Criteria for Insourcing vs. Outsourcing Business Development

I have written extensively over the years as to why and when it makes sense to outsource business development primarily for economic reasons.  

That being said, when a company is considering business development to create a systematic and sustainable lead pipeline building process one must consider a number of criteria (not only cost).  

 

Let’s consider some of the issues:

Criteria

Insource

Outsource

Headcount

Will require allocation of resources and overhead.

Draws on Human Resources investments and resources.

Headcount will not need to be increased,

In fact you may gain an opportunity to reduce current headcount or overhead.  

No Human Resources overhead required.

Retention / Churn

Business Development staff are often looked on as entry level for Sales jobs. If so they are not hiring people with the right abilities (for business development) as sales requires different skills.

Hiring the wrong people will increase turnover and lower success potential for the insourced operation while at the same time incurring additional costs.

The provider is responsible for providing qualified and professional staff.

At ETI our staff retention record is second to none and the median tenure of an ETI Business Developer - will for the most part - be longer than of an insourced Business Developer.

Control

Everything done under your roof.  They are your employees and they are assigned to focus on your business only.

Perception is better quality personnel and management.

Perception is that you have less direct control as it is not under your roof.  However in reality you exert substantially more control - for example the ability to ramp and and down, messaging control, real time production levels and results monitoring etc.

In ETI’s case we provide as a deliverable complete transparency (far more than would normally be available inhouse).

Focus

Inevitably an insourced operation (in our experience) is rarely 100% focused on the business development task ahead.  Over time priorities change and in many cases general administration and account management activities creep in.

100% focused on the business development task at hand.

Fully accountable for results.

Productivity

Insourced operations are rarely as productive as outsourced ones.  

Result:  Lower throughput of leads into the Sales Opportunity Pipeline.

Generally speaking productivity levels in real terms of an insourced operation will be about 50% of the outsourced company meaning that to fill your sales opportunity pipeline you will require about 2X the staff levels just to match the outsourced solutions throughput.  (See our prior blog on this subject.)

At ETI, whatever the model (Hours / Pay for Performance or Hybrid) you get 100% for your investment.   

Product knowledge and expertise / Brand Representation

Insourced should be better with more invested in training and access to information.

However, if the business development task is to identify new business opportunities - i.e not sell or close the sale - then engaging in highly technical discussions when the need it to build interest and awareness, might be a minus not a plus,

Conversations should be focused on need/pain current solutions etc.

Conversations should be consultative … not sales or product oriented.

Focus is entirely on identifying in qualifying and quantifying potential.

In reality since ETI’s BD’s generally have longer tenure than insourced, they often have a better understanding of your solutions as well as the the applications within the target markets being called.

Hand off is only done once relevant criteria meets this requirement.

Management Expertise

Management expertise in Business Development is rarely available insourced - and if there it is usually focused on other activities.

Acquiring such expertise or reassigning internal management is costly and disruptive.

Extensive experience and expertise.

In ETI’s case it’s management team is unsurpassed having decades of experience in “making it happen”.

Generally speaking insourced operations cannot deliver the extensive experience of the outsourced solution provider.

CRM

Most companies today have a CRM.  However, few CRM’s (if any) are built to maximize Business Development productivity.

However, to optimize and drive the internal operation you will usually need additional licensing costs and the training and or consulting fees that go with that.

If you stay with the CRM as is, your productivity levels and the ability of management to effectively manage the activity will be significantly compromised.

In ETI’s case we have a CRM (i*Collaborator) built entirely to manage the Business Development process.  Even third party systems that “bolt on” too traditional CRM’s cannot match our state system.

Furthermore, ETI offers services to leverage traditional CRM API’s to push and pull data seamlessly giving you the best of both words.

ETI has also developed its own tools to allow its staff to operate in your own instance of Salesforce.com while leveraging ETI’s CRM to maximize productivity and efficiency.

Technology

Although the technology components today are largely commoditized (and relatively lower cost) an effective insourced operation must have the following capabilities.

  • Monitor live
  • Record calls
  • Mentor live
  • ACD

Some older systems do not have these capabilities and may require additional purchases/licenses.

Any outsourced operation worth its salt should have a state of the art PBX and or technology platform delivering all the functionality required.

Suffice it to say that the notion that cost and the perceived improved internal controls and quality of staff is often not true.  When comparing apples to apples you may well find that an outsourced solution (or an outsourced supplemental team) can more than match an internal effort both in terms of costs, results, brand delivery and the overall productivity of your sales effort.

 

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