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Sales Initiative Magazine

THE UK'S ONLY MAGAZINE DEDICATED TO THE PROFESSIONAL MANAGEMENT OF SALES

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Lessons learned as a single parent arehelping young and novice entrepreneursbreak the 'sales taboo',. says AHGolds

DEATH WISH!Outsourcing could spell the end of the in-house sales team,says Alex McKay co-author of Death of the Salesman.

Rogers' research has led her to conclude that, with theincreasing knowledge, scale and sophistication of the salesoutsourcing industry, a class of global consultancies may beemerging in the sales arena as contract sales organisations makethe transition from being a tactical resource to strategic partners.Sponsored by sales development agency (PM, Death of theSalesman, attempts to explode a number of myths and perceivedbarriers that are deterring some business sectors fromoutsourcing their sales function.

We caught up with one of the authors, Australian Alex McKay,on a flying visit to discuss the potential of outsourcing the salesprocess and its ability to meet modern day challenges.McKay revealed that many global brand names are alreadyexploring the benefits of outsourcing what many professionalssee as an essential core competency.

Speaking exclusively to SI, McKay said: "We have a lot of verysuccessful clients who had never had their own sales forces.During the early days of setting up our business, we continuallycame up against a series of myths or misconceptions that said aninternal sales force was more loyal, more cost effective, better, etc.

"We wanted to test whether or not those perceptions weretrue. We wanted to find out what the reality of scale was whenconsidering outsourcing in the sales business at the time. Therehad been some work done by people like Deloitte's so wecommissioned Monash University in Australia to run a study withabout 180 companies in quantitative research and another 20 inqualitative research and these were all global brands. The studyincluded outsourcing in total, what the companies considered thesales function to be and, ultimately, what were the barriers tothat:'The results revealed modern businesses have not been slow inrecognising the benefits of getting outside help for processes

Sales must be among the last bastions of in-houseprofessional activity for most UK business, yet research nowchallenges this long held tradition.

Early last year SI interviewed Dr Beth Rogers, principallecturer in sales and marketing at Portsmouth Business School,about her research into outsourcing the sales process (See P25,January 2013) and her findings have been used to bolster theargument for using agencies in core competencies in the latestedition of Death of the Salesman written by authors Alex McKay,Graham Brown and Neale Skalberg. These sales experts arguethat the sales strategy of many businesses has remained largelystagnant while other areas of their businesses have evolved andsuggest that now the sales function is ripe for reinvention.

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1111"We have a lot of verysuccessful clients who hadnever had their own salesforces. During the early daysof setting up our business,we continually came upagainst a series of myths or~isconceptions that said aninternal sales force was moreloyal, more cost effective,better, etc:'

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other than sales.McKay said: "We got a bit of a shock when we got the

research back. Our suspicions were generally proved right withsomething like 70% of companies were currently outsourcingwhat you and Iwould call critical business services. Yet, onlyabout 12% were outsourcing some component of the salesfunction. 50 you take this big hunk of enterprise and you wereeither in the 90% that weren't outsourcing sales or in the 10%who were and the question was, who was right and who waswrong?

"That got us thinking about what the barriers were and didthe myths still exist? As we went through the data, all those oldmyths started coming up again: 'oh, we think we are morefocused', 'we think we are more skilled with people having moreinternal training, etc. 50 we set about challenging these mythshighlighted in the research:'

McKay and his.fellow authors recognised that the microcosmof business in Australia could have an impact of businessworldwide.

He continued: "Bythis time we had moved from thebusinesses in Australia into Europe with this second edition of thebook where we added research from another 30 or so companieswith quantitative and qualitative research conducted by BethRogers to see if there were some comparisons.

"While, in Europe, there is a greater propensity to outsourcebased on low-skill low-cost than there might be in other parts of

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the world, there is still very much the view that if it is not low-levelor contact centre work then it remains the domain of a corecompetency.

"Ifyou have ever read that Tom Peters and Robert H.Waterman book In Search of Excellence it's all about corecompetencies, whereas Beth tells us that, today, the world is nowabout dynamic capability, not core competencies. So all of those

. things that were core 20 or 30 years ago are now non-core:'Much of the need for change has arisen off the back of thefinancial collapse in 2008, McKay said, but that there now has tobe further development in business attitude to cope withcustomers' ever increasing expectations.

He explained: "It's fair to say that, before the last interruptionwith the global financial crisis, organisations had all got prettygood at what we call cheese-slicing - reducing costs ..That was theskillbut the difficulty with that skillwas that as you cheese-sliceyou take away value from various areas of the business. thecustomer already wants. So you get this spiralling decline incustomer satisfaction:'

McKay says this is where properly implemented outsourcingcan help organisations achieve the twin goals of both cost andcustomer satisfaction. However, he also acknowledges there arestill hurdles for many businesses to get over towards meetinghigher sales performance.

He said: "The book is a proof of competency in the marketplace and we have a slightly different tack from Beth. I am verymuch from the view that those sorts of things you see in markets,like changes of regulation where you s.ee differences incompetition and termination of use of one product to use

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another, that's where you get to see changes that make thecompany take some action."Research done last year showed that marketer's number onepriority over the last 18 months or so was customer acquisition,up 17% in weighting on their budgets. Everybody uses fancywords like 'activation' and all the rest of it but this is just aboutmore customers.

"How we address all the myths and the rebuttals, facing thischange of operating habits, is that we have completed all thatoutsourcing work for people and they were really successful- thefact that it was not using their own staff really didn't make anydifference. We have all sorts case studies to show this but theunderlying truth is that outsourcing works:'

McKay says outsourcers have to address commonly heldbeliefs that can stand in the way of an organisation realising itneeds to change its attitude towards the sales process.

He explained: "The research insight essentially reportedorganisations saying there are three problems with doing this andthat's why the businesses or outsourced service providers haven'tquite told us bow to do it. First of all they say 'we don't havesomeone with the depth of experience working in theorganisation'. This barrier exists because unless you have someonewho has done it before, all those risks and concerns come to thefore.

"The second is, because of the cheese-slicer approach, theorganisations have not had the appetite to look across theirbusiness as one of these sacred cows 'we've always done it thisway'.

"And the last barrier, which is really important, is they said,

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1111"We 'unpack and repack' thework:' McKay explained. "Wetake what the client iscurrently doing and we end upwith something like 70% of itgoing forward. That's becausewe look at the customer andat what they consider valueand we challenge the client tostrip out those things thatdon't add value to thecustomer.

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'given we have someone with the right experience and we havethe courage to look across the business and see where the realvalue is,we still don't know how to get from here to there', That'sbecause everybody thinks of a sales force as 300 blokes with abag. But what if it's all about screens, digital or virtual stores?

"So, the reality was most of the clients that we used to dealwith would say 'I will transition this process by giving you theproblem because my solution must be outsourcing' withoutknowing what the problem was. Our approach is to simply tellthem to stop there and think about this: 'rather thancommunicating value to customers, how do you create value forthem?"

McKay said he uses a process of stripping away anorganisation's preconceived notions of what they need to bedoing for their customers.

"We 'unpack and repack' the work;' McKay explained. "Wetake what the client is currently doing and we end up withsomething like 70% of it going forward. That's because we look atthe customer and at what they consider value and we challengethe client to strip out those things that don't add value to thecustomer.

"You can go to a client listing, say, 15 criteria that will makethe project successful. When a client tells you 'here are all theimportant things to do' you normally find a client has a host ofabout 100 things. They want to throw everything on the jet withthem and go into the future but it's just baggage.

"For example, there's a little trick we do with reports. Theworld's moved on a lot and using the real-time and capability,with technology like Tableau, you can bring in five or six sourcesof data and see it in real-time as a diagnostic. It's the ability ofthese sorts of outsource service providers to direct the assetwhich has become their significant value.

"Iget the clients to put their list of 'essentials' on the tableand, sometimes, it's difficult to fit them in the room! Then Iask,'what decision do we make from each of the piles of reports?' Atthe end of this rather tortuous period the client admits theyhaven't looked in detail at the value of their reports to thecustomer and most can be disregarded. This exists in allorganisations:'

McKay insists outsourcing is potentially viable for just aboutall industry and business sectors where a sales process is key tocommercial success.

He said: "Organisations will see a doubling of outsourcing inthe sales and marketing space in the next couple of years. That'sreally because these are the last untouched areas. The expertisehas increased am;ng outsourcing companies, which are muchmore sophisticated, and they have tooling that organisationscannot buy in.

"If,for example you take the Tableau diagnostic, you couldprobably buy it for ten-times more and take six-times as long todevelop it yourself as an outsourcing organisation that canprovide its services to you right here and right now:'He also debunks the notion that loyalty of staff is paramount toachieve commercial success.

Continued on page 28

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McKay said: "One of the barriers used to be the loyalty thing,, you know, 'we love our people'. Well, anyone who has beenaround since 2008 will know that was when the 'love' stopped!

"PriceWaterhouseCoopers (PwC) did a study in 2013 aroundmultiple generations of work which clearly debunks the myths. Iwas looking for some proof that loyalty matters. What doesloyalty of staff mean? Does that mean they work harder, staylonger, is it width or depth? No one really has an answer to that.

"What PwC found was that the average employee pre-crisiswas staying about four-and-a-half years. But among theGeneration 'Y's, born in the '80s and where all the up-and-coming talent pool exists, they say they will only stay half thattime. They are an HR manager's nightmare because they will have15 jobs on their resumes throughout their careers. Why? Becausethey don't feel they need to 'pay dues' since the financial crisisand the swingeing cuts organisations made in staff to cut costs.

"They will only stay in an organisation while it is stimulatingwork, their opinions are listened to, they are creatively engagedand while they are being rewarded straight away. It's as if they areplaying the Zelda game - they hear a 'kerching' and they get aprize and that's how they want to do their work,

"Suddenly, we see all this talent saying, 'I'm a soldier offortune' because they have watched their parents being'retrenched' and that's why the loyalty argument fell away in thatone study document:'

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McKay believes these 'freelancers' are perfectly suited to cuttheir teeth working with outsourcing agencies rather in the,sometimes suffocating, political landscape of a big corporateorganisation.

He said: "Outsourcing agencies can offer these a morestimulating career working across a diverse field of disparateprojects.

"And then these agencies can provide a pipeline for talent toorganisations, which no longer have in-house graduate schemes.They can 'cherry pick' talent from the agencies who have taken allthe recruitment risks:'

McKay says this trend is now even moving up into the C-Suiteas organisations realise the benefits of hiring and firing big-hittersto fulfil specific project requirement.

He explained: "Once upon a time an organisation wouldclaim to hire all its senior executives from the sales force but thatwas a myth too with many having been recruited from rival firmsor agencies. They now buy in senior management when there is aspecific need and get rid of them when that need no longerexists:'

Many may argue that the staff sales role still has some way togo but, from McKay's research, it is clear that there are manymore options for organisations to source quality sales talentwithout the need to hire their own teams. V\i