I’ve been there. At several companies before LeadJen, I was either an Inside Sales Representative, a player coach, or the Manager of an Inside Sales team. And, it’s not as easy as it looks–in ANY of those roles. I thought it might be helpful to share some of the hidden costs of building an Inside Sales team internally.
Every company considering an inside sales program, at some point, considers whether it should be outsourced or whether they should build it in-house. When looking at the budget, the outsourced option will always appear higher than the salary of the inside sales person on an hour by hour breakdown. Doing quick math tells us that maybe building in house is a better option. However, there are many hard dollar and soft dollar costs that are often ignored.
When calculating the hard dollar costs, companies must consider more than salary. Be sure to factor in commission/bonuses, benefits, and infrastructure. One last hard dollar cost that is often forgotten is data. What data will support the prospecting efforts of the Inside Sales team and is it clean? Often, companies will have to procure data to keep the Inside Sales team busy, which clearly is a hard dollar cost. If the company assumes that the Inside Sales team can just call from existing data, then the team is really doing database cleansing and not lead generation. This brings us to the calculations for soft dollar costs. If the Inside Sales team is cleaning data, then a percentage of the productive time focused on lead generation must be reduced.
A typical Inside Sales FTE will likely not spend 40 hours per week on the phone. Internal meetings emerge; additional responsibilities, etc. will take attention away from outbound calling/prospecting. Those responsibilities always get prioritized first because no one loves making cold calls. (I have to be honest. In my inside sales days, I was a top performer and very driven and I still only spent about 30 hours per week on the phone…on a good week!) Companies might calculate that 75% of the inside sales time is spent on the phone, and for some companies, this could be as low as 50% (especially if the inside team is doing data cleansing combined with lead generation.)
Management time is a huge opportunity cost. If the company has a small inside sales team, then an executive is typically assuming the role of managing the team in combination with many other responsibilities in sales and/or marketing. One of our prospective clients recently shared that for a 16 hour per week employee, they were spending 10 hours per week in management.
At the end of the day, when comparing the outsourced dollar cost to building internally, it seems like apples to oranges, but really it is apples to apples when all those costs are factored. The costs will end up being fairly equal. So, the decision is who will be more productive? By selecting the ‘right’ outsourced partner, companies can have an inside team that is dedicated to their company, has the knowledge to “talk the talk and walk the walk” even with really complex messaging, and the company can have confidence that each hour is used productively for lead generation vs. other distractions.