Inside Sales: To Outsource or Bring In-House, An Analytical Perspective
About 15 years ago, I started my move towards sales and marketing taking an inside sales position on contract at a start-up. It was fairly grass roots and a lot of prospecting involved. I didn’t do too bad and was successful enough to be offered a full-time position. At the time, I opt’d to move on to a more established mid-size company where they had a small team of inside sales to support the field and drive smaller revenue deals.
It got me thinking about how much the industry has changed. The communication channels are so complex now and ever time I work for a new company their sales structures and strategy are different from the next. Oh, and we can’t forget the demand funnel and how complex it has become. The funnel is now a process of multi-touch engagement and purchase predictability with a highly analytical approach to driving pipeline and sales.
How are companies, supporting heavy digital and top funnel engagements, organizing their sales teams? More specifically, what role does an inside sales person play? What are the cost implications of outsourcing vs. in-house inside sales talent? I decided to do a comparison – evaluating the costs, the impact, the scalability, and the overall success of each. Take a look below.
Outsourcing Inside Sales
COST: This is a highly effective approach to inside sales, keeping overhead to a minimum and allowing for project/volume scalability which helps optimize the budget associated with this function. You may spend roughly $120/hour per rep to an agency but you are not managing the staff nor are you paying costs associated with hiring and retaining permanent employees.
LEAD CONVERSION IMPACT: 35 – 50% of sales will go to the vendor that responds first (source: Hubspot). That makes sales follow-up a critical component to revenue generation. When you outsource, you have the capability of tasking inside sales with follow-up SLA’s and directing them to the areas that require the most attention.
SCALABILITY: With outsourcing inside sales has strengths like scalability and cost but they can also be the people that do the not-so-glamorous work of cold calling or responding to inbound inquiries that in-hous teams may avoid because there is not immediate value or return on investment.
“46% of high-growth tech companies are growing revenue by leveraging inside sales rather than outside sales.” – Harvard Business Review
In-House Inside Sales
COST: There is high overhead when hiring permanent employees. I typically take a mid-range salary and multiply it by 2-3x as an estimate of carrying cost etc. Team management, scaling projects up or down, managing employee turnover, and handling training and on boarding can take up time internally by upper management which pulls them away from revenue generating activity.
LEAD CONVERSION IMPACT: Although you may have the same capacity to set SLA’s within your internal inside sales teams, often this is hi-jacked to focus on enabling the field to close deals. In other words, your management ownership to the inside sales team is not yours 100% of the time.
SCALABILITY: It is difficult to scale a team of permanent employees and change focus and direction. For example, if inside sales have built a strong relationship with their field counterpart and work alongside them very closely they will not like having to switch gears and drive registration for a marketing event. It will be difficult to get buy-in from sales to support this change and may even cause future collaboration challenges.
So What Should You Do?
If you answer yes to any of these questions below, I highly recommend you test the waters with an external partner that have inside sales experts who can easily adjust to the demand of your business and respond to the needs of both sales and marketing.
- My executive team is not convinced we need inside sales and think our executive sales teams are managing all aspects of the demand funnel well.
- My budget does not allow for the fixed costs associated with on boarding and building a dream of inside sales experts.
- The company is in need of net new pipeline opportunities immediately and cannot invest the time to recruit, onboard, and train a team.
- You have a concern about retention of the team. You suspect you will manage a high turnover rate because they will see it as a stepping stone to executive sales.
- Your lead management system is not mature and needs optimization as you work the inside sales process. You don’t want to invest heavily into a team of inside experts if you are not certain that your current model is as good as it can be.
Outsourcing a team of inside sales experts helps you test your lead management system, allows for flexibility in scaling up or down as your business requires, and reduces your overall expenditure. It doesn’t have to be a permanent solution but if you are green in this area and want a team of experts supporting your journey, I highly recommend outsourcing. Put a 3-year plan together and evaluate, tweak, and optimize the process before you invest in headcount!
If you’d like to speak to on of our experts about inside sales, contact us below!