Outsourcing the Sales Function
A company can outsource all or part of the sales cycle. For example, a company may hire a call center to make the initial contact with the buyer and move the buyer from lead to suspect in the sales cycle. Independent agents are salespeople who are not employees of the company; they set their own hours, determine their own activities and are usually paid on commission. They often represent competing companies to the customer, such as in the insurance agency. A manufacturer's representative is an agent that sells the manufacturer's product and complimentary products and is hired because he/she already is selling in the desired market. Example would be an agent that sells bathroom faucets for one manufacturer and bathroom towel rods for another. Companies may hire distributors to receive and manage inventory and who have salespeople to complete the entire sales cycle.
Advantages and Disadvantages of Outsourcing
- Advantages of outsourcing include:
- Gaining access to more buyers because the organizations and people to which the company has outsourced the work sell a broader array of products and have existing relationships that can be leveraged.
- Outsourcing is less expensive because the company doesn't have to train salespeople except to inform them about the company's products.
- Disadvantage of outsourcing is lack of control. Outside sales agents can decide what to sell and when to sell it.
- To try to encourage outside agents to sell its products, a company may offer attractive commissions and incentive programs such as Spiffs (special promotion incentive funds), which are short-term bonus payments to sell certain products.
- Companies also employ a sales manager within their company to work with outsourced salespeople. These sales managers also pay attention to what the independent salespeople and organizations they work with are saying and use the information to create better marketing and selling strategies.