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Is it time to Outsource your Sales Operation?

 

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A few years ago, I wrote a blog about some of the major changes that were and still are shaping the world of Sales (http://www.dantranscon.com/index.php/blog/entry/does-your-trucking-company-still-need-an-outside-sales-force ). In that blog, I suggested that economics, technology, and customer requirements were raising questions about the value proposition of an in-house sales team in the freight transportation industry.

A few days ago, I read an article posted by the Business Guru Club (https://businessguruclub.info/outsourced-sales-management-how-does-it-work/ ) that made the argument that Sales is a functional area like Accounting. Companies can benefit by outsourcing their Sales operation as they do their Accounting activities to a for-hire third party.

“For small businesses trying to launch their own sales department can be very difficult, time consuming and above all – risky. If sales don’t start to come in and you have to dismiss staff a lot of time and money has been wasted and this could break the business.”

The article goes on to say that “by outsourcing your sales management you gain a ready-made sales department, with all the equipment and expertise you could possibly want in order to bring the business in. You gain assistance with strategy and basically get a sales manager as well as a sales person from day one. Targets are put in place from month one and a measured return on investment established before any activity is undertaken. You can also turn the service off and on as required or even off altogether if targets are not being met. Costs are controlled and yet no more expensive than in house. . . Let the experts bring the business to you by outsourcing your sales process while you concentrate on delivering a brilliant service to your customers and growing your businesses operations.”

There is no doubt maintaining a sales team is costly, particularly a poor performing team. Paying six-digit compensation packages to weak sales personnel can be a drag on profits. Some companies do not have a core competence in Sales or Sales Management. It is tempting for companies that struggle with the management of Sales to consider outsourcing to an outside sales service. Before jumping on the outsourcing bandwagon, here are a few items to consider.

Sales Personnel Interface with Customers

Revenues, the lifeline of every company, come from customers. In most companies, sales personnel manage the customer interface; they secure and retain these customers. For companies considering outsourcing their sales operation, they need to think long and hard about entrusting this critical relationship to a third party. It is difficult to “turn the service off and on.” For companies that make this decision, it is hard to tell customers that the sales team has been released and that they are being replaced by another sales team. Disrupting the sales rep/customer relationship can lead to revenue erosion.

Managing Customers is very Different from Managing Financial Transactions

Sales success comes from the interplay of several related activities. Revenue retention and growth comes from Marketing, Pricing, Promotion, Sales, and operational performance. In the freight transportation industry, this performance must be sustained over time. This demands that the sales team maintain an ongoing relationship with their customers and not just focus on bringing in new business. These functions must be skillfully calibrated and integrated.

Companies considering outsourcing their sales function need to think about who will control prices, margins, and discounts. Who, how and when will customers be entertained, and with what type of budget approval process? How will the sales reps and managers interact with other management functions? Other than sales personnel, who else will have responsibility for interacting with customers?

Managing Salespeople is a unique Skill

Sales personnel are often different from other employees. They tend to have unique personalities. They are the face of the company to customers. Are you comfortable in having these customer-facing people managed by and working for an outside company? If your sales team works for another organization, how loyal will they be to your company?

On the surface, outsourcing sales looks like an easy way to let someone else manage a troublesome area of the business. Look before you leap.

 

Dan Goodwill & Associates Inc. (www.dantranscon.com) is a consulting practice focused on helping transportation companies improve their sales productivity and profitability.  Contact me at dan@dantranscon.com if you need some assistance.

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Guest Thursday, 17 August 2017

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