Corporate leaders always consider increasing sales and decreasing costs are two of the most effective ways to increase profits and build shareholder relationships. Outsourcing as explained in previous chapters is a common practice to reduce costs, boost sales and focus on core competencies. Outsourcing the field of sales function is equally effective as the other services of an organisation and may be more complex according to Outsourcing Field Sales (2014) report.
Traditionally, sales outsourcing has been used by companies that are expanding into new territories or when developing a sales team around a new product. With the growth of the Internet networked companies, total sales business process outsourcing (BPO) has now become an accepted practice (Endurance Group, 2016).
Sales Outsourcing Benefits
Large, established firms as well as small starts-ups have realised the benefits of outsourcing in field of sales. When a company is in the start-up phase or ready to expand to the next level of corporate growth, it needs to focus resources on its core product and may be not on developing sales processes. Endurance Group (2016) report explains by outsourcing sales business process, these small businesses can move forward quickly because they can take advantage of the expertise of experienced sales outsourcing company and it is generally affordable. The general benefits can be listed as follows:
- Lower overhead cost;
- Standardise sales costs via commission rate or hourly rate;
- Deploy a larger multi-faceted sales team;
- Eliminate fixed payroll and benefits costs;
- Profit from years of established relationships;
- Increase sales coverage.
Outsourcing Field Sales (2014) reports meanwhile mentions that Tony Horwath, president of Sales Focus, Inc, a provider of sales force outsourcing to the IT industry, stated, “Many business owners are reluctant at first to outsource sales. The sales process is like any other business process.” He adds, “We utilise our extensive contacts and experience within the IT marketplace that small and medium size companies cannot achieve through traditional organisational structures. The benefits include delivering a dedicated focused sales force to customers along with years of management experience, proven processes and industry contacts, at a fix monthly expense, which allows companies to effectively manage their cost of sales.”
However, it is common sense that the importance of the organisation to find a vendor, not only understands organisation’s market but has had years of experience in the similar industry. To the companies that intend to reach distant markets sales providers particularly can be a very valuable asset.
Graham (2015) on his white paper report “Death of the Salesman the Myths Exposed” claims, according to research only 12% of businesses outsource any of their sales function. He further outlines, the original book, written by former executives of CPM Australia had conducted independent research in the Asia Pacific and Europe as well as real-life case studies. The book argues about the organisations reluctance to outsource sales. And this reluctance to outsource sales activities in favour of ‘in-house’ control is explained as a large opportunity is missed. It advises the organisations need to understand the world has now changed. What was ‘core’ in the 1980s does not primarily apply with the technology-driven 21st century economy. And yet despite the many proven benefits, outsourcing in the sales environment still lags far behind compared to other sectors.This is due to many misunderstandings such as:
- Outsourcing results in loss of control;
- No-one can be as loyal as our own in-house staff;
- There is little point in outsourcing because the cost savings aren’t significant;
- They won’t have the skills and expertise to deliver as we do;
- Sales is a core competency and should not be outsourced;
- Lack of reactivity in responding to changing market, consumer and business conditions;
- Outsource providers don’t add value and they just do what the organisation asks them to do without offering new ideas and initiatives.
It is an understood fact that poor planning and execution basically leads to BPO failures and this is similar to sales. To make the process risk free many experts explains the partnership approach is often the best and for sales it is crucial. However, before even starting the process of finding a partner to work with, the organisation needs access itself and seriously consider two things: what it hopes to achieve from sales outsourcing, and how well it can manage the outsource partnership once it is underway (Graham, 2015).
Outsourcing does not simply mean transferring the total responsibility of process to someone else. Once the contract is underway organisation should be aware of what its responsibility and act on to make it a success. Even-though, vast majority of organisations look at sales outsourcing mainly for to reduce costs, most will realise later, focusing on the cost-reduction goal alone is fundamentally short-term thinking. Apparently, sales outsourcing process is a long term commitment. However, this approach will bring improvements in productivity, efficiency and quality if pitfalls are addressed correctly.
When outsourcing goes wrong most complain about people issues more than anything else for the main problem. Graham (2015) says, with 60% of respondents reporting people-related issues as causing problems with their outsourcing arrangement, compared with only 12% reporting technology related issues as causing problems. Because of this reason, it is important to devote more effort to ensuring a cultural fit between the organisation and the supplier along with a good financial and technological fit.
Selecting the Right Partner
However, if a firm selects a outsourcing partner for sales outsourcing the supplier becomes the heart of the firm’s sales operations. In most cases the supplier will become the customers’ first contact and the organisation must trust the supplier to safeguard its brand and reputation. Usually, the references from previous business partners of the provider will help to get a good idea about the level of support they usually offer. In these cases to use, a check list for organisations to analyse selecting partners has been created by Pipeline Management . The areas of interest are as follows:
- Sales Process and Methodology – Any sales outsourcing vendor engage should be able to clearly outline their sales methodology;
- Sales Automation Tools – Technology can make all the difference in the efficiency and visibility of your sales operations;
- Performance Management and Reporting – Key Performance Indicators (KPIs) drive the goals, actions, and the success of sales operations;
- Cost – In addition to assessing whether the cost of a sales outsourcing program is compatible with budget, evaluate how the sales provider charges.
In summary, outsourcing sales and obtaining benefits is an avenue for growth for an organisation in today’s complex and competitive business environment. The decision to proactively collaborate with an external experienced partner or do it own can have a serious impact on the future survival of any business. But it’s a decision, which has to be made sooner rather than later for most organisations.