Hey there! Today, we're diving into a topic that many businesses grapple with: should you invest in an outbound sales agency, or is it better to build your outbound team internally?
Outbound sales, especially when it involves cold calling, is notoriously challenging. If your team already has the capabilities to handle outbound efforts effectively, you might not need to consider external help. However, if your internal setup lacks these capabilities, this discussion is for you.
Should You Contract an Outbound Sales Agency?
This is a question I frequently discuss with clients. The decision to outsource your outbound sales can significantly impact your business's growth trajectory, costs, and overall efficiency. Let's break down the considerations to help you make an informed choice.
The Problem: Scaling an Internal Outbound Team is Hard
Scaling an internal outbound team isn't a walk in the park. It requires substantial financial investment, often running into hundreds of thousands of dollars. The investment goes:
Initial set-up costs
sales coach and other enablement costs
Necessary tooling
Hiring good talent
Additionally, even when hiring the right talent it is hard to keep sales representatives. A high attrition rates among sales representatives will disrupt your momentum and necessitate continuous hiring and training efforts.
When Outsourcing Makes Sense
There are several scenarios where outsourcing your outbound sales to an agency makes perfect sense. If you're looking to reduce founder-led sales efforts, entering a new market, running a seasonal sales campaign, or if time is of the essence, an external agency can provide the necessary support. Additionally, agencies often have access to advanced tools and technology, which can be particularly beneficial for early-stage tech companies looking to scale quickly.
When Not to Outsource
However, outsourcing isn't a one-size-fits-all solution. If your business model revolves around selling a process rather than a product, or if your service or solution is highly complex, maintaining direct control over your sales process might be crucial. Outsourcing in such cases can lead to a loss of control and potential reputational risks, which might outweigh the benefits of hiring an external agency.
But when you hire an outbound agency, make sure they do multi-threading.
Embracing Multi-Threading and Cold Calling
I firmly believe in the power of multi-threading as essential components of a robust outbound strategy. Multi-threading simply means that you leverage multiple channels for your outreach. Be that social like LinkedIn, email, calls, or conferences. While there are industries where AI-based solutions combined with LinkedIn and email can yield impressive results, certain sectors still benefit significantly from the personal touch of cold calls. The key is to assess whether your target market can engage effectively through these channels without requiring in-depth platform discussions during the initial contact.
ROI Calculation: Internal Team vs. Agency
Let's delve into some numbers to illustrate the cost dynamics. Imagine you have a small Business Development Representative (BDR) team in Western Europe. Monthly expenses might look something like this:
3 BDRs with On-Target Earnings (OTE) of €15,000 each
1 BDR Manager with an OTE of €7,500
(assuming €60k yearly OTE for BDR manager and €90k for BDR manager)
This brings the total compensation to €22,500. Adding 20% overhead for taxes, tools, and administrative costs, the monthly expense totals €27,000. If each BDR targets 10 meetings per month, the cost per meeting stands at €900.
These numbers are quite optimistic, considering that achieving 10 meetings per month can be challenging. In comparison, some agencies charge between €600 and €1,000 per meeting, or offer retainers in a similar price range. Purely from a cost perspective, partnering with an agency often emerges as the more economical choice, provided they deliver the promised meetings.
Recommendations: Test Before Committing
While the numbers might suggest outsourcing as the better option, it's essential not to rely solely on a simple ROI calculation. There are intangible factors, such as loss of direct control and potential reputational risks, that need to be considered.
My recommendation is to conduct a test in a specific market. A three-month trial with an agency can provide valuable insights and is a relatively minor investment compared to hiring and building a new internal team.
Sometimes, specific market conditions or regulatory changes might necessitate quick action, making outsourcing a strategic move to capture opportunities swiftly. Conversely, if you have an established team and simply need to ramp up outreach for a limited period, an agency can provide the additional manpower without the long-term commitment.
So, outsource or not outsource?
Choosing between outsourcing your outbound sales or building an internal team depends largely on your unique situation. Evaluate your current capabilities, consider the costs and benefits, and weigh the intangible factors that could impact your business. By conducting thoughtful tests and analyses, you can determine the best path forward to drive your sales efforts effectively.