Managing Risk

As with any outsourcing endeavor, there are risks associated with sales outsourcing. One concern is that companies will lose direct contact with their customers. “Providers are getting better at making that appear seamless to a customer, but there’s [still] fear on the part of organizations that they are putting too much distance between themselves and their customers,” says Gartner’s Goldman.

Wittenburg says TXU managers were initially uneasy because Sales Focus personnel were not employees of the utility company. “They might be off message and make promises we couldn’t keep,” he says. TXU mitigated the risk by working closely with Sales Focus’ management and providing lots of training to sales agents.

There are also risks associated with information security and privacy. For example, an organization might have to provide access to sensitive customer data to an outside firm. Goldman says concerns about security might be keeping some organizations from moving ahead with a sales-outsourcing initiative. To address some of the security concerns, organizations should have outsourcing firms sign nondisclosure and confidentiality agreements where appropriate.

Trinkle says there’s a risk of selecting a firm that isn’t a good match with the client organization. For example, the service provider might not have strengths in the client’s particular industry or the two companies might have different philosophies for approaching customers. A good relationship requires “very compatible people who think along the same lines, who want to do business the same way,” says Trinkle. “If your product requires a great deal of technical competence, you’d better hire a firm that has technically competent people.”

Sales-outsourcing relationships need to be closely managed like any other outsourcing arrangement. “Any time you outsource, you need to be an active participant in the process,” says Goldman. That includes “continual interaction with the provider to ensure that objectives are being pursued and [service-level agreements] are being met,” he says.

Clients and service providers should set clear objectives at the outset and develop effective service-level metrics to ensure that goals are being met. Some common measurements include timeliness of the sales rollout schedule, customer acquisition and retention, sales volumes, customer service, level of upselling and cost reductions.

“During the early stages we find out what things are most important to [the client]; what their objectives are,” says SalesLogic’s Howard. Then the firm collaborates with clients to establish which metrics should be tracked that most closely align with the goals. “We spend quite a bit of time making sure we [develop] a great partnership, so that when the market shifts or a new product is introduced or a management change is effected, we can continue to [deliver high] performance.”

Sales Focus ensures that it has clearly identified goals from its clients before embarking on a sales-outsourcing engagement. Within the first 45 days of a program, the firm and its clients have an operational-level agreement. “We say we will hire a certain number of people, develop scripting and profiling and deliver sales training. This is all documented in the contract,” says Howard. “There is a separate service-level agreement in place for the actual sales program launch,” he says. “That states that we will knock on so many doors, sign so many contracts, make so many presentations, generate so much revenue,” he says. “We base the service-level agreements on what our clients’ requirements are.”

Having an offshore presence is increasingly important for sales-outsourcing providers, as more U.S. companies look to enter global markets and foreign-based companies aim to sell within the U.S.A.

“Sales Focus serves both U.S.-based and foreign customers,” says Horwath. The firm has developed partnerships with sales-outsourcing companies outside the U.S.A. to provide services in Europe, South America and South Africa. The firm is looking for partners in Southeast Asia,” he adds.

“SalesLogic recently opened offices in Mexico and Germany, and is expanding its operations in Asia, Europe and the Americas,” says SalesLogic’s Howard. These facilities provide services to local companies and to U.S. companies looking for help with offshore sales.

There are examples of call center providers in onshore and offshore locations engaging in outbound sales. Most of these providers are paid on an full-time equivalent agent basis. While some of these providers are willing to work on a risk-sharing model, the sales expertise and training is typically provided by the client. Most outbound sales to U.S. customers are performed domestically — mostly for reasons of cultural compatibility and return on investment.