When's The Right Time To Hire Outsourced Sales Reps?
Many companies struggle with the decision of when to hire outsourced sales reps. This is especially true of organizations that are in a growth or scale stage when business development is critical to the overall success and delaying a decision can delay scaling sales in the market. It can be difficult to determine whether your sales program is ready to scale to a larger team, with outsourced reps being the quickest way to do so.
So, when is it time to make the leap? What signs should you look out for that tell you that you’re ready to outsource? Let’s dive in.
Established Product-market Fit
The first of three steps in knowing whether it's time to hire outsourced sales reps entails proving the existence of product-market fit. Companies often assume there’s a need for their offering, but lack the market feedback to back up these claims. If you can’t prove that there’s demand for your product or service, you should not be looking to hire outsourced sales reps. If you add sales reps to sell a product that hasn't been proven in the market, there's a very real chance that your sales investment will uncover evidence that you need to drastically pivot your product, wasting your initial sales investment on an imprecise product-market fit exercise conducted by a sales team built for scale Instead of immediately looking to scale, you should be looking for a vendor that can provide a product-market fit exercise to decrease the amount of sales and marketing investment you need to make to get context around the big product-market fit question.
A company with an established product-market fit is going to have strong customer retention, at about 70% (for a B2B tech company in the US). If you are struggling to keep the customers you have, let alone bring in new ones, your organization likely has larger problems than adding bodies to its sales program.
You Have Established Your Sales Unit Economics
It’s critical to have a strong grasp on your sales unit economics before you consider growing your team with outsourced sales reps (we discuss sales unit economics in more detail in this piece). You need to have a strong understanding of your target customer acquisition cost, and what your sales funnel looks like from the lead stage through to closed-won revenue. These funnel metrics will allow you to set business development goals at every stage of the sales cycle. To get these funnel metrics, you’ll need to figure out your inputs and outputs and determine the cost structure and revenue creation capabilities of your sales program. You need to ask yourself, how much am I spending on labor? How much potential revenue am I generating? How much actual revenue am I closing? If your company is not finding and closing new clients at a predictable, profitable rate, it makes no sense to add to that sales team, since they will continue to generate meetings at a financially untenable rate by following an unproductive playbook. Before considering growing your team, you must ensure your processes and procedures for selling are in working order.
Time To Scale
If your company checks the first two boxes, it is officially time to consider scaling your sales program. You have proven there's market demand for your product and there's product-market fit through retention, you understand the assembly line of your sales and marketing program and what inputs and outputs look like, and now you need to ramp up production. However, scaling internally is easier said than done, especially in today’s market.
Many organizations plan on building their sales team internally, but fail to recognize the pile of costs associated with doing so (and doing so quickly). Hiring SDRs isn’t as simple as putting out an ad on LinkedIn. It takes time and effort to find and hire the right candidates, and even if you do, they likely won’t be there long. Does your company have the infrastructure in place to support a new hiring initiative that brings in high-quality candidates at a reasonable cost? Can you afford the time and costs of being wrong on a candidate when the future of your sales depends on you being right? If not, it is going to be very difficult to scale a sales program while also scaling your hiring capabilities.
The short tenure of SDRs is also a factor companies need to consider when attempting to scale a sales team internally. With the average tenure of an SDR sitting at only a year and a half in the SaaS industry, and with ramp time sitting at about three months, you’re only looking at a total of 15 months of productivity out of any internal hire. This causes many companies to fall into a cycle of having to restock their pool of SDRs with new, greener talent just as their old talent is becoming productive.
Additionally, you must consider the cost of training this new talent, who are likely recent college grads with little to no experience. Can you afford to train these reps, and do you even have the capability at the moment? Your program is likely to churn through reps quite fast, causing snowballing hiring and training expenses to bring in new talent. This is no way to grow a sales program.
If you have reached the juncture where your sales team is ready to be scaled, but you’re not sure how to proceed, it is never a bad idea to consider outsourcing. Outsourcing allows your firm to leverage operational consistency and get the most out of their investment by trusting the experts. If your firm has spent all sorts of effort on establishing the existence of product-market fit and building an assembly line, it should be staffing that assembly line with the best talent. The most consistent, repeatable way to do that is through outsourced sales reps.
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Is your company getting ready to take the plunge and scale its sales program? We can help. As a provider of all-encompassing revenue operations support services, we’re here to help your team with anything sales, marketing, and customer success, from staffing to consulting, to tech stack implementation, and everything in between. FullFunnel is home to the best sales talent and processes on the market, and we’ve leveraged years of data and industry experience to create a proven formula for successfully driving demand. Request a free consultation to learn more about our unique approach to sales and marketing.