targeted lists, more effective messaging, better conversions with prospects, and more meetings advancing to wins.
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Note: Even with in-house agency knowledge, be sure to invest in sales training and development via websites, books, podcasts, and formal programs.
Agencies can fall into ‘self-belief,’ and destructive groupthink where everyone convinces each other an idea is strong. There’s a real advantage of having the objectivity of an outsourced partner to challenge the agency.
Further, good outsourced partners provide ongoing sales training and development to their team. They draw on work across multiple clients to identify and share best practices. Collectively, the new tactics and tools can lead to better results.
Note: Before contracting, be sure to ask your outsource partner what the BDD and team’s onboarding and training process will be for your account.
Factor 3: Time
Many firms will assign outbound activities to an account person who is also splitting their time between clients and outbound work. With the right person, this can be successful, but more times than not, it doesn’t work. To truly take advantage of bringing outbound activities in-house, you will want to allocate 100% of their time to new business.
Note: Ask yourself if you have the financial stability and patience to have a BDD dedicated only to unbillable work for the next 12-18 months.
Most outsourced partners have their sales representatives spread across multiple clients. As such, you’re often receiving a fraction of their time. Because they’re spread across various accounts, you’re also receiving a fraction of their headspace and creative thinking. Like it or not, new business is still a numbers game. More time means more activity, which leads to more results.
Factor 4: Personnel
You likely will need your BDD to lead strategy, write cold emails, place cold calls, and perform administrative tasks. They may or may not be good at all those skills. To compensate, leadership may need to get involved with strategy, and you will need to lean into the firm’s resources to help with the other responsibilities.
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Start with an audit of your internal resources and be honest about who can and cannot support the BDD. If you can’t allocate these resources to support, you will need to be careful when recruiting that your BDD can perform at a high level in each of these areas.
Outsourced led gen companies generally come with a team that includes
• A strategic lead
• Sales specialists conducting outbound sales activities like cold call and email outreach
• Administrative support to manage prospect lists and sales technology tools.
Each team member has skills in specific areas of the outbound sales process, often resulting in greater efficiencies and effectiveness.
Note: Ask the outsource partner for the list of everyone who will work on your account, the number of hours each will spend on your account each month, and to speak to the account team before contracting.
Factor 5: Process
Unless the agency’s leadership has specific experience managing sales programs, you will need to recruit a BDD that does. In my experience, the most successful people in prospecting roles come out of higher-volume, transaction-based roles in ad-tech, mar-tech, media sales, and similar industries.
Just because a candidate has years of agency new business experience does not necessarily mean they will see success prospecting. Conversely, someone with high-volume sales and a general understanding of the marketing ecosystem often performs well in outbound sales programs.
You can teach agency capabilities but typically cannot teach the hunter mindset necessary for outbound success.
Agencies often find that creating an outbound new business program from scratch is difficult. Agency leadership generally does not have experience managing a sales process or a sales team.
Sales outsourcing allows agencies to plug into their systematic and proven approach. Outsourced partners can move swiftly into market because there is an established model in place and the tools to support their program.
Factor 6: Quality Control & Transparency
Insourcing lets you better track the development process and have more control over the quality of work. You can implement, test, and assess alterations more quickly, if necessary.
You’re also able to recruit, onboard, and train the person responsible for your new business efforts. Like all of your FTEs, you have the opportunity to zero in on specific candidate requirements such as discipline experience, category experience, and culture fit.
Note: While in-housing can offer more control, be prepared to invest in CRM and sales engagement platforms that provide detailed analytics to measure the program across a variety of key performance indicators.
With outsource partners, you generally have limited, if any, input into your representative. Ask to meet the team. Interview them. Make sure you’re comfortable with the aptitude and that they fit your culture. The best long-term relationships I have seen with outsourced partners and agencies are ones where the BDD becomes a true extension of the agency.
Note: Be sure to ask how often status updates are scheduled and for sample activity reports.
Factor 7: Sales Technology Stack
With in-housing, you get greater control of the sales tools used for your agency. While outsourced vendors often have best-of-breed tools, some tools may not be best for your agency’s particular use case.
Or, you may require other sales tools that the outsource vendor does not use, and they often will not introduce a new tool into their workflow. If they do, it will come at a cost.
I’ve seen sales campaigns executed by outsourced partners fail simply because the data list being used was inappropriate for the agency based on their target audience and capabilities.
Reputable sales outsourcing partners will come with a best-of-breed sales technology stack, including CRM, data lists, sales engagement or marketing automation platforms, and research tools. The outsourcing partner generally has contracts with vendors, reducing the cost to you for these platforms. They also have experience implementing these tools and can quickly set up and get clients into market.
Choosing the right solution for your firm’s outbound sales requires a careful examination of these seven factors.
Sales outsourcing provides specialist resources and knowledge of best practices and technology. However, your agency is not the only client, and you effectively pay more per hour for the team and processes. It’s the less-expensive overall investment, but you’ll also be getting less of a BDD’s time.
By contrast, the in-house solution gives you control of the talent, sales tools, and progress, yet requires more of the agency’s resources, sometimes without enough support for the BDD. There’s a more significant investment, but you end up with a dedicated team member fully committed to outbound sales at a lower hourly cost.
Neither outsource or in-house options will be successful if your agency is undifferentiated or has weak case studies and thought leadership.
Before you choose either option, make sure you’ve done the foundational work to enable either to be successful.
If you or your senior leadership team have limited sales experience, you should consider starting with an outsource partner. Obviously, the objective is to find an outsource partner to help you win new business, but even without a positive ROI, it will be an investment into an education on how to set up and run an outbound program.
What are you going to do for your agency to keep a steady pipeline of new work coming your way? Choosing the right approach to outbound sales is a critical decision for your agency, and you need to get it right.
If you’re unsure as to which path to take is the right one for your agency, contact me for my point of view on your agency’s needs.