Hiring and training staff is expensive. SHRM (The Society of Human Resource Management) estimates that the cost-per-hire is $4,129, and that replacing an employee can cost between six and nine months of their salary. When you consider the cost of searching, hiring, and training sales personnel, hiring an outside sales team can eliminate talent acquisition headaches.
When dealing with hiring and training sales staff, geography matters as well. Most B2B innovators are headquartered in major metropolitan areas such as San Francisco, New York, Seattle, Chicago, Los Angeles, and Atlanta. Although the pool of available talent in those locations may be larger, the cost of living and business operations is much higher (65.1 percent higher when you compare New York City to Salt Lake City and 58.4 percent higher when you compare San Francisco to Salt Lake City). That means more overhead for the company. Outsourced sales companies are often located in less expensive labor markets (for example, MarketStar is headquartered in Ogden, Utah), which reduces operating costs.
When weighing the pros and cons of in-house versus outsourced sales, you need to consider the limitations of maintaining an in-house sales team. For example, it is harder to scale sales quickly and cost-effectively, since you need time to hire and train new staff. You assume more increase risk since you are assuming more personnel cost and hoping that increased sales will offset the cost of the additional overhead. You also may have to hire experienced sales personnel to deal with routine tasks such as lead qualification, which is not an effective use of their expertise. Using an outside sales team also allows you to test new products and new markets while your in-house team focuses on key accounts.
Here are the five limitations of maintaining a solely in-house team:
- Limited personnel and resources: Scalability is essential to promoting growth, and with outside sales resources, you can expand your virtual sales team quickly and efficiently.
- Time to hire and train: In addition to the cost of hiring new sales staff discussed above, think about the amount of revenue lost during the time it takes to hire and train new employees.
- Increased risk: Building an internal sales team represents a risk if sales performance falls below projections or business conditions change. You could spend money and resources that turn into a net loss. Outsourcing sales is lower risk since there are no hiring or personnel costs and you can scale the outsourced sales team to meet your needs. Having turnkey sales resources at your disposal simplifies how you do business.
- Ineffective lead qualification: Qualifying sales leads is time-consuming and labor-intensive, and usually not the best use of a seasoned sales rep’s time. Lead calling and prequalification is one aspect of sales that can be outsourced with high returns, leaving your expert sales reps to work with prospects who are ready to buy.
- The risk of testing new notions: A company that is restructuring may want to hand off sales to maintain momentum until they have a new strategy in place so they don’t have to build an internal sales team before they are ready. At some point, you may want to outsource sales efforts to test a new concept or a new market. We are often called in to try out a new offering, testing market viability before the client decides to invest in building an internal sales team.
Leveraging an outsourced sales partner is a strategic move that will make more effective use of your in-house sales team and allow you to test new ideas with minimal risk. Outsourced sales are resources for hire, which means you can deploy them as needed without detracting from core sales activity.
If you do a cost analysis, chances are that outsourcing all or part of your sales program will yield substantial returns. If you need proof, consider some of the successes that other companies have achieved, or calculate what your own returns might look like. If you want to learn more, why not download our e-book, Is Outsourced Inside Sales Right for You?
