Outsourcing SDRs: The  Good, The Bad, and the Ugly

06-21-2020

SDRs have become more popular in recent years. With the emergence of new players in the field, an entire industry has started to revolve around the idea of an outsourced SDR team. But is this the right choice for your company? In this article, we’ll examine the good, the bad, and the ugly of SDR outsourcing and let you decide.

post img outsourcing sdrs 1

We’ll discuss:

  • What is SDR outsourcing?
  • Pros and cons of outsourcing SDRs
  • When does it make sense to outsource your SDR team
  • What should you look for in an SDR company?
  • How to use data and analytics to make it work

By end of the article, you’ll be armed with all the facts you need to make an informed decision. Let us begin

What is SDR outsourcing?

SDRs are the first line of defense in the lead qualification process. They are also one of the main outbound lead generators for any SaaS company. A good SDR rep usually drums up enough business to be worth their weight in gold. But to do their job properly, these reps need certain qualifications. They need to know your company and industry inside and out. SDRs should stay on top of client needs, USP, value propositions, etc. It’s not an easy job.

It’s not cheap, either. Not every company can afford to have a dedicated SDR team. It’s a true team sport.. Even if you can afford a few SDRs, there is a bunch of infrastructure required to make them successful.

  1. Sales Tools: SDR typically perform most of the work with tools.
    1. Sales cadence management tools: they help automate and optimize the outreach process.
    2. Activity logging : this type of software removes the need for data entry by reps. It allows for excellent follow-up, meeting scheduling, and more by automating a big chunk of tasks.
    3. Cold calling software : call center software that bypasses the need for additional hardware, manually dialing numbers and waiting for callee to respond
    4. Customer contact data
      1. Phone number : these tools eliminate the need for searching contact information about the prospects and make prospecting a lot easier and faster.
      2. Email Address: same as above, but for emails.
      3. User Intent data: this kind of software allows you to expose the intent behind user behavior and match it with your offering.
  2. Sales management tool:MoData is all you need to make data-driven decisions.
  3. Training tool: tools like this allow you to streamline the training and onboarding process. This way, new additions to the organization can start generating revenue more quickly.
  4. Emotional support : Sales is a tough racket. You need to spend time managing and more importantly – leading the sales team in down days. There’s no software substitutions for leadership and genuine human contact but this task is very important and has to be done. If you have your own SDR team you need to set aside time to perform this task.

As you can tell from the list, these tools need to be set up and integrated into the SDRs regular work process. You need dedicated staff to do this. With a few SDR, the cost can simply be too high to manage an inhouse SDR team for many organizations.

This is where SDR outsourcing comes in. Instead of investing in an internal team, some companies outsource the entire SDR work to outside companies. These companies then deal with all the day-to-day business an internal team would otherwise handle.

There are some pros and cons to outsourcing (more on this below). But it’s important to understand an entire industry has grown around this process. And like any other industry, there are some good vendors and some bad vendors. Don’t be too quick to judge before you see the whole picture.

Pros and cons of outsourcing SDRs

Like most choices, outsourcing SDRs comes with its pros and cons. You should carefully consider both before making a decision.

Pros

It’s cost-effective

Establishing an in-house team requires a large initial investment. You need to hire people, train them, buy equipment, expand your office space… You will need money for salaries, taxes, etc. etc. Once you’ve established it, an internal SDR team can be a huge benefit to your company in the long run, but it doesn’t come without high up-front cost.

And herein lies the problem – if you don’t have the resources, outsourcing is far more cost-effective. Depending on your contract, you simply pay the SDR company’s retainer or pay per lead. You skip all the other hassle. This is a good solution for companies looking to boost their sales or smaller companies lacking in resources.

It’s a lot faster

Part of the reason why establishing an internal SDR is more expensive is because it’s slower to set up. It takes more time before they start generating ROI.

Sure, hiring an outsourced SDR firm also takes time. You need to make sure you’re hiring the right people who will do the work in your best interest. You need to vet and consult, negotiate terms, etc. But in the end, all of this is still much faster than establishing an in-house team. If you want to run it as an experiment, this is an excellent way to do it.

It takes less effort

Hiring an SDR firm takes less effort than establishing a team in-house. Bear in mind, we’re not saying it takes “no effort”, as some of the advice on the topic suggests. It’s a common misconception that you simply hire the firm and they do all the work for you, which is patently false.

That being said, outsourcing is still the easier option. You need to make sure you give them all the right information so they can do their jobs well. They need to know your ICP, how to qualify your leads, and how to properly communicate with your potential customers. Also, you need to be on top of tracking metrics so you can adjust the outreach strategy accordingly. But all that still requires less effort than getting an internal team off the ground. If you are a small company you have huge demands on your time and setting an SDR team may not be the best use of your time.

No specialized skills required

Hiring an SDR firm does not require substantially special skills. It’s like hiring many other vendors that you already deal with. Sure you need to set success criteria, oversee results, negotiate pricing etc. but it’s certainly “do-able”. Hiring an internal SDR team requires special skills. You need to set up a recruiting pipeline, learn how to interview SDR, how to motivate them, how to evaluate their work. If you have never done these tasks before these are not the easiest skills to learn.

Cons

“One size fits all” mentality

Outsource companies often have a “one size fits all mentality”. This means they try the same strategies and outreach tactics, regardless of the client. While this approach may work in some industries, it’s extremely inefficient in more technical fields.

One way around this is finding an outsource firm that has worked in your field (or close to it). This way, it would be relatively easy to synchronize their approach with your business.

Lots of bad apples

Since one of the main allures of outsourcing is the cheap price, many vendors cut corners to stay competitive. Choosing the right company to work with can be a lot like playing Minesweeper. It’s not that all the moves are bad – but if you step on a mine, it’s game over.

To get around this, shop around for a bit longer. Don’t rush in your decision. And never go with the cheapest option. You get what you pay for.

Lack of transparency and control

Depending on the company you work with and the terms of your contract, you might not have a lot of control over the process. You need to be extra careful about this. The wrong company can do a lot of damage to your brand before you realize what’s going on. Your competitors will be grateful. You should certainly invest in a sales management tool like MoData to get insight into the SDR team workings. It not only helps you to be on top of the process, but also helps you learn about the process getting you ready for the day when you will bring the SDR team in-house

To avoid sending more clients your competitors’ way, negotiate the terms carefully. Resist the allure of cheap prices. If a deal seems too good to be true, it probably is.

You need lots of data tracking

Whether you have an in-house SDR team or outsource the job, you need lots of data tracking. But if it’s a company outside of your immediate control, you need a lot more of it.

An easy way to solve this problem is to use software like MoData. With a 360-degree view of your pipeline, you’ll be able to make decisions, pivot, and take immediate steps to change direction if you have to.

Information falling through the cracks

Reps have access to the type of information that can make products outclass the competition. Few things are better than your prospects or existing customers telling you exactly what they need.

Yet, SDR firms rarely get an incentive to provide this kind of feedback and it can get lost. That’s why some companies prefer to have these firms on retainer. Paying their monthly invoice increases the chances of receiving crucial feedback from customers or prospects.

As we can see, neither the pros, nor the cons are definitive. This is going to be a decision made on a “per case” basis.

When does it make sense to outsource your SDR team?

While the pros and cons are a good start, they don’t provide the full picture. There are other factors you can take into consideration before you decide if SDR outsourcing is for you.

Testing the waters

Your company has grown to the point where you think it might be a good idea to give SDR a go. But you don’t know where to start and you’re not sure if this model will be the right fit for your organization. This makes outsourcing a very viable option. You can test the waters without committing all the way. Of course, whether it works or not will also depend on the vendor, so choose wisely. Also be aware that if it doesn’t work it might be because of the vendor’s execution and does not tell you a lot about the viability of SDRs in your sales process.

Entering a new market

Entering a new market is like venturing into an unknown territory without a map. It’s a lot easier if you send scouts ahead and they mark up points of interest, food sources, water, you get the idea. SDRs can gain invaluable feedback when you’re trying to enter a new market and see how this market is reacting to your value prop. Please be aware that not all SDR outsourced vendors are good at and /or capable of providing you feedback information to make the right decision about the viability of the market. So yet again, choose wisely.

Supporting your internal team

Sometimes even when you have an in-house SDR team, you need to bring in the hired guns. For example, your business may be experiencing a seasonal surge. You don’t want to hire more full-time people because you’d have to fire them after the season is over. So what do you do? You outsource.

What should you look for in an SDR company?

From what we’ve presented so far, it’s obvious that outsourcing can work. But you need to find the right vendor.

You should look for a vendor who has a reputation in your field. If they don’t, then your risk increases. You want to minimize the risk as much as possible in order to leverage the outside help more effectively.

Another characteristic of a good vendor is 100% transparency. This means you can expect constant communication and ideally – you’d get to interview the SDRs, yourself. This way you can make sure they know what they’re doing and you’ll be able to direct them. They provide you access to rep activity information via CRM, Sales Cadence Management tools etc most probably supported by sales management tools like MoData.

Ask for case studies. Case studies are a great way to gauge the effectiveness of an outsourced SDR firm. Presenting you with the case studies is another bonus point in the transparency column.

Ask for references. Most good SDR outsourcing firms will be happy to provide you references. Be detailed in your reference checks. Ask for information and examples of the type of conduct that really matter to your business. Its easy to waste a reference check call if you did not do the needed preparation.

As far as price is concerned, don’t go with the cheapest option. This is rarely (if ever) the best one and since they compete on price, you can be sure they’ll be cutting every corner. In the end, you’ll end up losing more than you gain.

Shop around and don’t immediately lean into a decision. You don’t want to sign a contract with the first company that “seems good”.

How to use data and analytics to make it work

You’ve decided to go for it. You’ve weighed the pros and cons and figured outsourcing your SDRs was a smart move for your company. After shopping around town, you’ve signed a contract with a reputable firm and now you feel it is time to start tracking the progress of your new partner.

The whole idea of outsourcing is to make things more efficient. It would hardly be ideal to sit down and start tracking everything in spreadsheets. This is where a smart and intuitive software like the one we offer at MoData would come just in handy.

The software will allow you to automatically track the relevant KPIs. You’ll identify problem areas before they start bleeding your funnel. This is the closest you can get to an actual crystal ball.

Let’s get into the nitty-gritty of how MoData can actually be invaluable to you:

  1. Oversight:
    1. Are they doing what they are saying?
      1. Looking at reports all day takes too much time. Time you could be investing elsewhere. Besides, activity reports don’t always give you insight into the full picture. However, if you have a tool that highlights just the aspects of the process that warrant you attention, you’d have a much easier time. You won’t have to constantly be on the lookout for something being too high, too low, etc. MoData can do that for you. Sales tools allow you to implement changes without committing all of your time.
    2. There are leading indicators of success that you can measure:
      1. Activity Metrics
        1. Number of calls / emails
      2. Prospect / Account sentiment
        1. How many emails are actually getting replied to
        2. How many appointments with prospects actually take place
      3. Number of contacts at target account
  2. Alignment with SDR manager: You and outsourced SDR managers need to be looking at the same metrics. This way you can spend your time discussing actual issues and speaking the same language.
  3. Learning: At some point you will have to transfer the SDR activity in-house for reasons mentioned above. If you are not involved day to day with SDR you are not learning what’s working and what’s not. On the other hand the whole point to outsource is that you don’t have the cycles to manage the SDR. So how do you strike the balance and get the insights without spending too much time? This is where tools come into play. They help you:
    1. Quickly get an overview.
    2. Highlight the key insights.
  4. Change Strategy: There is a high chance that the first few months with the SDR team is not going to work. This can happen for many reasons including:
    1. Bad SDR Team: They are just not trying hard enough
    2. Bad Fit: They are trying but something is not right… the type, the way they are explaining the product, the followup, etc.
    3. The product itself has issues
    4. SDRs are focusing on the wrong prospects.

To decipher the exact problem you need data. Without data, you have no idea where the problem is. You need to look at metrics to figure this out. With the right metrics, you can easily figure out things, such as win rate, what your SDR cadence should look like, whether you’re getting the right ROI, etc.

Conclusion

While it does carry certain risks, outsourcing is the right choice for many organizations. Just make sure you’re not making any rash decisions, secure the proper tools for data analysis, and you’ll have nothing to worry about.

 

 

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