I always keep an eye on the bottom line, but I am proud to be a cost-cutter.

I once saw a company that went from startup to NASDAQ IPO to being delisted in three years, because it spent frivolously.

I’ve been able to make the most of my company’s resources because I’m constantly aware about how much money is being spent. This has helped us grow by 600% last year and maintain a 40% profit margin.

I am passionate about helping small to medium-sized businesses (SMBs) grow by using outbound marketing. But even if you have a good strategy, the cost of every piece can make or break your bottom line.


Need Help Automating Your Sales Prospecting Process?

LeadFuze gives you all the data you need to find ideal leads, including full contact information.

Go through a variety of filters to zero in on the leads you want to reach. This is crazy specific, but you could find all the people that match the following: 

  • A company in the Financial Services or Banking industry
  • Who have more than 10 employees
  • That spend money on Adwords
  • Who use Hubspot
  • Who currently have job openings for marketing help
  • With the role of HR Manager
  • That has only been in this role for less than 1 year
Just to give you an idea. 😀

The SMB Decision: In-House vs. Outsourced BDR

As a high-growth small business, the number one focus is sales. Customer acquisition drives revenue and with enough customers you can grow your company.

With no high-quality leads, your sales pipeline is depleted fast. With a lack of good marketing and lead generation, you’ll find yourself struggling when it comes to generating that pipeline.

This is not to say that in-house sales development teams are a bad idea, but they may be more suitable for larger organizations with an established customer base and revenue stream. Article: Diversity is a hot topic in many workplace environments, and there seem to be many inclusion initiatives to help diversify the job market.

There are two things business owners and executives need to focus on when deciding how they want their outbound sales program structured: cost, and the type of customer you’re trying to attract.

Are you confident that your company can invest in every component needed to build a solid, supported sales development program? Considering outbound prospecting is not going to work unless reps are dedicated at least 90% of the time.

For small businesses, this is a big decision: Do you hire more salespeople internally or work with an outbound partner?

Sales Hacker has already covered the do’s and don’ts of hiring outsourced sales professionals, tips for when it makes sense for your organization to outsource sales development, and the pros and cons of outsourcing this function.

Why aren’t people talking about the cost of diversifying?

When deciding whether to build an in-house outbound sales team or hire a firm, it’s important to consider four key costs.

The Four Costs of Outsourced BDRs

  • Salary and benefits costs
  • Software costs
  • Data costs
  • Hidden costs

1) Salary and Benefits

The cost of the Sales Development Rep role was one major factor in deciding whether to build out an internal team or use an outsourced BDR agency. And it can be significant.

The  outsourced BDR is the most important hire for any business, as they are often hardworking and eager to meet goals. They can also be trusted with being a company’s first contact point.

The average salary for an outsourced BDR is $74,000 with bonuses and commissions.

But thats not the entire picture. There are a lot of other costs you have to think about when hiring an outsourced BDR, like:

  • Human Resource Expenditures
  • Employer Payroll Taxes
  • Benefit Costs
  • Software Licenses
  • Training Costs
  • Administration & Management

Outsourced BDRs can cost a lot of money, and the average one costs between $100k to $150k per year.

This costs a lot of money. It would be cheaper to have 5 Outsourced BDRs, but you need someone who can manage them.

It costs a company the same amount as an outsourced salesperson would make in one year, or $42,000 to use a third party agency that handles outbound sales.

You’ll get a lot more for each dollar you spend. And if your contract specifies it, you might even get sales specialists and managers to work with the Outsourced BDRs.

2) Software Cost

With the software needed for a sales development team, costs can add up quickly. It is important to budget and plan accordingly.

No one can predict how much you will save, but here are some of the annual fees for sales software.

  • Hubspot: $14K+ (10 users)
  • InfusionSoft is $3500 or more for 10,000 contacts.
  • SAP: up to $1400+ (per user)
  • Salesforce has a large range of prices, from $500 to over $10,000 per user.
  • LinkedIn’s Sales Navigator is a monthly subscription service that costs $1100+ (per user).
  • Outreach: $1200 (per user)

If you’re not careful, the costs of these tools will continue to add up. Even if you only use three or four of them, it’s easy for your costs to exceed expectations.

Implementing a complicated system might cost more, like $250 per employee.

Using in-house sales development teams is expensive because of the high turnover, and software costs.

Mercer reports that the average turnover rate for American companies is 22%, while in-house sales development teams have a 39% turn over rate.

The agency will offer you the best technology, without having to pay for it on your own.

3) Data Cost

One of the most undervalued aspects of sales is data. This input can come in many forms, but it’s what helps generate sales for an SDR.

If you have multiple sales representatives, then the best way to fill your pipeline with prospects is by using one of three methods:

  • SDRs are responsible for finding their own leads.
  • The research team has found all the leads for the sales development reps.
  • Combining the two approaches

When outsourced sales development reps are tasked with researching their prospects, they have to spend time doing research that is not related to sales. This can cause them frustration and make them less efficient.

But is it realistic for SMBs to have a dedicated research team? In many cases, the answer is no. Which means you will be paying more.

In order to find the best people, you need a large budget. If you have more than one full-time researcher then that cost is going to increase.

Outsourced sales agencies have a team of researchers on staff. They use databases, real-time research, validation software and other human led resources to ensure their leads are as accurate as possible. These services come at an affordable cost because theyre spread out across many clients.

4) The Hidden Costs of Hiring & Ramping

Hiring is a process that takes up a lot of resources. You need to create job posts, interview candidates, and negotiate salaries with new sales team members all the time.

It costs more to hire inexperienced people, but you also need to invest in training them.

Of the 75% of high-growth companies that hire sales reps, most are new to this field. It takes an average three months for a rep to get up and running.

Its not so bad until you realize the average tenure for an inside sales rep is only 14 months. So you put in all of that work for just 11 full-quota months before they leave.

You take a risk every time you hire someone new. Not all sales reps will fit with your company and not everyone is going to be successful.

A great fit with the company culture is important for a successful tenure.

It can take a lot of time and energy to hire new salespeople. With outsourced reps, this is taken care of for you.

A Final Takeaway About Outsourced BDR

Why do sales professionals still think that everything has to be done internally or nothing at all?

The right answer to this question is completely dependent on the needs of your company.

We’ve found that companies who choose to outsource typically use a combination of an in-house sales andor marketing team with outsourced services. It’s up to you what level of commitment is right for your company.

For every company, there are more meetings equals more sales. The key to this is figuring out how you get those meetings and keep your profit margins high at the same time.


Need Help Automating Your Sales Prospecting Process?

LeadFuze gives you all the data you need to find ideal leads, including full contact information.

Go through a variety of filters to zero in on the leads you want to reach. This is crazy specific, but you could find all the people that match the following: 

  • A company in the Financial Services or Banking industry
  • Who have more than 10 employees
  • That spend money on Adwords
  • Who use Hubspot
  • Who currently have job openings for marketing help
  • With the role of HR Manager
  • That has only been in this role for less than 1 year
Just to give you an idea. 😀
Editors Note:

Want to help contribute to future articles? Have data-backed and tactical advice to share? I’d love to hear from you!

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Justin McGill
About Author: Justin McGill
Justin McGill is the Founder of LeadFuze - a lead generation platform that discovers new leads for you automatically. Get 25 leads free.