6 Must-Haves Before Embarking On Sales Outsourcing
Sales Outsourcing Prep
You're intrigued by the idea of sales outsourcing, and want to explore it. But how to start? Considering outsourcing an important portion of your business like sales gives you a great opportunity to evaluate what you're doing now, which parts of it are working well, and which parts need improvement. It also forces you to really understand your sales function and deconstruct it from the ground up.
Whether or not you eventually make the decision to outsource your sales, going through the process of clarifying your sales function and how it operates will be good for your business and help you moving forward.
To get the most out of a consultation with a sales outsourcing company, you must have a good understanding of your current sales structure, costs, and challenges, as well as an idea of where you would like to go in the future. Here are a few things your sales outsourcing company will need to know before they can develop a proposal for you:
What is the structure of your sales process?
Simply put, how does a potential customer get from Point A (never having heard of your company) to Point B (buying your product or service)? You should know how your sales reps are finding leads, how many and what type of contacts it takes to turn those leads into sales, and how long the process usually takes. Does converting a prospect into a customer typically take a week? a month? a year? Do your reps do most of their selling via telephone or email? Or is in-person contact an important part of a sale? Are you satisfied with the way your reps are selling now, or do you feel that a different sales method would be more effective?
How many sales reps do you currently have? How many would you like to have?
The first question should be easy to answer. The second depends on your goals, budget, and ability to scale delivery of your product or service. One of the advantages of hiring a sales outsourcing company is the ability to quickly ramp an initiative up or down as needed. You can start out with just a few reps and quickly expand to saturate a market quickly or expand into new areas.
Be aware that fixed cost per rep often goes down as the number of reps increases, so an initiative without good ROI on one rep might look very attractive with four or five reps. Play around with the numbers until you find a number that looks good from all angles. Don't forget your sales management. Do you have an adequate number and quality of managers for your current sales team, or are they suffering from a lack of motivation, training, or mentoring?
What geographical areas do you currently cover? Would you like to expand?
Again, this is a straightforward question. While expansion into new geographic markets might be complicated if done in-house, a sales outsourcing company often has a larger range of resources and expertise that makes moving into new markets relatively easy. Your outsourcing company can also help you understand the implications of differing tax and payroll burdens in different states.
What constitutes ideal monthly production for each individual rep?
This number varies greatly between companies, and only you can really determine what is reasonable and attainable for your specific product and industry. Your first step should obviously be to take a look at what your reps are producing now, as well as the conditions under which they are producing it. Is their compensation appropriate for the industry and their skill level, and structured to incentivize them properly? An effective compensation structure can be difficult to nail down, and is something with which you should seek outside help if you are unsure how to proceed. Do they receive regular training and motivation at well-planned and executed sales meetings? If you feel comfortable that your sales process is running at maximum efficiency, your reps are most likely producing near the level you should expect. If not, consider consulting with a sales outsourcing or training company to get a better idea of what is reasonable to expect.
What percentage of your revenue goes toward cost of goods sold?
Knowing how much your cost of goods is will help you figure out your margin and know how much you can afford to put toward acquiring sales. The smaller the percentage of revenue that you must put toward the cost of procuring your good or service, the larger budget you have to work with when you go market it.
What is the total cost of your current sales function, and how does that cost break down?
Many companies underestimate this number, because they include only the commissions they pay to their sales reps. However, other sales expenses may be buried in other places in your overall budget and costing you money even though you're not aware of their existence. To really drill in and understand how much your current sales team is costing you and whether you could save money by outsourcing your sales, be sure to take into account all the following expenses:
- Base salary for sales reps
- Benefits like health, dental, vision, 401(k), and paid time off
- State and federal taxes, including FICA, unemployment, and workers compensation
- Sales commissions
- Regular sales and product training
- Recruiting and HR expenses
- Background checks and drug screening
- Account management, including client reporting
- Any incidentals for travel and entertainment
- Technology and licensing (internet, hosting and backup, cell phones, laptops, and any other sales tools)
- Office rent, equipment, and supplies
- IT Support
- CRM and other software
Many companies find that when they add up the full cost of their sales function, it is considerably more than they had thought.
Once you've clarified the information above, you're equipped to make the decision of whether sales outsourcing would make sense for your company. If you are having a hard time coming up with answers to any of the above questions, consider taking them to a sales outsourcing company for clarification. Most such companies offer a free consultation and are more than happy to assist you in evaluating your current sales efforts and whether they could be improved upon by outsourcing your sales. Ready to speak with someone? Contact Netpique sales outsourcing today!