Certainly, the ability to develop in house resources to match the ability of a specialist company like ourselves appears to offer more potential. Typically, the thinking is based upon the assumption that doing it in house offers …
- greater control
- greater expertise
- a methodology for training/identifying future sales resources
- and other significant cost savings.
In other words the prevailing thinking is ‘we can do it cheaper and better’ in house rather than outsourcing to a 3rd party specialist!
On the surface, that seems like a simple cost-effective decision, especially when comparing with an outsourced operation. However, the practical issues are far more complex with the result that most in house attempts never achieve the desired objectives. And it is this failure that in effect reduces sales instead of increasing your profits.
The fact is that most organizations don’t have systems in place to control and track and manage in house tele-services / tele-prospecting activities. That’s especially true for startups. Success in winning new customers is far more complex than simply having you insist on a certain number of calls per day and providing a basic database (CRM) into which the results can be recorded. The need to actively manage personnel and the processes required are often overlooked.
Here are some of the required elements:
- A systematic methodology for recruiting, hiring and training qualified people.
- The more complex your subject matter and value proposition, the more difficult it will be to find the “right” people.
- Some considerations:
- University Graduates?
- Significant Business experience?
- Familiarity with selling to and navigating complex (and large) corporations?
- Some considerations:
- Complex products and services cannot be handled in a dialing for dollars mode using a script. This means you need smart people who can engage in a consultative dialog, think and probe, listen and “peel away at the onion.”
- Personnel management is an ongoing process because there will inevitably be turnover. Meaning more effort recruiting, hiring and training (with lost opportunity cost during the ramp up period). And that’s true even if a career path is established, because you’ll need to replace them when and if a promotion occurs. These substantial indirect costs are often not considered when a company considers going down the in house path.
- Making sure that your brand is being represented professionally
- Rigorous quality assurance
- Lead distribution and management
- Record Management
- Need to ensure that the notes related to the progress of each opportunity are sufficiently detailed to enable someone else to take over the record should the current business developer be replaced.
- Maintain focus: Often the Business Development team, once in place, often gets sidetracked with other duties (administration, account management, customer service etc.). Allowing this to occur dilutes the effectiveness of the entire effort as productivity drops dramatically.
So there is far more management time needed than is typically accommodated for. And on top of having to provide systems and dedicated management resources, you’ll need to provide efficient and quiet workspaces and phone systems that will support phone-intensive activity. Those costs are also usually overlooked.
To further complicate matters, because dedicated people are likely to be doing the same thing day in and day out, all day long, they are significantly less productive later in the day than earlier. The smarter and more sophisticated the people you hire, the greater the likelihood that boredom will soon set in. This inevitably leads to shorter tenure and higher churn rates. And then there’s vacation and sick leave with the lost opportunity costs associated with those periods as well.
At ETI we expect our productivity to be at least 100% more productive than that of a dedicated in house effort (deploying similar resources). Fact is on average we’re about about 200% more productive.
So, while on the surface it seems that doing it yourself may be better and cheaper it rarely works out that way. Once you take all the direct + indirect costs into account - and measure this against the actual outcomes - insourcing is usually substantially higher than outsourcing. And far less effective!
"Over the years I’ve analyzed what it would take to duplicate what they provided for us with internal resources and we always came up short on our analysis. It was always more economical to leverage a relationship with ETI."