New markets are full of risks! To ensure that your first steps into foreign markets or new customer segments are not a hit or miss venture, you need to know where the cost traps are and avoid these. Outsourcers can offer attractive solutions in this area.
Saturated domestic markets, high cost and competitive pressure, dependency on foreign purchasers – these are factors that drive both SMBs and major corporations to search for new growth and ultimately sales opportunities in international markets and markets with less competition.
The USPs of their products and services also encourage decision-makers to exploit the potential of international markets. No matter what it is that drives a company to venture into foreign markets: internationalization is risky business. Realistic planning is essential to minimize risk.
There might not be a magic formula for setting up a successful sales network abroad, but there are three factors that can make success more likely: know-how, adequately trained staff and knowledge of the national markets. SMBs usually lack all three of these key factors. One attractive way to acquire these parameters while lowering risk and eliminating the need for high investment costs is to get international outsourcing specialists on board.
Sales outsourcing for SMBs – yes, please!
Sales representatives at SMBs spend most of their time on activities other than meeting with or contacting their customers. Numerous studies show that sales reps spend only around eleven percent of their time actively selling and only roughly ten percent of their time acquiring new customers. Administrative tasks and informal communication – often paired with inadequate documentation and CRM processes that do not provide very meaningful information – hinder in-house sales and make sales somewhat non-transparent.
Companies that are planning on establishing a sales network in foreign markets must have control of time, processes and costs in their sales department. This is where outsourcers can do wonders – both for sales within a company and to help ensure a successful start in foreign markets – by providing targeted solutions, specific approaches, measurable success parameters and transparency in services and results.
An international outsourcer can roll out and take charge of sales activities in emerging markets. Such service providers are generally already “on site” and understand the market, people and culture. This makes it possible to create sales teams very quickly, and enables market entry without major, long-term investments in offices, infrastructure, or staff. Moreover, outsourcers can usually take care of setting up sales channels as well. The advantage here: rapid market expansion.
Outsourcers bring their documentation and CRM process expertise to the table. KPI transparency is consistent and comprehensive throughout the enterprise, giving decision-makers the information they need to intervene and make adjustments at any time.
A decisive factor for success in this context is setting clear objectives with the outsourcer in the form of a contract that assures complete transparency in terms of processes and data. After successful entry into the foreign market, feedback makes it possible to implement proven sales structures in-house so as to prepare the sales departments – both internal and external – for the challenges of national and international markets. Sales outsourcing is more than just “buying sales” in new markets. It also gives enterprises the flexibility to quickly end investments if they are unprofitable while aggressively expanding the markets that work.
Major corporations – Cost-effective sales coverage of individual segments
Sales outsourcers can also be an attractive option for major corporations that already have a foothold in international markets. Key accounts and large customer segments are already well established here, so corporations are interested in determining which customer groups offer growth potential – and how to efficiently tap into this. This is usually the SMB market, which outsourcers are much more effective in than internal sales representatives.
To achieve comparable cost of sales figures in the SMB segment, a sales team must bring in, process and handle orders more frequently. The “touch rate” is decisive here and represents increased communication with the customer. Having a virtual sales team can be extremely beneficial in such scenarios: it increases the number of customer contacts, e.g. since travel time can be replaced by contact time, and makes sales staff more available to the customer. Both factors result in shortened sales cycles and more contracts in a specified time period. This cost-effective coverage of the SMB segments through virtual sales and virtual resources is roughly 35 percent less expensive than conventional field sales.
Of course, not every contract can be signed “virtually”. But experience shows that even demanding products and solutions are sold successfully using virtual measures. Today, even industrial and pharmaceutical products can be sold by phone and email – and acceptance is growing, especially since customers also don’t have to spend as much time on their decisions or waste their time in countless meetings with field sales representatives.
Outsourcers use performance management as a standard process to guide sales. This creates transparency that extends all the way down to the day-to-day evaluation of success at the staff level.
This transparency also makes it possible to precisely specify the sales performance of the individual teams or countries, facilitates the identification of best practices and aids in making decisions on future investments in new and existing markets. The flexibility offered by outsourcers is particularly attractive to major corporations, which in most cases can immediately change how they use their sales service providers to adapt to sudden market changes. The outsourcer thus eliminates risk at different levels.
Moreover, the consolidation of complete sales teams through centralized sales activities at one location provides the basis for savings in overhead and management resources. The service provider then needs only one management team to steer the entire sales activities for a region. Consolidation can thus generate savings of up to 20 percent – without even considering the synergies from managing sales more efficiently.
Transnational standardization of processes such as reporting, training, knowledge management and performance management exposes even more energy saving potential. Time and resources are used more efficiently and sales regions become comparable thanks to benchmarks. Standardization also means enhanced quality.
And last but not least, both corporations and SMBs benefit from the constant level of quality and service of their sales activities.
One or more outsourcers?
Outsourcers provide valuable services – especially when it comes to covering international markets. But corporations and SMBs alike fear dependency, a loss of control and hidden costs. A common strategy to counteract this is to get multiple outsourcers involved. This often results in fragmentation, uncoordinated processes and a lack of comparability.
But there are also advantages to using more than one outsourcer in a region. These include benchmarking of partners for more sales success and security aspects with regard to business continuity. A multi-vendor strategy is recommended only if the loss of a service provider would have fatal consequences. Potential outsourcers should be thoroughly examined, and then collaboration can be progressively intensified over time. An outsourcer must understand your products and embody your values. Quality should always be the measure used for decisions. After all, these are your customers!
Picture: NASA/Goddard Space Flight Center [Public domain], via Wikimedia Commons