Should You Outsource Lead Generation?

Like most articles with clickbait titles that asks big questions that require nuanced answers...it depends!  :)

In this article, we focus on the strategic thinking around the in-house versus outsourced lead generation question.  We intentionally don’t focus on the economics of the matter because it will be different for everyone:

• For companies that are just getting started with outbound sales, you need to put some road behind you before you will understand your unit economics.  
• For companies that are already cranking with outbound sales, your unit economics should already be telling you what to do!

Note that the thoughts that we share below come with quite a bit of experience...and admittedly a smidge of bias.  RevBoss started as an outsourced lead generation agency and has since become a sales development software company.  So wherever you land on the issue -- in-house sales development team or outsourced sales development function -- we might be able to help!

In-House Lead Generation Pros & Cons

An in-house sales development function means that you (or your organization) owns the entire sales development process.  You hire the team, build the workflow, use the tools, etc.

In-House Lead Generation Pros:

• You’ll build a sales hustle culture.  A team of lead generation hustlers can do wonders for your team culture.  Done well, an in-house lead generation team generates energy, emotion, and velocity that will feed other areas of your business.
• You’ll have more control.  If you own the process, you can control every step along the way -- this requires more investment, but also translates to more upside.  This means custom fitting your messaging, process, team, and tools to suit your exact product and your exact market.  In some ways, having it all under one room can simplify the process in that you don’t need to coordinate with a 3rd party.
• You’ll be able to go deeper.  An in-house team will be much more effective if you’ve got a small set of target prospects or if your product requires a long-term relationship sale.  A 3rd party is not the answer if you need to work your network, buy steak dinners, and attend kids’ birthday parties to open up opportunities.  Services companies in particular need to think twice about outsourcing sales development because timing is such a big factor in the sale.
• Once you nail it, you can scale it -- big time.  If you own the process end-to-end, you’ll have a much easier time scaling it once you crack the code.  And if you’ve got a big market and a chance to own, you need to be ready to scale your process.

In-House Lead Generation Cons:

• The process takes lots of time and resources to get started.  You’ve got to build a process, hire a team, train the team, refine the process, etc. -- none of which is easy, particularly hiring.  By the time you recruit, hire, and train your first SDR you could be several weeks into the process with an outsourced partner.  And unless you’ve hired lots of sales pros in the past, you will almost certainly make hiring mistakes that you’ll need to unwind.
• The process takes time to yield fruit.  If you close a deal in the first 3 months, you’re killing it.  6 to 9 months to your first deal is more likely.  Building everything internally will actually add to the time-to-results because you’ll need to factor in the front end of the building process and the management overhead needed to nurture the team and process.  
• The lead generation tech stack is complicated.  You can hire great people, nail your messaging, and refine your process...but none if it will matter without a technology stack to support and automate your process.  The lead generation tech stack is awfully messy -- you need to be ready to put a lot of time and effort into developing a toolset that works for you.

If you’ve got a product with a clear path to market and the experience and resources to make a big investment, then your best bet is to build an internal sales development function.

Outsourced Lead Generation Pros & Cons

An outsourced lead generation function means that you (or your organization) works with a 3rd party that owns all or part of your pipeline generation process.  Your partner hires the team, builds the workflow, and runs the process that feeds warm leads into your sales process.

Outsourced Lead Generation Pros

• You can get started very quickly.  At RevBoss, we have our customers up and running in 2 weeks or less with a software-driven, process-perfect sales development process.  For some companies, this is awfully convenient.
• You get instant expertise.  Instead of stumbling through the dark and making rookie mistakes, you can get the benefit of your partner’s expertise and experience.  Skip all of the painful lessons learned and skip ahead to the right process, right away.
• You can experiment with less risk.  If you’re taking a new product to a new market, you probably don’t want to distract your core team with 6-month prospecting experiment that may or may not pan out.  This is a perfect case for an outsourced partner.
• You can add more engines to your process.  If you’ve got your process nailed, it often makes sense to replicate and accelerate with an outsourced partner with experience in hiring, training, and executing.  It can be much easier to bolt on more resources via third party than it is to recruit, hire, and train internally.
• You can turn it off, dial it back, or dial it up less painfully.  If you’ve never done sales development, then it often makes sense to work with a partner to validate the process.  If it works -- great!  Ramp up the partner or build your own process.  If it doesn’t work -- no biggie!  Shake hands with the partner, walk away, and be glad that you don’t have to fire anyone.
  
  

Outsourced Lead Generation Cons

• You don’t build the muscles.  It goes without saying that in choosing to work with a 3rd party, you are effectively choosing not to build a process in-house -- which means that you’re not going to develop the process, know-how, and experience on your team.  This isn’t necessarily a bad thing, but it is a trade-off that you need to consider.
• It still requires work.  Outsourced lead generation providers aren’t magicians -- they’re typically very good at the process but will still require time and attention from you, the customer.  Good partners need help at the outset and should quickly find a groove, and thus shouldn’t require tons of babysitting in the long turn outside of day-to-day coordination.  But if you’re putting forth significant time and effort getting a partner up to speed, you might consider investing it in your team not a 3rd party.

If you need to move very quickly or need help ramping up the process, then your best bet is probably working with a partner to execute your sales development process.

In-House vs Outsourced Lead Generation Review

To summarize, in-house sales development is usually best for:

• Companies with well-defined markets and well-defined products.
• Companies that are looking to go big and need to invest big.
• Companies with small markets and big ticket, high-touch sales.
• Services companies with long-term, relationship-based sales.
   

And outsourced sales development is usually best for:

• Early stage companies that are still figuring it out.
• Management teams that don’t have sales experience.
• Sales organizations that don’t have technical resources.
• Sales organizations that are taking new products to market.
• Companies that sell commodity products and can cheaply outsource.

A Framework To Help You Think About Lead Generation

Here is a quick framework that you can use to think through the decision to insource or outsource your lead generation process:

1. Are you ready for outbound sales development?
1. If no -- then get ready!  Or just don’t start at all.
2. If yes -- next question.
2. Do you have the cash, resources, and patience to own the process for the long haul?
1. If no -- then think about outsourcing for a short-term test...or just not starting at all.
2. If yes -- next question.
3. Do you have a well-defined target market and repeatable sales process?
1. If no -- figure it out...or consider outsourcing to figure it out.
2. If yes -- next question!
4. Do you have a big, big market that you want to own?
1. If no -- consider an outsourced partner to right size the process.
2. If yes -- next question!
5. Do you (or someone from your team) know how to build a sales process?
1. If no -- consider an outsourced partner to get started.
2. If yes -- next question!
6. Do you (or someone from your team) know how to build a sales team?
1. If no -- consider an outsourced partner to get started.
2. If yes -- fire it up!  Hire a team and get going!

Once you're up and running, your decision framework is less qualitative and more quantitative -- ultimately, the numbers should tell you what to do.  I’ll write about that next time.