What is Outsourcing
What is Outsourcing?
Outsourcing is a process in which companies use separated goods and services from a foreign (external) provider rather than providing them within their own company. Companies use this service for a specific activity that is usually not their “core business”.
The main goal of outsourcing is to allow the company focus on its internal capabilities that can provide a strategic advantage on the market. It also allows a company to focus their limited capital on key activities.
Because of this cost-effective benefit, outsourcing has become popular across the pharma industry.
What is sales promotion outsourcing?
Sales promotion outsourcing is the process of using the sales team service of an external company for specific sales activities, whose sales promotion team represents a product or service to the market.
Sales promotion outsourcing helps companies to run their business more effectively without the worries relates to sales promotion activity.
This service is most often used by companies that want to place a new product on the market, raise awareness of an existing product or increase sales, without hiring new staff within the company.
Sales growth and new customer acquisition are usually in the focus in sales outsourcing. Thus, it is not about cutting costs and streamlining sales areas. Instead, it is about adding sensibly and efficiently to your own distribution organisation with external sales staff dedicated to certain tasks.
The aim is not achieving the result at lower costs.
Rather, it is expanding distribution capacities in a targeted manner so that much more will come from it on bottom line. And while it is hard to justify additional sales employees in a company, there is a good chance of increasing the sales or marketing budget when the return on investment is right.
By outsourcing your sales to a third party that has expertise in sales and marketing management, you will have better chances of getting ahead financially and increasing your sales.
Outsourcing your sales promotion won’t only help your business in generating more revenues, but it will also save you from all sales staff-related budgets like managing and training. Outsourcing your sales promotion management will also spare you from all office expenses like rent and office equipment.
Who needs sales outsourcing?
Companies can outsource their entire sales force or part of it. The outsourcing vendor (or sales rep) is usually compensated based on the results they produce, whether that’s the number of sales closed, sales revenue generated, number of qualified leads generated, or another agreed-upon metric.
Sales outsourcing is usually considered by businesses that lack adequate resources like manpower or time to expand their sales process.
A typical salesperson spends most of his / her time updating excel sheets and status, traveling to meetings, filling out timesheets, and more. In fact, sales reps spend only 30% of their time selling. Sales promotion outsourcing helps sales people focus more on selling. Outsourcing sales can help increase flexibility and allows sales teams to focus on higher-level tactical tasks or strategies.
Why would a company choose to outsource?
Win more business for less cost
Your sales team will have targets to hit. If you don’t have the resources you need to reach your goals internally, sales outsourcing might be an efficient way to get there.
The cost of recruiting, training and supporting a good sales person is high; and even the best recruiters will acknowledge that not every sales hire works out, causing many HR issues along the way.
Outsourcing sales can be a cost-effective and low-risk approach to testing new and unfamiliar markets.
Lack of expertise
Your internal team may lack the expertise and experience to handle certain sales functions.
Company growth
If you’re looking to scale or enter into a new territory, the hurdles that come with it can be different from what you’ve faced.
Focus your time on strategic areas that need more attention
It can often feel like you’re constantly putting out fires when you’re running a busy sales department. By outsourcing sale promotion you will be able to develop that strategic plan that’s been on your mind for months now.
How Outsourced Sales promotion Teams Work?
There are many services an outsourced sales promotion team offers. Generally, they aim to help their clients grow by building brand awareness, getting leads, analyzing, metrics and closing deals. What your company will get will depend on its needs.
An outsourced sales promotion partner will be there to help create a sales strategy, provide the team with the right tools, and optimize or improve the company’s lead generation.
Why companies use outsourcing?
Outsourcing in the pharmaceutical industry allows companies to engage in research and focus on important business preservation strategies, maintain a competitive advantage, and ensure future growth.
- Focusing on core business – 36%
- Expense reduction – 36%
- Increasing the quality of business – 13 %
- Increasing market share – 10%
- Development of innovations – 4 %
- Preservation of capital – 1 %
Reasons for outsourcing sales
Source: 2001 Outsourcing World Summit
What are the advantages of outsourcing?
There are many advantages of outsourcing, including speed to enter the market, control of operational expenses, scalable staffing levels, and reduced overhead expenses. The reduction of HR costs is a large advantage of outsourcing solutions.
Some of the benefits for finding new sales reps:
- It is budget-friendly.
- Finding new sales reps gives you access to new markets.
- A big network of sales reps means a huge sales force and coverage.
- It increases your sales and revenues.
- It helps your small business in building business connections.
For successful outsourcing you have to have vision and certain strategies. You need to have clear needs and goals.
Are there any risks of outsourcing?
There are risks in all business relationships. The key to reducing risk is to find a reputable outsourcing partner that has a substantial history in your industry and experience with methods of conducting business process. It is essential to have a close, transparent relationship with your outsourcing partner. The outsourcing partner must become an extension of your business.
Pros and Cons
PROS | CONS |
Sales promotion outsourcing can help you incease flexibility. Your team can focus on other tasks | Loss of control over sales process |
You avoid hiring people or a new team | Loss of focus on tactical tasks |
Focus on strategic decisions | Dependancy on third parties |
Other departments in your company can work more attentively |