Words To The Wise™ By David Lamont, Marketingsage.
Outsourcing is often the fastest, least expensive, most flexible way to generate sales leads and sales. Outsourcing enables you to both access specific markets and/or to reduce the internal resources necessary to support your sales efforts.
Proven strategies include:
- Freelance Telesales Reps
- Contracted Telemarketing Firms
- Industrial Representatives
- Resellers and Solution Providers
- Affiliate Programs
However, before we look at the strategies, it’s worth noting that it’s common to use multiple outsourcing strategies at the same time. Additionally, if your goal is solely to reduce the investment necessary to support your sales efforts, your strategy options will be limited. Licensing and OEM strategies allow you to focus on product development and/or fulfillment. However, other strategies require you to invest sales and marketing support. Of course, that investment can also be in outsourced marketing solutions (discussed later).
Outsourced Sales Strategies
Freelance Telesales Reps can be used for both sales and lead generation. Individual telesales representatives can be contracted through freelance sites like Guru.com. Many are in the business of contracted sales. Some are just providing the service between jobs. Most collaborate with you through a (sometimes free) online CRM system and they work best when they are given a list of prospects and a clear set of talking points. However, when you work with an individual you can expect them to learn something about your business that will make them more effective over time. They are also more adept at building relationships with target prospects and customers.
Freelance telesales reps expect to be paid for their time and generally do not work for 100% commission. Since they are often asked to work on 100% commission you’ll see many rants on that topic.
Contracted Telemarketing Firms can be used for both sales and lead generation. There are many telemarketing firms that use call centers full of people to make calls on your behalf. Many are staffed outside the USA in countries like India. These services differ from those that you can expect from a freelance telesales rep because your relationship is typically with the account manager, not the people on the phone. The people on the phone may change frequently. They work from call lists and scripts. That works for simple tasks like renewing a subscription, reminding people about upcoming events, and some appointment setting. It does not work well if you need to establish a relationship or longer term rapport with a prospect.
Telemarketing firms often charge a set-up fee, plus a fee for each telemarketer assigned, and a fee for the number of calls made. Some are paid for each appointment they set up for your in-house sales team. Because the telemarketing firm carries some risk these per-appointment fees can be high and the quality of the appointments may not be as high as your sales team would like.
Industrial Representatives can sell your product on your behalf. Industrial Reps are individuals and small firms that act as sales agents for complementary and competing products and, usually have a fairly well defined geographical territory and/or prospect list. They typically sell to organizations – businesses, government, but not individual consumers. Unlike telesales people, industrial reps will visit customers and prospects and can participate in more consultative type sales.
Industrial reps. are paid a commission and may also be paid a retainer. They typically sell products that generate repeat business from the same customers. Such products might include components for building other products or consumables such as office supplies. Unlike resellers, they do not take ownership of the product.
Resellers and Solution Providers can purchase your product from you for resale to someone else. Resellers, sometimes referred to as “box movers,” buy and resell products for a profit. Solution or service provider-type resellers do the same. However, the product is typically sold as part of a larger solution. These firms usually sell specific brands and may be “authorized” by the manufacturer to do so. Additionally, resellers and solution providers often provide related products, installation, repair and support services for their customers.
Some manufacturers sell directly to resellers and solution providers. Others sell to distributors who in turn sell to the resellers and solution providers.
The fact that a reseller (or distributor) takes title for the product makes this strategy attractive. The reseller can be viewed as the customer because they pay you, the manufacturer/developer. That said, selling through this channel is far more complex and costly than many executives realize. Agreements can be very one-sided in favor of the reseller and merchandise return agreements may prevent manufacturers from quickly recognizing some revenue on their books. Additionally, distributors and resellers typically require incentives to push a product. Many of these firms view the manufacturer incentive programs as profit centers. Because they mark-up promotional expenses, marketing costs can be substantially higher through this channel.
OEMs (original equipment manufacturers) can purchase your product from you for resale to someone else, usually as part of their own product offering. The integrated product may or may not be visible to the end-user. If it is visible, it will likely carry the OEM’s brand.
Typically OEM sales are high volume, lower margin, agreements. They are attractive because of their revenue potential and because end-user sales and marketing are handled by the OEM. In some cases, market access is dominated by a few large OEMs because your product must be compatible with their product to gain customer acceptance.
Licensing. Patent holders sometimes license the manufacture and sale of their inventions. The licensee pays a fee and/or a royalty to the inventor and takes care of everything else.
Affiliate Programs came into vogue with Internet delivered digital products. However, it can work for physical products as well. Amazon uses such a program to sell books. The affiliate introduces a product to their market and receives a commission when someone purchases it. The process is tracked online using coded links. The affiliates are not considered representatives of the vendor and may not be vetted by the vendor. The system works for simple, inexpensive products that are purchased online with credit cards.
There are various affiliate networks that manage the transactions for a fee – typically a percentage of the sale. There is usually a minimum charge and a charge to process a check so you can get your money.
Affiliate relationships tend to be casual and, as such, any one affiliate may not generate many sales. You may also see a burst of sales followed by no sales. This can happen when an affiliate promotes your offering to a big list and the moves on (a common spammer tactic).
Franchising is worthy of consideration when you want a committed seller who also provides the capital and local management necessary for success. Franchisees pay the franchisor for the use of their brand, system, training, supplies, etc. There is an upfront franchise fee and regular royalty payments. Most franchisees also have purchase agreements with the franchisor.
Franchises work for locally delivered services that have a product component. Obviously there are many franchise-based restaurants. There are also IT service firms, financial service firms, hotels, auto dealerships, etc. Most franchises have a retail consumer-focused offering. However, there are business-to-business franchises.
Franchising is regulated in the US and many other countries, making it an onerous channel strategy for many firms. Legal, support, and recruitment costs can be high.
Supporting Your Sales Strategy
Because an outsourced sales team is remote, not necessarily dedicated to your product alone, and not accountable in the same way your employees are, you need a more organized marketing function. Sales tools such as brochures, white papers, reseller kits, and videos must not only be available on-demand, but these tools need to be more educational and persuasive to enable the sale. You may also need to organize training and sales incentive programs. Additionally, you’ll need to build your brand, create demand, and even provide sales leads. That’s where Marketingsage can help.
Marketingsage is a full service marketing firm that helps other marketers and business executives increase revenue by cost-effectively generating sales leads, building brands, launching products and developing sales channels. With Marketingsage you can add expertise, bandwidth, specialized tools and contacts when you need them, for as long as you need them.
If you think Marketingsage may be able to help you and your business, please give us a call at 925-426-0488 or click here to have us contact you.