Outsource Lead Generation

Should you as a business selling modern products outsource lead generation?

Before we begin, let us explain what we mean by a modern product. These are products which did not exist 10-12 years ago; think SAAS based products, e-commerce, cloud-based solutions etc. Purchasing these products usually involves a change in behaviour from your buyers, either in terms of how they use the product (cloud-based instead of installing), or how they purchase the product (subscription). If you feel this describes your product or solution, we urge you to read further.

Most modern organisations today look to outsource non-core activities to external agencies.

While there is some debate on the benefits of outsourcing, those in favour of it seem to be prevailing for the following arguments.

  • Outsourced agencies have specialised resources for the task.

  • Having these activities in-house consumes the bandwidth of the management(attrition, hiring, reviews etc).

  • Outsourcing makes it easier to scale up and scale down if required.

  • Outsourcing drives more accountability in the task.

Outsourcing has found great acceptability in areas like customer service, accounting, legal and administrative work. However, when it comes to sales, people have been reluctant to outsource any part of the process. And why wouldn’t they be? After all, sales is considered a core function for the organization.

Stages in the sales funnel vary greatly in their need for expertise & effort

While sales as a function is a core activity, there are elements in the sales process that can be considered repeatable & time-consuming. These are often the primary culprits in dragging down the productivity of sales rep.

Let’s look at the typical stages of a sales funnel for a modern business and the activities involved:

Also commonly referred to as lead generation, this is the first step of the sales process to find potential customers. It usually involves a two-part process:

  • Pre-qualification:

    This involves creating a lead universe of potential prospects based on simple parameters like industry, company size, revenues, number of employees, number of offices/physical locations, etc. These details are publicly available and easy to find.

    For example,. a recruitment solution provider might look at the number of employees, the number of new joinings in the previous year, and the hiring pipeline.

  • Outreach:

    This is the part where the sales rep reaches out and makes initial contact with prospective clients over a call or an email. The conversation usually involves two parts; asking basic questions to assess if the prospect is a fit and providing a brief of your offering for the client to do the same.

At this stage, the sales rep asks a series of open and close-ended questions to understand the situation, challenges & motivation of the prospects to make a change and adopt your product offering. The sales rep might also filter or qualify prospects at this stage based on the newly acquired information (requirement/budgets/timelines, etc).

Through a series of conversations, the sales rep tries to convey the value of your solution in terms of the needs, challenges and desired end state of the prospect. This stage involves product demos, pilots, sharing case studies, handling objections & negotiations.

The prospect commits to purchase your product/solution and, through a series of steps, is taken through the steps to use your product solution. The objective is to ensure that your solution is adopted smoothly by the client’s team.

Ongoing engagement with the client to ensure they are getting the right value from using your solution followed by trouble-shooting, supporting and regular engagement to drive more value.

Happy clients lead to further business either in terms of repeat business, purchasing more products or referring to other clients.

Modern products require a high degree of expertise in sales

If you look at these stages from a prism of complexity or skill required(knowledge about the product, knowledge about the buyer, ability to and effort (repeatable but time-consuming tasks) here’s what it looks like:

Stage Complexity Effort
Prospecting Low High
Need assessment High Low
Providing a solution High High
Onboarding Low High
Client Success Moderate Low
Renewal/Expansion High Moderate

Now let’s look at the typical sales team in modern business.
Most modern businesses hire fairly senior resources in Sales. Ask any founder/sales head of modern business and here’s what you would typically hear:

“Ours is a consultative selling process. Our product adoption usually means a change in behaviour for the client and needs significant persuasion despite the obvious value it might add. Our best salespeople can navigate through this process, discover stated & unstated needs, and position our product in the right context. It takes considerable skill & experience to do so.”

These are people who are good at understanding the needs of the client, customize/ present the solution, and effectively explain the features, advantages & benefits in the client’s context.

Highly skilled Sales reps are spending most of their time on low complexity tasks

While this is expected from a sales representative, how they spend their time is much different.
We spoke to and studied the activities of over 100 seasoned SAAS sales professionals. We sat down with them and noted down every hour spent! Here’s what we found in terms of time spent on each activity:

Stage Complexity Effort Time spent
Prospecting Low High 50%
Need assessment High Low 15%
Providing a solution High High 15%
Onboarding Low High 15%
Client Success Moderate Low 25%
Renewal/Expansion High Moderate 25%

The time spent on prospecting might come as a surprise to a few people. Keep in mind that the funnel drops significantly in the prospecting stage, making the number of deals worked upon much fewer thereafter, though the time spent on each might be higher. Alternatively, you could also sit with one of your sales reps for a day and reach the same conclusion.

Most salespeople spend more than half their time prospecting! Another 10-15% time is spent on onboarding! If you have such highly skilled people in your team, you should aspire to have them spend time in front of the client.

How can outsourcing help in increasing the productivity of your sales team?

The table above might suggest that there is ample opportunity to improve the productivity of your sales reps by cutting out non-core tasks. External agencies like outsourcing lead generation companies suffer from certain shortcomings though. They do not have as much context about product changes, new features or recent case studies as an inside salesperson would. Usually, external agencies are able to perform well when there are well-defined and repeatable processes and clear conversation guidelines.

Outsourcing a part of your sales process indeed makes sense for a SAAS based modern organization. What activities, and to what extent largely depends on the maturity of the organisation and its sales process.

Early-stage
(product-market fit)

At the very early stages (product-market fit), it’s best to keep all activities in-house.

  • First hand feedback from each stage is critical in developing your sales process in the initial days
  • A repeatable process & established benchmarks like conversion rates & time in each stage are prerequisites for outsourcing
  • This services might seem attractive at this stage but won’t get you the desired outcome.

Mid-stage
(growth)

At this stage, SAAS business should look to outsource low complexity tasks.

  • Once you’ve established product market fit, reaching out to a large number of prospects becomes critical to growth.
  • A small field sales team cannot cover enough ground. Sales people tend to de-prioritise prospecting.
  • It helps you reach out to a wide audience without incurring high sales salary costs.

Late-stage

With an established sales process, businesses can outsource the onboarding process

  • This helps you manage the higher number of onboarded clients
  • Establishing clear onboarding and early usage metrics can help you monitor and control infant churn
  • Sales teams can continue to intervene at critical junctures during the client lifecycle to assess and execute renewal or expansion.

Our Fee is Performance Linked If you are at a stage where you’d like to explore outsourced lead generation, you can find out more about our services here.

Take The First Step

Frequently Asked Questions

1. How does outsourced lead generation work?

This exercise typically involves you hiring an external agency to prospect for you. These companies usually have an in depth discussion around your target market, value proposition and will co-create collateral like email templates, call scripts etc. They will then, on your behalf, reach out to your prospective clients either over emails, messages or phone calls. Typically at a pre decided time in the sales funnel these leads would be transferred to your internal teams to take it forward.

There are some variations a bit based on when this handover of the ‘lead’ takes place. At the lower end you have basic lead database companies which will just pass on contact details( emails & phone numbers) of relevant people without having a conversation with them. Alternatively they could run a mail campaign for you and handover the responses to you. The lead quality in such cases might be on the lower side with quite a few non relevant leads passing through the cracks. However the cost per lead works out to be much cheaper in this case.

In slightly advanced exercises, the agency not only makes the initial reach outs but also has the first conversation with the client. This conversation is largely to understand & qualify the client requirement and to give a brief about your offering. The cost per lead in this case is usually higher but is offset by the higher quality of leads you are likely to get.

2. How do outsourced lead generation companies work?

They typically work with large databases. These could be either internally created through scraping data online or purchasing existing online it it databases. Once the database is filtered based on your target segment, it will proceed to make contact with your buyers either over email or over the phone.

In terms of pricing models, it will either charge you a retainer for doing a certain number of reach outs or charge you for the number of leads delivered or a combination of both.

3. Should I Outsource my Lead Generation?

The decision to outsource your lead generation depends on the stage of your organization, nature of your product, size of your sales team and current sales funnel. It works better if you have a clear understanding of your target segment and value proposition. Well defined products and services do a lot better than bespoke consulting services. Finally if you have an existing sales team who are good at converting quality leads but don’t get enough opportunities in front of the right buyers, this is the right step to improve your sales engine.

4. What are the benefits of outsourcing Lead Generation services?

Primarily it helps you scale your sales effort without incurring fixed sales cost and conserving management bandwidth. Setting up, training and managing an effective inside sales team requires considerable skill, experience and time. Moreover attrition and managing productivity in an inside sales team can be a challenge in a young organisation. Unless you have such skill & bandwidth internally, it might be wise to outsource lead generation to an external agency with the requisite expertise.