The Mansfield Sales Blog

Measuring the Cost of In-House Vs Outsourced Sales

Posted by Greg Dunne

outsourced salesThe decision to outsource sales and marketing is often precipitated by a discussion about "costs." You want to lower your costs while increasing your rewards. Increasing new customer acquisition, improving brand positioning, market penetration, and improving your sales teams effectiveness are all common goals. These goals are often accompanied by the rather vague goal of reducing sales and marketing costs. These goals are all valid and achievable, but how will you know which sales force option best meets them?

Or, in other words, how do you compare in-house sales team costs to the cost of outsourced sales?

When measuring the effectiveness of sales, sometimes the classic sales productivity measures are best, like:

  • Revenue growth
  • Close rate
  • Market share
  • Reorder rates
  • Average order
  • Sales profitability

But if you are trying to make the decision to outsource sales, then you are going to need an idea of what your in-house sales force costs, as well as their productivity. This can be very difficult to do because sales and administrated expenses are typically mixed. There are also a number of costs that are impacted by a sales force, but are not specific to a sales force like overhead and support personnel. When trying to nail down these shared resources costs, the best approach is to spend some time tracking and analyzing how shared resources are used. By taking the time to track and analyze these resources you will get a much more complete and accurate picture of their costs than by relying on employee estimates.

When you are trying to decide if you should outsource your sales force, remember to take into account all the in-house costs. Once you have your costs lined up you can more accurately compare the costs and benefits of your sales force options. However, full sales force outsourcing typically saves 25% to 50% in costs!

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Topics: market penetration, outsourced sales

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