Why Startup Founders Should Avoid Outsourcing Sales

August 23, 2016 Geoffrey Walters

Many first-time founders are taking a huge step into the unknown—and they’re understandably terrified of the pitfalls hidden in the inky-black business nothingness that stretches before them.

Running a business is scary, if you’ve never done it before, but picking up the phone and asking people to buy from you? That’s terrifying.

On the other hand, handing over control of your creation to someone else is pretty nerve-wracking too.

So picking a sales strategy has the potential to strike fear into the heart of the hardiest entrepreneur. And if a founder plumps for an in-house sales strategy, they know this means they’re going to have to get involved in the process themselves—and that means cold calling.

Cold calling is difficult, even for seasoned sales professionals. Perhaps it’s because of this fear that many startup CEOs decide to dodge the bullet and outsource. Or maybe they think a team of pros will do a better job and let them concentrate on what they’re good at. And for some founders, they know sales is vital - no sales, no business - but they feel like it’s something you can just hire for. It’s not really important.

Big mistake. Huge. Here’s why.
 

Have Courage: Resist The Urge To Outsource

Don’t let your fear of cold calling overwhelm you: it’s perfectly natural.

'Courage is not the absence of fear, it’s overcoming it,' said the English actor Natalie Dormer. Jakob Marovt, co-founder of sales research company Pipetop, would no doubt agree. Marovt is candid enough to admit that his first experience with outbound sales was very unpleasant indeed.

'As a first-time founder, I was s***-scared on the first few outbound sales calls,' writes Marovt on Pipetop’s blog. 'Imagine an introvert ex-engineer trying to convince experienced biz guys to buy his half-baked product. And yes, I sucked big time.'

Despite this harrowing early experience, Marovt is unequivocal when it comes to the question of whether or not to outsource sales—he has benefited from overcoming his fear.

'Outsourcing the sales process sounds like a great idea for product-focused first-time founders,' he writes. 'We’ve seen our friends and clients try this multiple times. And it never works. They always go back and do it in-house with founders in charge.'

Why? Because 'early sales is as much about learning as it is about selling'. A founder who gets involved in every aspect of the business early on is at a huge advantage later on when it comes to hiring, as they know exactly what each part of the business requires.

'The founding team should wear every hat,' says Joel Gascoigne, co-founder and CEO of Buffer. 'There’s almost nothing that myself or [other Buffer co-founder] Leo haven’t done in the early days of the company. As a result, I get super excited about how far we can take things across all areas of the company and I can speak on a deep level with anyone in any area.'
 

Don’t Just Think Of Selling As A Transaction

It’s tempting to think of a sale in fairly basic terms, as a mere business transaction—this is why many CEOs are content to outsource. But those who resist the urge to do so understand that a sale isn’t simply about closing a deal—at this early stage of the business, it’s every bit as much about brand image and audience understanding. A good CEO will use these sales calls to find out about customers and to push the brand.

'Selling is never just about the transaction,' writes Vanessa Merit Nornberg in Inc. 'It is also about your brand image, which is either nurtured or denigrated in the sales process. Using an independent rep means renouncing control over how your product gets sold and by extension, the image that is built around your product and your company.

'Independent reps may at first seem like a less expensive shortcut to an in-house sales team, but true cost should not just be measured in terms of dollars and cents. In-house sales reps are a valuable investment for your long-term business strategy.

'They sell only your product—so they sell deeply as well as broadly. They can be trained and monitored to be sure they are accurately conveying product knowledge to your customers. And they speak the language you teach them to speak, so they inspire the conversation you want customers to have about your product.'

Resist the urge to outsource and you’ll be surprised at how much you and your in-house reps will grow as a team simply by nurturing your brand during the sales process and listening to prospect feedback.
 

Founder-Led Sales: Going Deep

So you’ve pushed the brand, experimented with a few different sales techniques and generated some revenue.The next step is to grow the sales team slowly but surely from the two-to-three people it is currently to around 15 or 20.

For this period, you will remain at the helm, molding the team in your own image. Hire in twos and threes rather than one person at a time. Hiring this way promotes camaraderie and healthy competition.

It might be tempting to get some experience in at this stage. Don’t. Rather than hiring experienced sales veterans, look for young, hungry, open-minded salespeople who are eager to learn—and people who won’t be fazed by the ever-chaotic early days of a startup.

Recruitment company TalentBin was one startup that pursued this strategy to remarkable effect. 'Instead of hiring seasoned sales execs out of the powers-that-be in the recruiting world… we focused all our energy on landing new, hungry grads out of high-caliber universities like Stanford, Berkeley, UCLA and more—with preferences to athletes and others who had demonstrated grit and success on a team,' writes TalentBin co-founder in First Round Review.

'This fresh blood was willing to go after waves of new customers instead of focusing on maintaining and renewing existing contracts… They weren’t entrenched by tools and ideas.'

An open mind is crucial at this stage, not least because prospects are more diverse than ever.

'Nowadays, it pays to expect a difference in your sales prospects. Even prospects who resemble you demographically are more diverse than ever in their technology habits and communications styles,' write Matthew Bellow and Neeraj Agrawal in Forbes.

'Some people still want a phone call, while others respond better to a text at some points in the process. You want to enter every sale with an open mindset and readiness to watch for sales cues, whatever they might be.'
 

Engage Your Prospects Early On

Play with different strategies—it’s all about making sure you’re engaging the customer. If they have a hot product that a lot of people want, some startups can have wild success early on with a very basic approach. The problem comes later: customers have not been sufficiently engaged to return and business dries up.

It’s a problem that SalesLoft CEO Kyle Porter knows all too well. After essentially failing in its first year, Porter’s daring adjustments saw SalesLoft take off to the point where they now have 80 staff, a $6 million run rate and were rated the number-one medium-sized business to work for in Atlanta last year by the Atlanta Business Chronicle.

So what brought about the upturn in fortune? 'You either have a modern sales organization or you don’t,' Porter told Dan Reich of Forbes. 'When I started SalesLoft we had this hot thing that a lot of people wanted. So we could reach out to anyone with a “soft touch” and we were kind of able to ‘carpet-blast’ the universe and get some really good numbers.

'Eventually, you need to go deeper and build real relationships with people. If you’re out there and have a sales process that’s working but doesn’t require significant skills, you should be skeptical.

'If you’re sending emails and people are responding, but you’re not actually diving in and solving problems and going deep, building relationships, connecting with people… those sales are going to eventually dry up.

'That’s what I’ve learned about the modern sales organization. The good ones aren’t taking anything for granted. They’re going deep to build true problem-solving relationships with their buyers. They figure out ways to get really personal and interactive with their customers over time.'

Developing this relationship with your customers by 'going deep' should be the focus of your second sales phase, with closing deals a necessary but secondary concern.
 

Be Patient

Often, CEOs can become impatient at this second stage of the sales process. For example, they might balk at a rep struggling to close a deal—or simply taking longer to do so—than they would themselves. As Openview founder Richard Harris points out, there’s often good reason for that—and sometimes it has nothing to do with the ability of the salesperson in question.

'The product is your baby,' writes Harris. 'Nobody knows your baby better than you. And no-one can speak more passionately or convincingly about your product.'

You also have added clout as a CEO, something that a salesperson is unable to use to their advantage. 'The prospects trust you more than any other person at the company,' says Harris. 'Where a customer might think a sales rep only has the incentive to win a commission, you’ve put years of work into your product and really believe in its ability to solve a customer’s pain points.'

So remember that your reps, no matter how good they are, do not have your gravitas to call upon when clinching a deal. Where you can help them is by imbuing them with your passion for, and knowledge of, the business—another reason why this hands-on approach is so vital in the early stages of your startup.
 

Taking Things Up A Notch: Time To Recruit Experience

The exploration part of the sales process is drawing to a close: now it’s about refining process, and this is where experience does count. You need someone with experience, but again, we’re not talking about a grizzled veteran here. Hiring someone like that would likely cause your young, go-getting sales team to feel alienated from their sales manager, who themselves is unlikely to tolerate the slightly chaotic, improvisational culture common to startups.

'Seasoned or senior salespeople typically come from companies that documented procedures, defined processes precisely and didn’t tolerate the by-the-seat-of-your-pants way of a young startup,' writes Crazy Egg and Hello Bar co-founder Neil Patel.

'Besides, seasoned or senior people may not have the passion of someone who is younger and less experienced. Plus, they can be very expensive.'

What you should look for here is someone who has experience of growing a small, hungry but callow team of up to 10 salespeople into a tightly honed sales machine comprising 25-30 reps: Someone who can fine-tune your rough sales tactics into a smooth overall strategy, set up quotas and train the new reps.

Again, hire in twos and threes so that reps don’t feel lonely or isolated and to provide healthy competition.
 

Time To Go Big: Get Yourself A Senior Sales Leader

If you’ve navigated the choppy waters of startupdom to a point where you’re ready to go to 25 reps and beyond, then the time has come to hire a senior sales leader. Again, though, the candidate should be someone whose experience fits the company culture: someone who has recent experience of guiding a startup sales team to greater heights.

'[You’ll need] someone with a proven track record of scaling things big, who is a VP of sales at a company that already is where you want to be…three years from now,' writes Steli Efti of Close.io.

It’s a big step, warns Efti, so make sure your company is really in the position to make it.  'To bring such a person on board, you’ll need to throw a lot of money and some equity at them,' he writes. 'That’s why this is such a crucial hire, and one that you shouldn’t make light-heartedly [sic].

'They will guide you on a journey that will make or break your startup.'
 

Conclusion

The appeal of outsourcing is obvious, but founders need to see the big picture. Sales is an investment, and it’s integral to company identity as well as company growth. No-one should see it as a line item or something that can safely be left in the hands of contractors. The evidence is in too: build a great in-house team and you get scalability and longevity. The time to figure out how to get over those SaaS sticking points, where so many companies crumble, is right at the start and serious, professional sales teams with the right tech support are a big piece of the puzzle.

*Featured Image Source

About the Author

Geoffrey Walters

A serial entrepreneur and digital nomad, Geoffrey has been running his own marketing consultancy for the past year.

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