Staying in Your Own Lane

I had an opportunity to speak last week to a group of early stage startups on the topic of managing early growth. One founder asked me to describe my biggest challenge in my entire startup history. The response that immediately came to me was the difficulty I and most entrepreneurs have had in sustaining focus on the core business.

After nine startups, I have become a huge fan of on-demand outsourcing. Yes, given that my latest business is an outsourced business process model, it is admittedly a self-serving affinity, but this might be a true chicken and egg phenomena come to life.

If you think about all the ways that businesses rely on outsourcing today, it would be crazy for a startup to try and build their own version of a legal, accounting, logistics, recruiting or any other non-core” back-end” business function. But, what about non-core “front-end” business functions? What about on-demand sales and marketing?

No one builds their own advertising team, yet somehow brands emerge. No one tries to generate leads manually or manage their customer interactions on a spreadsheet anymore, and as a result we have 650+ sales and marketing technologies all vying for a place in our hearts. This “outsourced” lead gen, scoring, ABM, sales enablement and lead nurturing business is intended to what? Improve our sales reps’ ability to mine the opportunity shafts of their target demographics more efficiently and increase their selling productivity.

But, ateotd, you still have that same team of sales reps doing what they have always done with the same result they have always produced. That is, 20 percent of them produce 80 percent of the sales while the other 80 percent come along for the ride. The only change to the cost model is that it has gotten more expensive and the amount of time sales reps spend actually selling has been reduced to less than 30%.

Base comp is higher. Commission plans cost more. The sales tech stack is expensive; Salesforce Lightning Unlimited alone runs $3,600 per user per year. The benefit burden is higher – most plans now approach 40% of base comp. In short, paying your own inside sales team is expensive, and building and maintaining that team costs even more.

Why should the business of driving revenue be managed any differently than the business of logistics management? FedEx and UPS specialize in providing reliable shipping services with consistent results. To replicate that service, you’d need to purchase trucks, hire drivers, and you would have to manage it. Outsourcing it to a team of professionals who already have the experience and equipment to fulfill your needs would dramatically cut overhead costs and minimize your risk of failure.

One significant benefit from outsourcing is predictable cost. With an outsourced model, you know exactly what the run rate will be each month and with most outsourced sales models you can dial it up or down as your capacity dictates. Another benefit is predictable revenue. If you believe that your business model responds to leverage, that is if you believe that by increasing the number of sales activities your team can execute, there will be a resulting and correlative increase in closed business, then by allocating a specific force multiplier, you ought to be able to predict future revenue as well.

That predictable revenue metric is the way that you can measure the one result that no outsourced sales provider can guarantee … deal volume. If your deal volume depends on increasing lead flow, prospect conversations and interactions – that is if you have a viable product or service – then, outsourcing to a cold prospecting provider gives you the top of funnel ammunition you need to close more deals.

Look at the problem through the other end. We are now in a job seeker’s market. Unless you happen to be one of that handful of big-deal tech super-stars or sexy startups with heavily hyped runway, you’re going to have a hard time finding sales talent. Instead, you will grow that 80 percent crew with even more mediocre players who will accept your less than stellar comp plan and produce … well, you know. Big producing sales reps like to sell big, game-changing products in big hungry markets. Is that you?

Recruiting, training, compensating and then managing a sales team is a big long-term investment, and unless it happens to be your core business, you are distracting your management team and yourself from the true issues central to your growth. You also assume all the risks of bad hires and what they can do to your team’s performance as well as their cultural impact to the rest of your company. And, as long as you are looking through this end, also throw in the time and cost of recruiting in this tough market and what you have is a huge downside with almost no upside. Why no upside?

Let’s do some math (from Bridge Group and Vorsight data):

In a buyers’ market, it takes 90 days to hire and onboard a new sales rep.

We’re not in a buyers’ market. So, it's worse.

It takes 4.4 months for a new rep to become productive and 10 months to become profitable. And in the new sales 3.0 world, where NO ONE answers their phone or returns email, it get's harder every month.

Only one-third ever deliver quota. Period. Think about that.

The average rep performance is 52 sales activities and 6 conversations per day.

Every time you churn a rep, it costs 200% of their comp to replace them. To say nothing of what it costs YOU.

I told my audience last week that many people strongly believe that this model works, and they swear by it. But as my buddy Henry Ford once remarked about innovation, “if I had asked people what they wanted, they would have said faster horses”, I believe that when you compare costs and performance, what markets really want is a different form of transportation altogether. They just don’t know it yet. Consider:

Inside sales activities = 52/day – Outsourced sales activities = 400/day

Inside sales conversations = 6/day – Outsourced sales conversations = 46/day

Inside sales cost = $X – Outsourced sales cost = less than $X

In addition to the obvious math problems, according to the Bridge Group, the top challenges for inside sales managers are:

1.      Productivity and performance

2.      Recruiting and hiring

3.      Forecast accuracy

4.      Ramping new hires, and

5.      Coaching & development

So, as I told my audience last week, I started UberConnectForce because after my own experiences of managing to unpredictable, expensive and disappointing results, I started looking for an alternative to the big shovel.

I believed that faster horses was not the answer to increased sales, nor was continuing to do things the way we have always done them in the past. We have instead created a model that approaches selling in an entirely different way, leverages extensive use of the leading sales acceleration platform, employs smart, college-educated, small-town community-based sales talent and operates on a scalable, multi-channel outreach structure and process that favors the customer.

We are additionally blessed with some of the best sales and marketing leaders on the planet who are on our advisory board and help us get our customers’ messaging into the most effective communication structure possible, and a world-class cybersecurity expert to assure that we and our customers don’t violate any current or future data privacy regulations.

And to answer that challenge question, I said that my biggest yet is the one I am working through now, which is to persuade CEOs and sales executives to try a different ride. In other words, my competition is the status quo. It may be hard going for a while, but I’m pretty sure that one day soon, we will all get to witness a new Henry Ford moment in sales.

Then, sales will join legal, accounting, recruiting and logistics as the newest member of the outsourced on-demand business model.