Should you outsource sales?
As the CEO or founder of a startup, you'll someday make a decision to either grow an internal outbound sales team, or outsource it.
Outsourcing sales to people who really know how to do outbound sales is a good choice ... but only if the time is right!
When is the time right? Well, there are two distinct stages of sales for any company.
At this stage, you're still figuring things out. It's about learning and experimentation. You have not yet figured out a predictable and repeatable sales model. You haven't developed your sales funnel yet. You're looking for answer to these questions:
- How do you generate leads?
- How do you qualify leads?
- How do you close them?
- What are your conversion rates?
- How much time does it take from initial lead generation to closing a customer?
- What's the average LTV of a customer?
- What kind of sales reps do you need to hire and how do you compensate them?
- How much does it cost to acquire a customer?
- Do you have scalable lead sources?
You don't need to have 100% of all the answers, but at least have the answers to 70%.
At this stage you already have all the answers, or at least you have them 70% of the way.
You already have something to build upon, you already have something that works. Now it's just about scaling it up and optimizing it.
You can't outsource sales exploration
This is something you and your internal team must do. You the founder, you the CEO, you the early employees who have a holistic understanding and know the nitty-gritty details of your startup.
The lessons you'll learn during this phase are crucial, that's why you don't want to outsource them. You want to put your own finger on the pulse of the market, so that you get a feel for what prospects respond to.
You want to know what works, what didn't work, and why. These are crucial pillars for your understanding of your market.
The mistake many startup people make is they hire a “sales person” to go out and talk with customers so they can do what they’re good at which is building product or “running the company.” Sales people are a different breed, you say. The problem is that in an early stage business there probably isn’t a perfect fit between your early product and a customer’s needs. You learn that by showing them your product, watching their reactions, asking them questions about what they’d like to see improved and then racing back to the office to talk with the team about what you’ve learned and how you can incorporate it into your product plans. Repeat this process 50 times and trust me you’ll see patterns.—Mark Suster, Startup Sales – Why Hiring Seasoned Sales Reps May Not Work
Outsource sales execution
Once you're in the sales execution phase, then you can outsource sales. Now you can hand it over to sales professionals who really know how to execute and optimize a sales model.
They can take you from 70% to 80%, 90% and finally 100%. That's what they specialize in; not the creative thinking and wild experimentation required to build your first sales model, but to refine and polish it.