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Getting Started With Sales and Marketing Outsourcing – SMO
January 29, 2009
Excerpts from an article originally written for Global Services magazine, “Sales & Marketing Outsourcing to Gain Momentum in the Coming Years,” January 05, 2009
Sales Outsourcing Approaches
Sales and Marketing Outsourcing (SMO) today has evolved into three primary models, including inside sales, outside-transactional sales and more recently, outside-consultative sales. Most mature of these three approaches are the inside sales solutions delivered from contact or call center facilities. Leading providers of contact center sales include SITEL, Sykes, ICT, Hispanic Teleservices and Direct Connections International. Popular locations for the larger operations include the US, India, the Philippines, and Central / South America; regions where English or increasingly, Spanish language labor is plentiful. Most telesales providers offer in-bound and out-bound sales as well as other ‘phone plus computer’ services such as lead generation, appointment setting, seminar or event registration, database updates and other similar.
Outside-transactional sales outsourcing, the second of the models, is very common within certain industries; particularly those offering lower complexity technology products, telecommunication services, consumer-oriented commodities like food products or clothing and many types of personal financial services. This model is very accepted in both business to consumer (B2C) and business to business (B2B) sales. It is also common as a channel management solution where local promotional campaigns, and point of purchase design and implementation are necessary.
The third model, and latest evolution of sales and marketing outsourcing, is the concept of fully outsourcing the end to end function for revenue generation, including marketing. It is essentially a BPO approach to revenue responsibility and for many companies may represent the sales model for the future. An obvious driver behind full sales outsourcing is companies simply deciding that managing sales teams is not an organizational core competency, much like others have decided that owning IT resources is not core. Another trend contributing to this scenario is one suggested by the authors of Making The Number, a book on sales benchmarking. They suggest that because of changing workforce demographics, particularly in the US, the labor supply of experienced high-end, career sales professionals and managers is not keeping up with the demand from the companies needing their skills. This demographic trend is expected to accelerate and could be forcing companies to identify alternative approaches to managing revenue generation – and outsourcing even high-end sales is one such alternative.
Within the US, several firms offer this full service model. Leaders include Marketstar, MarketSource, Harte-Hanks, Hawkeye and Next Level. Most providers in this space offer both inside and outside sales and cover the full sales life cycle from opportunity identification to closing and contracting. These full service models also include tracking and reporting on the same key selling metrics a company would expect from its own sales organization, but without the expense of investing in a CRM tool, as that too comes with the outsourced model. These larger firms deliver across multiple geographies, support a wide variety of industries and work with SMB to Fortune 50 sized companies.
Many boutique solutions exist in this space as well, where firms with deep domain or other specialized knowledge focus on specific industry verticals or particular customer business models. 3forward, for example, is one such boutique model providing sales and marketing execution exclusively to IT and business process outsourcers. They also have a unique specialization around emerging outsourcers wishing to open or grow sales in new markets. Service Leadership is another, whose specialty is assisting technology companies in targeting US channel partners as sales agents for their products and services, then helping them establish relationships and demand programs.
Marketing Outsourcing Benefits
Outsourcing critical marketing responsibilities is the other part of this evolving outsourcing model which can provide many advantages, particularly for small to midsize companies and start ups lacking the resources to hire a full time marketing officer. In fact, next to great offerings or truly unique solutions, marketing may be the most important (yet possibly most neglected) business enabler.
The venture capital firms and emerging business investment community recognize this challenge and are becoming major advocates of including specialists in marketing and sales strategies as part of their management oversight model. So to, as an article in India’s Economic Times last September suggested, are many of India’s emerging outsourcers and technology providers. These small and medium sized IT, software and technology outsourcing companies are now (or should consider) “…outsourcing some key marketing functions like making pitch documents, lead generation, power point presentations and even reverse outsourcing (where they appoint a local agency to market their products and services in the US).”
Business to business branding and marketing firm The Delve Group, a leader in developing market differentiation strategies for outsourcing providers and leveraging their brands as a sales accelerator has observed this trend as well. Brenna Garratt, Delve’s CEO shared that “up until 2-3 years ago companies would seek our specialized expertise to help define and articulate their brand and high-level marketing strategy and then transition this new framework back to their sales and marketing teams. Today we are being asked not only to provide this valuable foundation but also to manage their go-to-market implementation. Senior leaders (as well as venture capital firms supporting their portfolio companies) realize our vantage point offers a wide-range of innovative and time tested approaches and that keeping us at the helm can fully maximize their sales and marketing effectiveness as well as provide efficiency and measureable results beyond what they could do on their own.”
The Future of SMO
As a practice, sales and marketing outsourcing is not yet receiving the formal level of analysis afforded many other BPO solutions. None of the leading advisories or analyst firms identify it as an ‘official’ BPO category on their sites, although many are now publishing papers and recommendations on emerging models and approaches. That sales and marketing outsourcing is here to stay is hard to challenge – even for the largest companies in the global marketplace, hiring, training and managing sales teams for all possible geographies and specializations can be a very expensive and cannot guarantee results. In marketing, it’s often a case of needing the right amount of experienced resource, at the right time, to be successful.
For these and many other reasons, expect to see continued evolution of this latest BPO model. It may even be an approach to consider for your own organization.
Comments
3 Responses to “Getting Started With Sales and Marketing Outsourcing – SMO”
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[...] challenges can outsource their sales and marketing. My friend Matt Smith at 3Forward has offered a fantastic primer on their blog, and I can’t say it any better than they do so I won’t. But the point is there is no [...]
Thank Matt. Great article.
Any idea on the size of the outsourcing sales market?
Evan,
Thanks for the post. We are trying to get an idea on the both the current size and growth projections of the SMO market and have separate discussions with a couple analysts that follow the subject to try to reach some conclusions. In the meantime, we believe that this model is not just a short term reaction to economic and other external factors, but a true shift in the way many firms consider acquiring and focusing the talent needed for market development. Changing workforce demographics, accelerating market micro-segmentation, speed, complexity and other factors are drivers, but we also believe many companies are in fact implementing consistently with two philsophies that author Tom Stewart associates with this latest phase of globalization. Those are “outsourcing to acquire a capability to help earn the right to win’”; and “Outsourcing to create human capital mobility”.
For more insight, suggest you take a look at a recent post by Phil Fersht on the subject. “Where should outsourcing vendors invest their marketing dollars in this climate?” http://fersht.typepad.com/the_outsourcing_bloghorse/2009/03/where-should-outsourcing-vendors-invest-their-marketing-dollars-in-this-market.html. Phil has an excellent perspective on these trends and is worth following.
Regards, Matt Smith