Why you should not outsource your initial sales efforts

Most technical founders are not comfortable with the sales process or the disciple of selling. They tend to treat it as beneath themselves and “sleazy”. Given that most entrepreneurs I interact with are engineers, I usually walk them through an engineer’s approach towards selling, which tends to mirror the agile development process they are familiar with (more about this in a later post).

Many entrepreneurs do try to sell, and not seeing quick success, come to a conclusion that they should outsource their sales efforts to an “expert”. Usually this is after they have exhausted their initial contacts and get frustrated with the constant rejection that comes with sales, or after they have finished tapping into their entire list of first level contacts who could possibly be a customer. They tend to be more comfortable “convincing” people they know well rather than “selling” to people they dont know at all. Which is why I ask them to “dig their well before they are thirsty“.

Without sales there is no business.

Without sales there are no customers. No customers means what you are building is a side project.

Without sales there is no revenue. No revenue means what you are working on is an unsustainable venture.

I have heard of enough companies who have died because they could not sell, but rarely heard of companies that died because they could not develop or build a solution that was sold.

To me, sales is the headlights to your business. I would never recommend outsourcing your sales function in your startup.

Even large companies I know in other areas besides technology, outsource manufacturing, engineering, finance or customer service, but rarely outsource sales or marketing.

I dont consider selling via channel partners as outsourcing your sales. That usually means you have to “sell” and convince your channel partners.

There are 3 reasons why I dont like sales outsourcing.

1. You dont “own” the customer and dont get direct customer feedback. In the initial days of your startup, its absolutely important to have direct customer connections, feedback and input. Even after you grow larger, customer connections are the biggest source of innovative ideas. Without direct customer access you will get a warped view of the real problems and pain points they have, which results in a sub optimal solution.

2. It is very hard to predict predict consistent closure of deals and commit to financial milestones. When you outsource sales, the outsourced company has the eyes and ears on the ground to understand what moves deals, whose budgets are cut and when deals might happen. That information is critical for you to plan your quarterly projections. Without that information you will also find it hard to understand how to allocate resource towards projects and features the engineering team should be working on.

3. Even if sales is “outsourced” most outsourcing vendors will require your help to constantly tweak your positioning, handle customer objections, change pricing, etc. Even after 5+ years at a large software company with over 500+ in a direct sales function, I found us to be constantly changing messaging and positioning each quarter to keep up with customer trends.

Can some parts of the sales process (like the initial lead generation) be outsourced instead of the entire sale process? Possibly. If you feel that the biggest challenge for you is to get the initial meetings and you get a sense that after your get those appointments you are able to move the sales process forward, then I would suggest you look to getting help from a firm that sets up appointments, or does targeted lead generation.

9 thoughts on “Why you should not outsource your initial sales efforts”

  1. Mukund,

    Isn’t your statement “Without sales there is no business” quite outdated in this era where everyone (well, almost everyone) is on the bandwagon to have free subscribers in large quantities with a hope of being acquired by someone at some point of time?

  2. How should a bootstrapping startup, one with let’s say 3 or 4 people (including the founders) and where everybody is an engineer and everybody is doing everything, handle sales?
    I was that guy, who on exhausting his initial list of contacts without getting a cheque, thought sales was very difficult. At that time, the recession was a factor, but I felt I could have done more. Would engaging a lead generation agency be prudent when you are spending from your own pocket?
    Also, in such a scenario, is it fair to expect everybody to pitch in to (and focus only on) the sales process as opposed to product development say? (Everybody else disagreed with me, which was one of the reasons we had to wind up.)

  3. Good Post. Steve Blank wants to call sales in a startup as ‘Customer Development’ and it necessarily don’t have to be offline but has to be done by the founders to ensure they’re building the right thing. The difference is that you’re not just trying to just sale something but to actually ‘Listen’ what customers want!

  4. I agree with samudranb, when the team size is less. What are the marketing strategies?? can someone pitch-in to help us, a bit??

  5. We totally understand @samudranb shoe. Being all tech guys as co-founders, with team size less than 5. It is almost close to impossible to get sales, without sales background. Winding up is the only solution. Unless they had taken below steps..

    @Bala – Trying to address your question too

    1 – Customer Development – Most of us here are aware what Customer Development is? The act of knowing who your customer is and catering to his needs is important. Rather than developing a product which you THINK is going to work in the market.
    You have to keep polishing your product till the time it is being accepted in the market.
    2 – Content Strategy – Seen Is Sold. The product which is seen or shown in the market is sold. You need to have great content to drive traffic to your product. http://stigmatter.com/ has great content strategies which help in lead generation and eventually sales.
    3 – Sub Product – You can create a sub product, which is usually freeware in the market. It should be very simple, easy to build using agile methology and without much in presentation. Once this free product has taken its footsteps in the market, it should point to your actual product which obviously has more features.

    For more Strategies contact http://www.stratageeks.com
    You can email us at service@stratageeks.com


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