TRANSCRIPTION OF EPISODE
Chris: On this episode of intent topics, we’re going to talk about outsourcing versus hiring business development reps. Good afternoon, Logan. How are you doing buddy?
Logan: Good. How are you?
Chris: Good. Yeah, this is a topic that’s come up a couple times recently in sales calls and I thought it’d be worth chatting about the kind of pros and cons of outsourcing business development reps versus hiring them and putting them in house. What are your thoughts on that?
Logan: Well, I think obviously businesses need to make the right decision for them. And I have some thoughts on how to figure out if that’s right. So if that’s where we’re going to talk about today, let’s dive into it.
Chris: Let’s do it. What do you think? So let’s start with what you said they’re kind of, it depends. So it’s not a one size fits all thing for sure. So let’s talk about that a little bit.
Logan: So business development and sales, I think have been separated due to the amount of activities that are now possible. So back in the day, salespeople, you could just give them a list, they could go on the road, whatever it was very simple. Now, the amount of data that’s out there, the amount of opportunities like selling has over the last 20 years, like you can sell over a vast expanse as opposed to really tight territories because of the phone and Internet and sort of go to meeting and all that kind of stuff.
Chris: So you’re not traveling around anymore? [crosstalk 00:01:57] You’re doing research making conversations start, right?
Logan: Yeah, exactly. And so I think that’s where the business development role is really important because they can … the amount of data and calls and emails and cold stuff that there is to do, you could completely sort of inundate a sales guy or women with tasks that are not necessarily high value. I think that salespeople should always prospect, but I think it’s a little bit different. Like you can arm a salesperson with material to prospect in a list of prospects that’s not necessarily like completely cold and all that. So when it comes to business development, you really have to think like, “What kind of expanse am I selling into? Do I have a very focused …” like if I’m in an industry where there’s only a hundred firms, I never want to hire a business development person. I want to make sure that the salesperson is that’s going to be touching that account is going to be really working that.
If I’m in a fairly expansive, highly competitive sort of marketplace, then business developments are a great opportunity to really weed out for that salesperson the right opportunities. So when it comes to, do we want to go the business development route in house or outsource? We first need to decide, is business development even the right thing to do? And so I think it’s like what’s our total addressable market? How complex are these deals? How much is it like … there’s some industries, we all know them that where it’s kind of like they call it like the old boys club. It’s about who you know. Well, business development is not a place for that.
Business Development is a place where cold intros are sort of par for the course. Researching companies that have never been seen on a target account list. Very important.
Chris: It depends on the product as well, right?
Logan: Yeah, exactly. So then when we say, … let’s assume that for the company that were talking about that business development is a necessary sort of piece of the puzzle. And when we look at like the predictable revenue models and whatnot, we can say, this fits, we need to generate x amount of leads. We need to generate x amount of appointments. And it’s really kind of a numbers game. It’s not really about, I got the one of a hundred, sort of decision makers. So we say it’s a numbers game. We need to generate x amount of SQLs, we need to generate x amount of appointments, we need a BDCs, you know, business development center or our business development team. Then I think for in house versus outsource, it’s really a risk calculation. So, when you’re in house, there’s risk and when you’re outsource there’s risk.
Chris: [inaudible 00:05:50] about that in house risk [crosstalk 00:05:53]training performance.
Logan: Exactly. So well, there’s the performance but really when it’s in house, it’s on your dime. So everything that … depending on the state that you’re in, depending on the country that you’re in, you sort of take on the liability for your brand. Not necessarily like legal liability, but everything that happens with that BDR or the team of BDRs is now your responsibility. That it’s not when it’s outsourced, but it’s a different sort of responsibility. Now, you’re trying to plug somebody into your culture. You’re trying to … and for companies that are new to the business development game or heavy flagging business development game, they’re just not getting the numbers that they need.
This is really hard because he’s sales manager and a business development manager are two very different people. And that’s because you’re trying to get people to do different activities. That’s like saying the head of the janitorial staff, can go run a factory line. Like they’re just different things.
Chris: The other liability since reason that word is, I mean the costs. It’s not just the salary, it’s the desk, it’s the computer, it’s the t-shirts, it’s the mechanics, it’s the coffee, it’s all the stuff that you need to retain employee. And there’s a cost associated with that that you just don’t need to incur. The other thing is, … we talked about this in another podcast is, selling a product that like maybe you’ve created and your emotions with that. Similarly, like if your sales team’s not performing or you need new leads or whatever it is, maybe you’re doing it wrong. And you might not ever find that out if you don’t go work with a company that are experts maybe across industries, across clients, like we do and maybe the messaging needs to be different. Maybe the cadence needs to be spread out or all the different factors that we’re constantly testing. Not to say you can’t do that internally, but I’m saying there’s likely or it’s possible that there’s an element of just like, maybe your kids just ugly, but can’t admit it.
Logan: Yeah. I think it’s like … the way that I would put that as like, you have the risk of not attaining the competencies that you need to be successful. So it’s like, if you’re building a team from scratch, the one way to counter this is if you have the budget, and you’re going to get the ROI after this to go out and hire a team of BDRs with experienced business development manager. You’re not making the business development management role somebody’s like side hustle in your organization cause that’s not a good idea to move. If you’re able to go get one of those really experienced, top notch business development managers … what we do at Union will not compete. For instance, with a really high level business development manager who’s dialed in on the latest trends is a great. Leader of those … like that’s the way to hedge against all this.
So if you want to take the risk away, hire that guy, the risk you incur is, you’re going to pay a salary, and it’s going to be a lot more than a BDR. And so I think that’s really what we’re looking at there. So then-
Chris: So real quick right there, but so we were talking about hiring business development reps, but now it’s turned into, we need a rep, and you the manager for that Rep. And the other thing that I’ve seen happen is a good rep isn’t necessarily a good manager, they are different things. There’s doing the act of generating business and then there’s leading the team and the process and coaching them on their swing, they’re just different things altogether. So if you outsource, you don’t need that because that’s kind of built into what you’re paying for.
Logan: And so the big risk on the outsource side is picking the right company. So we’ve seen so many, I mean, these are our competitors. So there are-
Chris: New in the inbox every day-
Logan: There are very good competitors in our space. There are companies who have been extremely successful that I admire, that I’ve read their blogs, all that kind of stuff. There’s also the other side where they just kind of take the money from their client until the client is done paying them because there’s a lack of performance. So, the real sort of risk is, you picked the wrong company. The way to hedge against that is, how much does the company like just the company that you’re looking at for outsourcing have experience in your industry or related industries, is that competency that you don’t want to build internally? Is that truly in the company that you are looking at outsourcing too? If it’s not, and if they’re just like a generic lead generation company, you need to look, and it’s not that hard to look for companies who are like this.
There’s definitely a continuum where like here at union, I’ll spend with my team before we say yes to bring a client on. We’ll spend two, three, four hours sort of dry running the strategy and figuring out if there’s enough content to really drive success. So I would never like yet my way into a deal because I know like the bludgeoning, the potential of a bludgeoning from somebody who I said, “Yes, this is going to work.” And then it doesn’t. I’ve been on that side of the coin and it’s-
Chris: It’s expensive-
Logan: expensive, and it’s embarrassing to the person who says, “Yes, I can do a good job,” and they don’t do it. So I think like when we look at the outsourcing side, it’s like, alright, if hiring the BDM, the business development manager and hiring two, three, four reps isn’t worth it or where you’re uncomfortable with that or you want to see is the business development sort of function in my business necessary, go outsource. If you’re going to outsource, make sure that the core competencies of the company that you’re outsourcing to align with what is needed to sell your product or service. I would say that if you have budget and you want to get quick wins that are aligned up with your overall business strategy, the right outsource business development company is 100% of the time going to be quicker and more efficient than trying to develop that competency inside of your business.
And I’ll tell you this from my past life, the business development sort of function is so volatile because the minute it goes stale, everybody knows in the company. So if you’re listening and you’ve got this business development sort of function in your business that’s not providing that the ROI, and you are that leader, you’re not crazy if you start to look outside of your business for an outsourced and you either run it as something that’s sort of tandem, like produced the … or just get rid of your inhouse because in this world, business development should not ever stagnate for a bit. It shouldn’t, it doesn’t need you.
Chris: So you mentioned ramp up speed, if it’s an outsourced thing, you don’t have to train, you don’t have to … it’s a fast ramp up, but it’s also on the other end, I mean, have you ever had to manage out an employee or a sales rep? I mean, you must’ve. It’s hard.
Logan: Have I manage-[crosstalk 00:14:52]
Chris: Managed someone out. Not necessarily fire … I guess fire. Is the manager mount meaning like prove that the performance isn’t there and you have to get rid of this person. It’s hard. That’s my point is it’s hard. It’s emotional, it’s taxing. Everyone sees it happen. It’s bad for morale.
Logan: It’s never fast enough. Like the person that is the hardest for and the person who thinks … that feels that they’re the most surprised that it had to happen, is the person that’s firing everybody else in the building knows-
Chris: Oh my God, it’s the worst. Sometimes it’s[crosstalk 00:15:36] but we can do a whole podcast on the emotion of that because it’s one of my least favorite parts of some of my career. But isn’t it always the person that is like, everyone else realizes you’re under performing. I’m looking at reports that show you’re not performing, anyways that’s a different topic. But my point is … I don’t really wish this upon ourselves, but like if we have a contract, and we’re not performing, or they make a business decision where they don’t want to work with the SRC, you can just give your notice and expire the contract in three days out of the terms. That’s just easier.
Logan: Yeah. So I think it’s a matter of accountability. So when it comes to a function of your business that really needs to deliver growth, it needs to deliver numbers. When you start to … unless you have that top notch sort of manager, when you start to talk about bringing employees into a world that it truly is a, what have you done for me lately environment-
Chris: You go on a plan, performance plan.
Logan: Yeah, exactly. So in that case, I would say that’s where you want to outsource because you can make that decision. It’s not, “I don’t know your wife and kids. All I know is that you guys told me that I would perform at this level and you’re not so either fix it or I’m going to find somebody else.” And that’s a difficult decision to have with employees, especially in a smaller medium sized business or start up. You get to know these people. So I’m not saying don’t hire people, and I’m not saying don’t go in house, but I’m saying business development is not something to be half assed. And I see a lot of businesses. It is half assed because it’s just not the priority. Like business development is a priority to a business development person, but it’s not necessarily sometimes it can be the ugly duckling in an organization-
Chris: Certainly and often an entry level role. So you also get to think about, these people are probably trying … they come in entry level and they’re trying to get to different section of their sales [crosstalk 00:18:11] And so you always have that turnover happening, so you’re constantly training and recruiting.
Logan: And that’s in a more mature business. And I think that’s still a place, like when you look at the more mature businesses, what we’re doing for those kinds of businesses is really augmenting their business development teams. And that’s where you can kind of get that bi-directional learning and competency increase. Whereas, on the smaller to medium size business, it’s really like it’s kind of binary is like, are you in house or are you outsourced? And then as you grow, you can afford to take a flyer on a few projects or strategies with an in house team as opposed to really keeping it tight either in or outsource.
Chris: Cool. All right, Logan. Well, that wraps up this week’s episode. I’m Chris [inaudible 00:19:13]
Logan: And I’m Logan Kelly. Thank you everybody for listening, please give a five star rating on whatever podcast that you are listening to.