Understanding Outsourced SDR Pricing Strategies

There are multiple ways in which the outsourcing business operates. Today, we examine some standard commercial models encountered when comparing partners for outsourcing the early stages of your sales pipeline (an external company is setting up sales calls for your account executives). For simplicity, we focus on the extremes of these models. While combinations exist, and this list isn't exhaustive, it provides a good starting point for those interested in the options available.

Per Contact or Activity

These models encompass variations and combinations of pricing per unit, where a unit could be a contact on the calling list, a target company, or even a dial made or email sent. Typically, you agree on the work to be completed, specifying the number of contact attempts per company or individual regardless of the outcomes of the initiated discussions (yes or no for a call with your sales rep). Some operators are limited to a single channel, usually email or call, while others adopt a multi-channel approach, potentially including LinkedIn outreach.

"We will prospect a list of 1000 contacts and reach out to each one minimum 5 times or until spoken to."

Benefit: The SDRs have no pressure to sacrifice quality to secure sales calls since the focus is on delivering the agreed amount of work. In theory, you should only have calls with those genuinely interested.

Commission-Based

You're placing an order for results, meaning payment is earned for each agreed sales call between your account executive and your ideal customer. Defining what actions qualify for a commission (e.g., a warm introduction email following a cold call vs. a prospect accepting a calendar invite for a sales demo) is crucial. The most common criterion for the commission is that the agreed sales call actually took place. There is also interest in the models where a commission is a revenue share of done deals, but that is usually perceived as too risky for outsourcing companies and payout might be too far into the future.

"We'll set up sales calls between you and decision-makers from your most-wanted accounts. You'll pay only for the sales opportunities that we successfully sourced for you."

Benefit: Pay-for-performance model. Financially, the safest option, though not necessarily the best in quality, due to SDRs being incentivised to push for sales calls, for example, when timing is off.

Fixed Fee

With this model, you receive what was agreed upon, regardless of how the deal and work order is structured (above is just one example). This approach sometimes applies to kick-offs, trials, and pilots, followed by a commission-based model. The primary consideration is who bears the costs in the case of a failing project, so reading the fine print is crucial.

"We will charge you a fix fee for preparation work, such as training and prospecting, and the kick-off project will include 15 good quality sales calls with your most-wanted accounts."

Benefit: It's an easy model to get started with a new outsourcing partner. It's not probably the cheapest option, but both parties should benefit from a clearly defined project.

Setup Fees & Miscellaneous Costs

You might come across various initial and ongoing costs. These start with setup fees, which encompass expenses for integrating systems and training sessions to start the partnership smoothly. You could also find charges for prospecting, where the outsourcing company creates a list of potential leads for you. Some companies may even require you to buy these lists through them, which can add to your overall expenses.

"We also offer additional services, such as prospecting for leads."

Further, there could be fees for extra support services, such as account management, software licences, ongoing reporting, or data entry into your CRM system.

Cancellation Policies

When a sales call doesn't happen because the prospect either doesn't show up or cancels, it's critical to know what to expect regarding compensation. Some companies might offer a refund or promise to set up a new sales opportunity as a replacement if you notify them within a specified period. However, others might not provide any form of compensation for these missed opportunities.

"No refunds!"

A combination of unclear policies and hefty commissions might be surprisingly expensive! Therefore, it's crucial to have an explicit agreement regarding the compensation model, if applicable, and the exact process for addressing such scenarios before they occur.

Understanding the complexities of outsourced SDR pricing models can significantly impact your sales pipeline's efficiency and success. By considering the detailed insights on various pricing structures, you're better equipped to evaluate and choose the outsourcing partner that aligns with your business goals and financial plans.