The Sales Engagement Podcast
The Sales Engagement Podcast

Episode · 3 years ago

Sales Development: How To Decide Whether You Need to Outsource or Hire an In House Team w/ Kevin Warner


Outsourcing your sales development isn’t necessarily a good fit for every organization. While it has the ability to save time and money for some, it simply doesn’t make sense for others.

Kevin Warner knows this. As the CEO and outbound sales leader at Leadium, he helps organizations engage in strategic sales development activities that bring you qualified leads. From strategy to execution, they provide full service support.

Welcome to the sales engagement podcast. This podcast is brought to you by outreach dot ioh, the leading sales engagement platform helping companies, sellers and customer success engaged with buyers and customers in the modern sales era. Check out sales engagementcom for new episodes resources in the book on sales engagement coming soon. Now let's get into today's episode. Hey everyone, welcome back to another episode of these sales engagement podcast. I'm your host, Joviing Allo, senior content managing editor at outreach, and today we are joined by Kevin Warner, CEEO and Co founder of medium. You probably heard of them, and we're going to be diving into the great debate that is among salespeople these days in house versus outsourced sales development, the pros, the cons, the ends, the outs, all the above. But before we getting that, I'm going toss it on over to Kevin, who can introduce himself tell us a little bit more about medium and his background and what we're going to be talking about today. Kevin, nice to have you on the show. Thanks, Joe. Excited to be here. Thank you for the warm welcome and yeah, just to jump right into it medium. We're really focused on one thing and that's engaging in just strategic sales development activities to bring sales qualified leads to companies. So any lead generation, sales development, outbound sort of activities. We look to provide kind of full service from strategy to execution, where one of the leading agencies we like to see in the market. We like to say agency because we're not just another outsource of vendor who's trying to do your payper performance lead or hey, I can source some data for you. We actually try to boil down to a what are you trying to do, what are you trying to accomplish as an organization, and then what's the best route to get to that end goal? And then we also look to layer in the actual execution. For a lot of those businesses it's not all together package into the one we can actually layer each individual item depending on a company's needs. So we really look to become kind of a growth partner in a way. I think it's a bad, fantastic and it's a good distinction to hit right off the bat. The the agency part right, you're a you're a comprehensive kind of a partner. That the companies work with. That's exactly right and and we're really bullying down that agency mantra this year. And you know it's become very familiar on the marketing side, right on the inbound marketing side, everyone's familiar with agencies. Outreach uses agencies probably all day for all sorts of activities, from producing this podcast or the unleashed event, whatever it might be, helping with design, helping with inbound strategy and digital marketing strategies. On the outbound side there hasn't been a lot of attention or focus or credit credibility it on that same service execution, feeling that same service need for an organization, and that's where really we're trying to kind of fit in and say, Hey, there is a value add to the strategy, to the experience and to a more affordable kind of specialized expertise for a lot of rules that you don't necessarily need employed on a daytoday basis. I think that's a good segue into the meat of the podcast today, the debate between in house and outsourced sales development. Full disclosure. Outreach uses inhouse team. We have a very large sales development team. That shouldn't be surprised, though, because we're like a very outbound heavy shop. We have a tool that caters to those types of people. But would love to hear the pros and cons of both. You know, some solutions are going to work for some companies, other solutions are going to work for other so let's hear the pros and cons from from the source here. Yeah, that's exactly right. There's pros and cons to everything and outsourcing isn't isn't necessarily a good fit for every organization. We lead to boil it down to kind of three markets, enterprise, kind of mid market and then small and medium sized businesses. Outsourcing for SMB's it is a shoe in every...

...time. I'm I've never come across this situation where outsourcing sales development and lead generation isn't the good approach. Mid Market you're starting to follow more into what's going to be better long term for the organization. And then enterprise. We don't necessarily play in on the outsource sales development for enterprise. It's a hard game to win. Right. We consider outreach itself as more enterprise. You're just going after different funding goals or growth goals. A lot of stock put on investment by having head count, not necessarily that it's a valuable headcount, but there has to be head count assign so it's a different ball game. And we actually say, Hey, for those enterprise businesses, there's a better outsourcing solution, which is actually just data ly generation. You know, you guys use some sort of database. We would argue that, you know, human researcher would add a lot of value. But for outsourcing sales development, we focus on mid market at SMB's and really there's buckets who can then fall into and why is outsourcing better for these organizations? And in most instances it boils down to two things and that's time and resources. And we can categorize now from employment costs, technology, the data, the strategy, ability to scale, ability to ramp, whatever it might be, all of those subcategories which will talk about here in a second fall into two things, time and resources. Okay. Well, let's look through the Lens of the the SMB small business. Okay, are bread and butter. Here you go, the as you would put a shoeing every time, right, Jami, or why is it a shoe? In? Every time it's a shoe, and every time for the pure reason of time and resources. So SMB's don't necessarily have salary, you know, the the ability to pay salary to a large sales development team. Some smbs don't have, you know, funds to pay sales reps. it's still being driven by founders there, cofounders, whatever it might be. They're kind of wearing several layers of hats and one commonality every business has is they need more customers, more clients. All right, very few businesses today say hey, I'm good, I'm content and that's going to be, you know, not our market again, but most organizations have the commonplace that they want more customers. Now it's a matter of how much can I afford? I can't afford necessarily to bring in a VP of sales. If I can't afford to bring it a VP of sales, I definitely can't afford an SDR whose whole job is just to create opportunities, because I can't even pay a closer. But one thing I do need is I need leads. And if you think about leads and the sense of what are they, they can only come in from a few channels, and that's inbound and outbound are kind of the too primary and inbound is incredibly effective as well. You need content marketing, you need digital ad money. You know that's a that's a beast in itself. And within bound you don't necessarily know who's coming in and when they're coming in and if they're qualified or unqualified. which leased outbound, which you're getting to choose who you're targeting with what message, through what channel at what time. So I know who my ideal customers are, I'm going to go and knock on their door instead of waiting for them to come to my door. So why is that? Our bread and butter? Is because most of those organizations they need that business but they don't have the resources to go and get it themselves, nor the kind of wherewithal to know even how to start that that programm or that system, who to hire, who's qualified or not, and if you just think about hiring the team member to execute on that goal, if you make a bad hiring move, it could cost you a year or a quarter or multiple quarters. And then how are you going to rebound if your company's already struggling to grow because you're not bringing in leads? Making one wrong move could cost your business. You know it's longevity.

So I mean this is a this is a big deal. Like, you can't just throw some money at an SDR and hope it's going to pay off. If that, you're putting all your eggs in that one basket. Right, if you're a small business, you don't have the, as you said, resources to kind of test this out. So outsourcing is probably the way to go. Now let's talk about the things, the considerations that let's say you you are running a smb, the considerations you have to take into account when looking for an outsource agency or something like that. One are some of the things they need to look at. Yeah, before we jump into that, I think it's a good another point on why are outsource agencies good? To begin with, a just hiring an SCR to solve a problem. Well, the average scrs only with an organization for a year and a half and and it takes between three and five months to ramp and SDR to where up their pipelines going to be. And you can only ramp an SCR if you have the internal infrastructure in order to train them, in order to provide them all the technologies and the sales tools in order to deliver on it. So before we talked about hey, how do I decide what's a good outsource vendor or not? It's important to say hey, you can, you can do this yourself, but look at what's going to be in your way. Right hiring an SCR just to drive pipeline. It's going to be a long process just to get them to where their pipeline starting to kick in. SCRS are typically the least qualified within the sales pipeline. Right these are young, usually younger people who want to become account executives don't have the sales experience. So they're going to be put on the front line to kind of get that experience before they can grow into account executives. So you can't just expect an SDR you hire to instantly know what to do. They need that training and coaching. If you just take the SDR cost alone, if you are trying to do this inhouse, I think it's you know, the bridge group every year does really good and breaking down SCR cost but I think it costs an organization about a hundred and fortyzero dollars on average to have one SDR employed for a year. Why is it so expensive? Because there's a lot of hitting costs that a lot of team members within our organization and a lot of owners will overlook, and that's hey, you have salary, but then you have benefits. Then you have taxes, right, and taxes aren't cheap. Then you have technology costs. You got to get them onto the CRM. You need to give them a program like outreach, right, and outreach has limitations on how you can sign up. An annual contracts are not so you need to give them all these resources, sales or linkedin. You need to provide them access into and those all have built in costs. Then you need to pay for that training time. You need to pay for that down a ramp up time. So if you have an SCR on salary, you know that it takes three months to ramp an SCR. That means you're covering the costs of that SCR for three months. What happens then when your SCR leaves you after five months? You paid out a lot of money. Figure fifty thousand dollars by that point, and all costs without any production because they left and went to a new job. They were stolen. So it can be really damaging to an organization and in order to try to do that in house if you don't have that infrastructure built, which is why we say enterprises are often times a different beast, because enterprises have the infrastructure, they have the resources to bring in sales trainers and training programs and people just to build training programs for scrs. They have a clear pathway for an SCR to become a AE, which might allow them to pay them less money up front because there's there's just a longer career path. So before we say hey, you know what is a good way to break down who to use? There is a real you know, worried that I like to say if you are an owner or a VP of sales looking to do it in house. Is What happens if you get it wrong. Outside of costs, which are definite, you then have to pay for data. Who are these people going to reach out to? You still have to find email addresses, you still have to find directiles.

If you go to a database like zoom info, discover or again not cheap, super expensive annual contracts and put limitations on the data you can receive. Outside of that, the biggest value add for outsourcing is the strategy component. What are we doing and how are we going to do it? How do we leverage the technology and the data to get us our greatest results as quick as possible? If you go in house, oftentimes you don't get any of that. You have to figure it out on the fly, which means you're going to spend more time and more money and more resources to try and hope that you hired the right person to get you to that end goal. Going out sourced, you're able to circumvent all of those barriers to driving pipeline, which that's all you want, is you want leads and you want them as fast as possible. In House, it's going to be a long road, it might never pay off, you could be huge investments and it can be incredibly disruptive to your company. Going out source you can circumvent at all. I feel like you've you've told the story before. You paint a very upugalyptic picture of the dangers of building out an inhouse says d our team. So let's let's just right now agree that the people listening that they want to outsource. Okay, there are some thing theer's some pitfalls of outsourcing as well, because you don't like you did say that you are getting better strategy and people have done it before and the ramptime decreases significantly, so the production happens right away. But you have to pick the right one right. It's the same thing as hiring someone. You're still vetting a candidate to help you with this process. So what are going back to what I asked before. What are the considerations? What are the things you need to look at? Yeah, your one biggest worry when you're outsourcing is, you know, the vendor, vendor reputation, vendorability to execute on what they're promising. And the biggest worry you have and the biggest road block that you have in front of you is it's a low barrier of entry and it's high margins. Low Barrier Ventry and high margins means you have a lot of crap and the market place right and you probably get the emails. If you're a business owner and you have an SMV, you get the emails right now, right, hey, we can source data for you, Hey, we can do leads for you. It's going to be the same process as if you wanted to hire internally. You need to put your vendor through that same process. Right. It's not going to be a two day close. You have to have the same kind of red flag indicators popping up as if you were doing interviews. Do Multiple rounds of interviews, talk to, you know, the past employees or clients. Ask to speak to multiple right it. Don't just speak with the first one that they present you, because if you've asked for references, most people are going to give you the best one, and vender worry is the biggest issue. So you almost have to use your smell test right. That's going to be one of the best indicators for you in the market. But it's not the best thing to say. But the smell test is obvious. leadium puts a lot of time and attention into passing the smell test. We produce a lot of content. We add faces of every one of our outstores team members. We try to put on video and add pictures to the website so you know who your team is. Right you're you're inherently adopting a remote team. You want to know who they are. Most outsource businesses don't want you to know who they are because a lot of them are then outsourcing, you know, out of the country as well. These smell tests will be your biggest indicator. If they wrote to a cold email. The email sound a little fishy. It didn't sound like it was that well put together. Does it seem like it has a good organization base here in the US or is it all overseas? Reputation is a big one and then strategy is a big one as well. And have them talk to you about strategy on the phone a very quickly you're going to know. Is that vender just about the margins? If they're all about the margins, a clear indicator is going to be they put a young salesperson or commission only salesperson on that call with you just...

...with the goal of closing you for three months or closing you to a sixmonth contract. Trying to get some strategy out of that call. Right. How would you approach it for me? How do you know about my market? Do you have any experience in the pharmaceutical market targeting, you know, large medical device companies, and how would you approach it with us? How is that different than you approach it elsewhere? If the person you're talking to on those calls can't talk heavily to strategy, clear flag. Don't go with them, because outbound sales and outbound Lee generation. It is one hundred percent about the strategy. Everything else is very simple. The strategy that they go with or that people use. That's what it's all about. And before you mentioned data costs. Or are using zoom in forward discover org? Is that something that gets passed on to the company that is outsourcing or or should that be covered by the the outsource company that you're purchasing? Yeah, it's a good question. I always say if you're outsourcingly generation and sales development and they use a database, don't go with that vendor. That's my argument with it. So, okay, at medium we don't do any database Lee generation because again, you could just take that contract and do it yourself. I'm just trying to play a heavy margins game and the best interest isn't for my end client. If you're outsourcing, it's to me. I want to make sure that we're doing everything by hand so that we can produce and we can control every variable that's going to go into your outbound program so at leadium we employ over a hundred researchers right and we hand generate every lead for you that you're targeting specific to your ideal customer profile. So for us, before we can begin working with you, before you ever sign a contract with with us, we lock in who are you even going after, because we want to be comfortable a we can source the data and then be that we can actually get you the conversion rate that you're expecting to get from an outbound program so by defining that ideal customer profile, we then have a research team in the back end who become dedicated to your account. We actually assigned researchers to your account who, all day, every day, all they do is look to source data, and data today is readily available, right and if I go to Linkedin, I can find it's the best database. The problem is it doesn't have contact information, but I can find who the decision maker is within the specific companies I'm going after. Within ten tries you can typically find their email address, right. You can just guess. Mine might be first named, period, last name. What did? You can go through ten variations get to that email address, run that through multiple email validation systems, and then not just one, you have to do multiple just in case they're varying systems, and then boom, you have a valid contact information. Then what additional data do you need? Do you need facebook followers, you need linkedin followers, whatever it might be? By only using what databases have a you're stuck to whatever that database has, right. So what happens if I'm targeting ideal customers who don't exist in that database? Are you, as an outsource of vendor, then limited, right, or can you go beyond that? Well, if you don't have any channel to go beyond that, now you know that your outsource of vendor is putting limitations into what they can actually deliver for you, and those limitations are on other vendors. There's also a worry about what market are you going after? A lot of SMB's aren't going after CMOS of fortune five hundreds. Right outreach, for example, is going after VP's of sales and sales development leads at large enterprise businesses. A lot of times that date is cheap and easy. Any number of databases can get it for you. But what happens when you guys are going after restaurant owners? Right, single location and restaurant owners? What happens when you're going after HBAC owner owners? What about long you know long care high schools. What happens if you're...

...going after high schools, what about Catholic high schools and Christian high schools, which one of our clients goes after? There's no database, with no Catholic high schools. How do you then find out who the principle is? So you have to have a system in where, hey, we're really good. Our backbone is actually the data sourcing and then applying a strategy on top of that. So I would say if you are using a database, another red flag indicator, because you're just repackaging everybody else, putting, you know, a nice little let's stick on it and saying, Hey, look, pay us now x amount and we're going to take high margins, whereas if we're giving you a human researcher and a research team who work every day doing exactly what you want, then you have a lot of power. Still as our client, you can come to us and say, Hey, you guys are off a little bit right. I want to start finding Catholic high schools who have over three hundred students. Okay, let's go back and let's refine what that researcher is doing. There are no necessary limitations because we're doing all open source, and I think that that is something that would set a outsource agency apart from the rest that human verification. I used to work for a sales data provider in the space and I can't tell you how many times we would get calls me like I need to know all of the mechanics in Flint, Michigan, and we're like cool, let us know when you find out, because that's we can get them a yeah, that's incredible, but but it also does to say that that separate markets. Right. When is outsourcing good for separate markets? And we said, Hey, maybe appointment sending outsource sales development not good for enterprise businesses, but really good for mid market and SMB's. On the data side and the way we set up the data side as an outsource vendor, we actually that's where enterprises are knocking on our door because the question becomes, Hey, we have two million records in our sales for us over the past ten years. However, none of them are accurate. And, by the way, we've also changed how we capitalized industry and there's no technology that can just go in one by one and change how we redefine how we you know, tag leads or contacts by industry. We need somebody to go one by one who understands a the data technology and then be can actually validate and enrich these databases in real time. So let's quickly play devil's advocate here. I am a sales leader and I am thinking about building out an in house s Dr Team, but obviously there's a very attractive offer on this side to outsource it. I don't want to relinquish control. What is your response to that? It's that's that's the one thing I need. Don't beat make sure these people are in front of me. I need to watch them. You need to make sure they're on top of the thing and pound in the phone and send any of us. Yes, and we've been confronted by this a we've been we've lost customers over sales development reps thinking we were producing too well, that they might lose their jobs. So they have to control it all in house because we were out competing with their internal team. And then, as a sales development rep, you don't look good at all. Or leader, you don't look good at all if you have the resources to start putting together sales development team. Our response is always don't choose one or the other. We are incredibly affordable and we are full service. Full service meaning we package data, we package the technology. We're outreach partner, so every one of our clients gets an outreach seat. So you're using the best of the best technology for outbound and you don't have to take on the contract for outreach. will do it for you. So we packaged data, that's technology. The execution team, we're actually providing you an SCR to manage the day to day. We're probably writing you a strategist to break down who are you targeting? Why? How do we develop messaging? And we also have an inhouse content team. All of this for an incredibly affordable rate, starting at thirty five hundred dollars all in it. That's about half of an SDR cost if you're going entry level. But by the way, that includes all technology and data, so you don't even need about thinking about something else.

But if you have the resources and you're looking to do it internally, is it as a team, we say bring us on as well. Right, we're super cheap, we're super full affordable. We can make a great argument bring us on at the same time. And if your goal is to have it running in house and you don't want to use any vendor a. You should start with us because you're going to learn a ton of the strategy side things that you will not will be able to ramp your team that that experience and that training and how do we do it and what do we do? Will be able to ramp it. But while you're ramping your internal team, we can start your pipeline today. We can have outbound launched incredibly strategically within ten days, and so you're starting to get an inbound pipeline as you ramp your team. Are Contracts are super short. Three months. How long does it take to ramp an SDR three months. So why not at least bring us on now? If we make a use case that we're driving Roy, meaning we're setting more appointments, that are closing into deals, then then what our cost is. Then why would you ever shut us off, even if you have an internal team run us together, because we're making you more money. Within that three months we made you more money than what it took to costs. The second problem is what happens if two of your strs quit within two months because you guys didn't know what you were doing. There was a lot of chaos. There wasn't a lot of direction. If you're only relying on your internal pipeline, you'll immediately have a dip in your productivity, which means your revenue projections are going to drop as well, because you're projecting revenue based on the endown and pipeline that's coming in, whereas we can come in at stabilize it. And that's actually what a lot of mid market and enterprise companies have actually engaged us for. Is Hey, we have an internal team. We just want to always on solution so that if three people leave from our group of Steven we don't have a huge drop in numbers. We can actually just put more top of funnel leads into the program you guys are running to make up for that exit of those employees while we ramp new employees back up. So my quick take is don't choose one or the other. If you're building a team internally and that's what you want to do, do us side by side. And I know I'm talking for a long time with hey. That's one of the podcast. Yeah, one of the biggest benefits of outsourcing to a good vendor like medium is just strategy. Yeah, Self Plug Selflog is the strategy component. We live and breathe outbound and there's one single advantage we get as an outsource company that allows us to speak to the industry more so than if you were to go higher a VP of sales development or lead sales development or in SCR and that's over the last few years we've worked with hundreds of businesses over fifty different industries, varying sizes, products, target markets, whatever it might be. We are one of the handful of companies who can say that's a bad approach, that's a bad strategy, that that's not going to get many opens. Hey, you have a deliverability problem. Here's how, here's the fastest way you can fix it. Hey, are you even planning for deliverability? Is everybody just emailing everybody? Hey, that's bad content. That email will never work. You're repositioning, you're using the wrong variables. Because we work across so many different industries and markets, we've built the knowledge base. So even working signed by side your internal team, we can say, Hey, let us coach you on actually how to do this the right way as quick as possible, and I think that's a good mic drop moment right there. I was going to ask you for a takeaways, but I think you hit all the takeaways right there at the end. They're done. That's the time or two I think. Yeah, yeah, that. If people want to learn more about Lidium, I don't know why you would, because I think you've learned everything here. But if people wanted to conduct you learn more about Lidium, maybe pick your brain a little more. How can they do that? Yeah, my email. You can...

...always email. It's Kevin at Lidium Don ioh. You can always go to Lidium Don ioh learn about how we approach sales development, outbound sales and lead generation. We have, of course, our own podcast, the outbound sale podcastcom you can go to the outbound sale blog, which is just all content for sales development reps or any owner looking to engage and outbound sales and a strategic way. Just go to Lidium Don ioh and it's pretty much a treasure trove. When we can talk about the smell test, if you go to one company versus the next and just go to their website, you can see who passes the smell test by who lives and breeze outbound sales every day, and that's right Kevin, I encourage everyone to go check out lidium. I encourage everyone to check out your new podcast. I want to thank everyone for listening today, and especially Kevin me on the show and we will see you next time on the sales engagement podcast. This was another episode of the sales engagement podcast. Join US at sales engagementcom for new episodes, resources and the book on sales engagement coming soon. To get the most out of your sales engagement strategy, make sure to check out outreach die ioh, the leading sales engagement platform. See you on the next episode.

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