In the last few years, we’ve seen a wave of outsourced SDR vendors introduced to the SaaS community. An outsourced SDR firm is a company that owns appointment setting end-to-end, typically conducting outbound outreach, qualifying inbound leads, or a combination of both. There are generally three types of outsourced model: pay per appointment, pay for activities and a retainer model (no promises but they’ll do their best).
While we do have our opinions, we thought it would be best to first take a step back and look at this emerging trend from a higher view. Before we talk about which vendor to use, why are you considering this as an option for your company? Is this the best path? What should you know before you start taking this option seriously?
Where were outsourced firms a few years ago, where are they now, and where are they headed?
5 Years Ago – Traditional outsourced companies were not using modern best practices. Cold calling was executed with general scripts and little qualification. Marketing blasts were sent via email with tools like Marketo, Eloqua and Pardot. Outsourced firms were more like marketers rather than performing actual sales development work.
Now – With the boom of sequencers and automation technologies, outsourced teams can get closer to what an in-house team can do. Now firms deploy best-in-class tech stacks including third party data providers, sales engagement platforms, multi-channel prospecting tools, and comprehensive research solutions.
5 Years From Now – Software will start to eat farther down the qualification funnel and allow outsourced firms to get more specialized. Logic will be built in to the point where AI can handle more prospect engagement. Reps can have more creative time by doing things like researching and creating customized account prospecting strategies.
What are typical scenarios where companies go outsourced?
Companies at every stage ask us if they should consider working with outsourced SDR firms. After all, it’s risky to refocus full-time resources on an unproven strategy – when that strategy involves salespeople who are not given a revenue/bookings quota. Before we discuss the pros and cons of adopting an outsourced model, let’s talk about when it might make sense to outsource SDR work:
Proving the SDR model – Outsourcing sales development for the first time is less daunting, less expensive and can be easily folded or redirected. On the other hand, if you adopt an outsourced model that is not properly executed, you may assume that sales development is not a fit for your business (when it was really just an underperforming vendor).
Expanding into a new market – Sales development teams provide an incredible feedback loop from potential customers in your market (how they react to your value prop, what’s their current solution, what questions they ask about your solution). New markets can be incredibly complex to test, validate and navigate. Not including the fact that it’s a heavy investment when done in-house.
Offloading tactical SDR work – Having an option to allow your team to focus on pure selling activities is the ultimate goal. We are seeing more companies partner with outsourced firms to lift tactical tasks from their SDRs. For example, outsourced teams could take on the task of human account research and feeding target contacts into your CRM.
Augmenting what’s working internally – Imagine you are a sales leader carrying a much bigger number without the budget to hire enough full-time headcount. You might have enough money to augment your SDR team with a squad of SDRs “on tap.”
Companies with marketing departments that need to engage with non-TAM leads – As companies grow, their internal SDRs become more strategic and account driven. It’s typically not a good use of their time to focus on companies that fall outside of the Target Addressable Market (TAM). However, these companies could still generate revenue – we’ve seen clients go outsourced in this scenario.
Pros of Going Outsourced
Money and Time – You don’t have to spend money on recruiting, benefits, risk of mis-hiring, cost of ramping reps, promoting, and management costs that go along with scale.
Tools and Systems Access – Whether it be sales engagement platforms or data enrichment tools, providers generally have access to best of breed tools and have strategies that are tested from previous. Going outsourced saves you from the significant recurring cost and technical debt of building your own SDR tech stack.
Scalable – If your outsourced SDR experience is a success, outsourced firms generally don’t have a problem scaling their efforts. This ties in closely with the benefit of avoiding recruiting and ramaping headaches.
Experience – Outsourced firms have the benefit of running dozens of experiments in parallel to see what works and what doesn’t – in theory making them more effective. They can also apply the strategies and best practices that you may not have in-house.
Cons of Going Outsourced
TAM and ICP – If you don’t have your Target Addressable Market (TAM) and Ideal Customer Profile (ICP) clearly defined and communicated, you will hinder your outsourced SDRs ability to perform. Meetings will get booked, but pipeline, bookings, and churn metrics will suffer.
Disconnect with internal leadership and team – While you receive regular updates, it can be challenging to get a feel of how your outsourced SDRs are doing or performing at any given time. You will get regular reports but making/suggesting changes can be challenging in real time.
Vetted best practices – If your chosen outsourced firm is not using best practices, they will burn through your lead lists quickly and diminish your brand. If they say they are using tested best practices, don’t take their word for it. Ask for sample messages, cadence examples, scripts, and previous customer references.
Lose learnings – A little acknowledged fact is that SDRs can be a critical part of the feedback loop for the product team. If SDRs are regularly hearing from prospects that they’d like a Gmail integration, this information is gold. While outsourced firms say they provide this type of information to their clients, they’re not as incentivized to do so and we have seen this information fall through the cracks.
Developing in-house talent – If you agree with the idea that the best talent a company can have is developed in-house, then you’re at a huge disadvantage when going outsourced. When you think about developing your next best field reps, customer success reps, marketers and leadership, there’s no better option than in-house SDRs.
While Outsourced SDR firms have promise, they are still finding their identity. Are they a silver bullet to pipeline generation? Certainly not. But outsourced firms can add value when they are implemented in the right context.
Successful early adopters understand the drawbacks of outsourcing and realize that they offer a supplemental strategy. If you want to optimize for the success of an outsourced team, ensure you institute clear and constant communication, do everything in your power to enable them and above all, value the learnings rather than the outcome.
If you do go with an outsourced vendor, make sure that you get access to the “exhaust” that comes from all of the false positives the firm collects. It’s as important to make sure you get the information of where a prospect did not want to continue the conversation or process. This will allow you to update your systems so unfit prospects will no longer be reached out to, saving you and your team valuable time.
While you can be successful if you follow the guidelines we’ve listed here, we still recommend an in-house sales development team if you want to drive meaningful growth over the long run.
SalesSource is a sales consulting firm that brings implementation & advisory together to accelerate growth. We work with B2B companies that need to accelerate time to predictable pipeline and revenue – because it’s tough to uplevel your revenue operation alone.
Contact us at [email protected] to learn more about building world class sales development teams.