How to Decide to Outsource Sales - Step 1: Determine the Current Sales Team Performance

What does outsourcing mean for Sales?

"Outsourcing is a business practice in which a company hires a third-party to perform tasks, handle operations or provide services for the company." Link For our purposes, outsourcing sales means hiring an outside person, whether in the United States or internstionally, to sell the products that your business offers. At first, this person will have little to no knowledge of your company or your products. The goal of this course is to provide a framework to outsource one of the most crucial parts of your company's revenue production: sales. But the first step in this journey is to answer the question: when do I know that I need to outsource sales?

Determine the Current Status of Your Sales Team Using KPIs

The first step is to evaluate where you are with your current sales team. and this generally starts with evaluating the numbers for your sales team.

Many successful companies use Key Performance Indicators ("KPIs") to evaluate their sales teams. (According to HubSpot)[https://blog.hubspot.com/sales/kpis-every-field-sales-leader-should-be-measuring], KPIs are metrics used to track the performance of a business, a department, or individuals against goals. Choosing KPIs that are most relevant to your industry and business goals is key — focusing on the wrong ones can be costly to your company.

Identify How You Currently Sell: Inside Sales vs Outside Sales

How your sales team members approach potential and current clients is important in evaluating whether to outsource sales. The first step is to classify whether your current sales employees are in inside sales or outside sales.

"The main difference between inside sales versus outside sales comes down to how you sell your product; via technology or in person. Inside sales involves selling products and services remotely. This can take place using a variety of methods including phone calls, emails, video conferencing etc." Link

"Outside sales is where you sell products and services in person through face-to-face meetings, and other more traditional mediums and events. These can include industry events, conferences, trade shows, seminars etc. This can even include bars and door to door sales. As you can imagine this method involves a considerable amount of travel."Link

KPIs for Inside Sales

According to a study by Salesforce, the average inside sales team has 14 KPIs. Link. The number of KPIs for your sales team doesn't matter as much as making sure your sales goals align with your company objectives.

  • Calls Per Day. This is simple: the number of calls each sales person makes per day. In general, this number is set between 20 and 80 calls per day. Each sales team member should have a list of qualified leads that he or she can work off of throughout the day. A qualified lead is a person or business that has expressee interest in your company's services.
  • Calls to Contact. This KPI measures the number of contacts that each inside sales team member has each day. If your sales team is calling a lot of leads but not making contact, then you have to evaluate the time of day and phone number that each person is calling. Low contacts indicate a problem that needs to be fixed. A good benchmark for the calls to contact KPI is between 10–15%.
  • Average Call Time. If your sales team can't actually keep a prospect on the phone, then sales will not result. "While tracking the number of calls per day is a valuable metric on its own, inside sales reps shouldn’t focus on blindly hitting a number; outreach needs to be targeted, meaningful, and genuine to generate sales. Merely hitting the calls-made benchmark doesn’t offer a full picture of sales productivity. Any half-decent inside sales rep can make 100 phone calls a day, but those who spark high-quality, engaged conversation from the get-go will stand out above the noise." Link. Depending on your industry, a good average call time KPI is between two and five minutes.
  • Calls to Lead. When a sales person makes contact with a prospect, they can qualify that person as a potential lead. This usually leads to further contact and sales activity. Keeping a keen eye on this metric will allow you to keep your sales pipeline full and lead to closing customers in the near future. For those sales people that do make contact, industry standards generally convert a call to a lead at a rate of 8% to 12%. Anything less than 8% means additional training is necessary for your sales people.
  • Closing Ratio. This is the end all KPI for inside sales teams: how many leads they convert to paying customers. It is also called Conversion Rate or Client Acquisition Rate depending on the industry. You can find it by dividing the number of calls to contacts by the number of customers result or calls per day by customers acquired. A good ratio is anywhere from 1% to 5% (ie, 1 out of 100 calls to 5 out of 100 calls).

KPIs for Outside Sales

Outside sales is your boots on the ground team meeting face to face with prospects. Both inside and outside sales teams have similar KPIs.

(Geckoboard)[https://www.geckoboard.com/blog/sales-kpis-how-to-define-the-right-metrics-for-your-b2b-sales-team/] offers a list of ten excellent outside sales KPIs:

  • Activity per rep: The average number of calls, emails, or other outreach activities performed by each sales rep over a set period, such as daily or monthly. You can narrow this metric further and look specifically at calls per rep, emails per rep, or meetings per rep, depending on which activity has the best conversion rates for your business
  • Average follow-up attempts: The average number of times a sales rep tries to contact a lead before giving up on the lead
  • Average sales cycle length: The average amount of time between the first contact with a lead and when they become a customer
  • Customer acquisition cost: How much it costs in sales and marketing tactics to acquire one new customer. Compare this to customer lifetime value to see if you might need to adjust pricing or reduce sales costs
  • Lead response time: Average time it takes for a sales rep to follow up with a potential lead. This metric is typically for self-identified leads, such as people who submit a form or download an ebook
  • MQL to SQL conversion rate: The percentage of marketing qualified leads who move down the funnel to become sales qualified leads
  • SQL to Win Conversion Rate: The number of SQLs who become paying customers
  • Number of deals closed: The number of deals your sales team closes in a certain time frame, such as weekly or monthly. Compare it to your goal number of deals to more accurately gauge your progress. You can also track this metric for individual sales reps
  • Pipeline volume vs. goal: The total number of leads currently in your sales pipeline compared to your target number of leads
  • Revenue growth rate: Your month-over-month percentage increase in revenue

Putting It All Together and Identifying Your Conpany's Strengths and Weaknesses with Current Sales Staff

Now that you know the KPIs, roll your sleeves up because it is time to get to work to determine where outsourcing sales could be a good fit and where the current team needs improvement. Gather all of the information and calculate the KPIs identified above. Meet with your existing sales staff to determine where they have areas of weakness. Would hiring out some of their day to day duties help increase KPIs? For example, many businesses find that outsourcing lead generation is crucial to increasing sales. \(INSERT\)

Once you have your KPIs determined, how do you determine if they are above or below your competitors? There are a few methods to compare your current KPIs:

  • Compare KPIs Over Time. One basic way to determine if your sales teams are performing up to your business's standards is to look at KPI performance over time. For instance, is your lead response time better this year than it was last year? Are more qualified leads leading to more closed sales when compared with the same period in the past. To compare over time, you must have data to compare it against. If you have just implemented KPIs, this option may not be feasible.
  • Compare to a Rolling Average. If you don't have historical data on your business's KPIs, one way to track your performance is to compare it against a rolling 30-day period. For example, if you were looking at the Calls Per Day Metric, you would average the total number of calls per day from the last 30 days - total the Calls Per Day from Day 1 to Day 30 then divide by 30 days. Then on the next day, you would find your rolling average by summing the total Calls Per Day from Day 2 to Day 31 then dividing this total by 30. Continue doing this for the foreseeable future and you will be able to compare in real time whether your performance was better or worse than the average performance over the previous period. Rolling averages are an effective tool to examine real-time performance, and they don't require a lot of historical or past performance data on sales.
  • Compare to Industry Data. While sales KPIs are a closely guarded secret, some general rules of thumb exist. Try searching for your industry and then the term "average sales KPIs". You may also check with your trade industry council to determine if they keep statistics.

How to Decide Which KPIs to Improve With Outsourced Sales People

Once all of the data and KPIs have been calculated, the next step is to decide on how to improve these sales metrics through outside sales. Look for KPIs that do the following:

  • Sales KPIs for Outsourced Personnel Must Align With Business Plan Objectives. Outsourcing sales is no easy task, but one well worth undertaking. Pick KPIs that align with your business objectives and long and short term strategic plan. Outsourced personnel in sales will be quick to grasp the importance of improving KPIs once they understand how it aligns with your overall business goals. For example, if you are in Oil & Gas Distribution, you may want to increase new customer distribution to help raise revenues by funding new research to identify new opportunities in oil site exploration. By linking the KPI of increased Calls Per Day with a long term goal of finding new long term opportunites, you give the outsourcer insight into your business and a goal to measure their efforts against.
  • Sales KPIs Must Rise to Industry or Historical Standards. Current KPIs may be below historical or industry standards. Identify these KPIs and focus on ways to improve them through outsourcing. For example, your sales staff may not be responding to qualified leads in a timely manner. Outsourcing this task to a qualified professional is an excellent way to take some of the load off existing personnel and give the outsource professional a clear goal.
  • Target Select KPIs Rather Than All At Once. It is tempting in some organizations to try to improve all underperforming sales KPIs all at once. This is not only unfeasible from a cost and time perspective, it may also be harmful to the overall goals of the business. Choose 1 to 3 overall sales KPIs and determine how best to improve those through sales outsourcing. For example, finding qualified leads might be a challenge for the existing sales team. Using a lead generation source might not only be cost effective, it will help massively improve on KPIs.

Summary & Conclusion

In this first step, we have run through the way for your business to measure your current sales team's performance. You have taken an important first step in hiring outsourced sales professionals to help improve your business. Measuring current sales employee's performance and whether outsourced sales people will help improve this performance starts with identifying key KPIs that drive your business. Then you can proceed to the next step of defining your outsourced sales team's goals.