In a recent call with a prospect, the question of “outsourcing the sales function” came up.
Rather than answer the question directly, I asked him what he meant by that. He proceeded to tell me that he had read how some companies are outsourcing everything, including their sales effort. However, he said, from his perspective it was not a particularly good idea.
Rather than tell you why outsourcing sales won’t work for most companies, let me tell you where it does work.
One client has been successfully outsourcing their sales effort. They are in the Internet advertising business and are now placing their inventory with brokers. This company sells “clicks”. This is a totally generic product. Where one click might be better than another click, it is adjusted through tracking results. Their click and Google’s click are essentially the same thing. If their click is better than Google’s click, the results are all tracked and balanced out. There is no way that Google will get more than his click.
On the other hand, client David W. is moving from a rep strategy for his internationally marketed industrial products. Rep firms are outsourced sales teams. However David is reversing the “outsourcing” because he knows that having his own rep in a territory means better sales focus and better accountability.
Another example is when, ten years ago the radio advertising business got all excited about selling its inventory like Google sells clicks. A former partner created a company to do this and sold it to Google. It was a giant dud. He made millions. Google ended up shutting it down and writing off their investment. Why? Because local advertising is not a commodity. It responds to sales effort and it cannot be tracked the way clicks on the Internet can.
Where its true, in my view, that business has used the excuse of this Crash of 2008 to outsource and downsize, efforts to outsource the sales effort have been a failure. In fact, when the Government stops QE whatever number we’re on, companies who’ve been ramping up sales efforts will prosper. Nothing works better than a great sales team to improve the top and bottom line.