B2B marketers face immense pressure to deliver and leverage results due to the expanding scale, scope, and speed of business. In fact, 61% of B2B marketers lack resources (funding, time and staffing) to succeed in their b2b lead generation efforts. These resource pressures often lead to questions about whether specific functions need to be developed in-house or through outside partners.
On the one hand, businesses contend with the fact that they do not want to lose control of their business, culture, marketing, staffing, and training. Additionally, there is a notion that 3rd party resources are not accountable because they don’t provide enough insight into what they do on a day to day basis. Furthermore, the fact that some 3rdparties, like lead generation companies, commonly provide benchmarks but not guarantees, makes it an even greater risk for businesses to hand over specific functions to 3rd parties.
On the other hand, businesses that outsource their marketing to 3rd parties can do more, at a lower cost and at the same time reduce exposure to staffing issues involved in hiring, firing, and turnover.
From the investor’s perspective, outsourced marketing is great because it’s a variable expense in the profit and loss account (or income statement), which means that the cost of outsourcing can go up or down depending on the revenue.
For CMO’s, keeping the marketing spend internally gives them a sense of control. CMO’s also argue that 3rd party B2B services can’t fully appreciate or understand their business-like internal staff.
The question is, what marketing challenges do B2B businesses face when outsourcing and is there a solution that both investors/founders and CMO’s can live with for the overall good of the business?
Considerations for outsourcing
According to Christopher Ross,(Gartner for Marketers research director), a healthy mix of in-house and outsourced skill is what a smart marketing manager will go for. Mr. Ross states that in-house expertise is essential for building capabilities with a potential to drive differentiation and create a substantial competitive advantage while outsourcing is useful for bridging the gap in niche skills and for filling unpredictable and intermittent marketing needs.
Mr. Ross goes further to say that there are seven key considerations when deciding between in-house talent and leveraging outside capabilities. These include:
- Can the outsourced resource support a proprietary marketing skill or provide a distinct competitive advantage?
- Is the desire to outsource driven by the need to fulfill a function or by the need to hire a person that can serve in a multi-dimensional capacity.
- Can the business commit a budget to recruit, retain, compensate, and train talent internally?
- Does the outsourced skill compliment and add to an existing resource in the organization?
- How soon and how flexible is the business in having the new resource activated, scaled, discontinued, or reduced?
- Will erratic support or frequent turnover by the 3rd party agency cause a meaningful negative impact on the business?
- What is the cost comparison between outsourcing and insourcing?
Figure 1: Top marketing challenges in 2018
According to a 2018 Hubspot report on the state of inbound marketing, for 61% of businesses, their number one challenge is in generating traffic and leads. 39% of businesses additionally find it difficult to prove the ROI of their marketing activities.
With these considerations and challenges in mind, we shall discuss why smart marketing managers outsource and leverage outside capabilities in order to get the best results. The focus here will be on traffic and lead generation which is the number one challenge for most businesses.
Why you should outsource Lead generation
From the seven questions/considerations posed above, let’s pay attention to the two main recurring themes. At this point a smart marketer should be curious to answer two critical questions:
- What is the cost of outsourcing lead generation?
- Is outsourced lead generation more effective than hiring in-house sales/marketing experts?
Although the cost of hiring a lead generation service varies a lot, in most cases, the cost of hiring and maintaining one sales/marketing/business development professional is more than enough to cover a whole team of outsourced lead generation or appointment setting specialists from an agency.
For example, a team of outsourced experts from a good appointment setting service should be able to:
- Generate a full sales pipeline (from prospect to customer)
- Confidently promise and deliver qualified appointments
- Increase lead quantity, quality, and ROI
Generally, businesses that effectively outsource lead generation not only gain high-quality qualified leads but also gain them faster and at a lower cost as compared to hiring and managing internal staff for the same function.
Here are a few more reasons:
- Less headache outsourcing: The total cost of outsourced services come as a single package. You don’t have to shoulder several different costs including personnel, support, administrative, infrastructural, and other hidden costs related to hiring internal sales/marketing teams and trainers.
- Easier to repurpose an existing budget and get budget approval: hiring staff internally requires a long-term budget commitment which is a nightmare to approve. It’s a lot easier to hire a whole team of outsourced lead generation experts at once.
- Your sales team will be more productive and happier: By outsourcing lead generation to deliver higher quality and quantity of qualified leads, internal sales staff can focus on robust follow-up and closing of deals which is what they enjoy the most.
- Expert direction: Outsourced lead generation agencies have up-to-date knowledge about cutting-edge technologies and how they can be used to leverage more efficiency and productivity to benefit the whole business.
- Gain higher quality insights faster: partnering with metrics-driven outsourced lead generation experts can provide cutting-edge, high-quality, insightful information faster without having to take any time to ramp up because this is their forté.
- Division of labor: Since there is more significant division of labor between the in-house and outsourced staffing mix, sales cycles are likely to be shorter and more robust.
How to evaluate and outsource B2B marketing
Knowing the right steps to take can make outsourcing a smooth and successful process. Here are the four most important steps or considerations to make:
1. Assign an internal project leader to the task
Find a person within the business who has some sales and marketing skills/knowledge/background but most importantly someone that primarily has excellent project management skills. The individual will be the internal contact with the outsourced lead generation service.
2. Determine what and how much to outsource
Do you require outsourced skills to fulfill a small, short-term job or a thorough job that requires a comprehensive service? It is also critical to understand the following:
- Are you looking for a lead generation service that will drive revenue or a service that will execute projects (e.g., a content marketing campaign including whitepaper syndication/whitepaper distribution)?
- Are you able to quantify the outsourced lead-generation budget over a one-year period? Determine how much you spend on a lead. Better yet, find out your current ‘cost of customer acquisition’ and ‘customer Lifetime value.’
- What kind of relationship will the business have with the outsourced party? Is the outsourced marketing spend going to be qualified or measured against the quality of deliverables (e.g., the quality of lead generation by content marketing) or is it going to be based on achievement of specific results?
3. Determine the B2B outsourced marketing agency that is a good fit
There are a few fundamental attributes to look for in the best, outsourced lead generation partner for your business:
- How do they prioritize approval of their success metrics? The right partner will co-create your definition of success for your sales pipeline and for the overall company. Goals and metrics should be agreed upon. The agency must then guarantee leads.
- The lead generation partner should provide more business opportunities. They should do this not just through predictions but primarily by providing you with data, metrics, hard facts and figures about the performance of lead generation activities.
- They have a good track record with their staff. Investigate and find out the lead generation agencies’ retention and sales training programs as well as the rate of staff turnover.
- They should have expertise and experience across multiple channels. The ability to generate high-quality leads from several different channels allows expansion into new markets and prevents leads from drying up. A good lead generation partner must help you discover and leverage each channel to maximize the ROI on each channel. For example, the ability to maximize the ROI of content marketing through content syndication.
4. Decide between retainer and project pricing
Fixed project pricing is assessed and defined through an estimation of the work that needs to be delivered and then billed accordingly. Project pricing is done irrespective of time spent on each item or hourly rates.
Retainer pricing is usually based on a fixed amount (monthly) tied to deliverables on a defined or floating scale.
Almost all lead generation agencies or companies tell a very compelling story about what they can do. It is therefore essential to distinguish the right lead generation partners from vendors who just offer lip service instead of tangible agreed upon deliverables. To find such a partner, it is important to evaluate what you need, what you can afford (or not afford) and what you expect from the right partner. It is entirely possible to find outsourced lead generation staff that think, respond, and perform like the internal staff and yet have all the benefits of an outsourced service.