When it comes to customer acquisition, our view is Augment > Outsource
In startup land, things are hard. (Yes, so hard that there’s actually a (great!) book called “The Hard Things About Hard Things”; I digress but check out our 321 Brain Food post for more on that…) And on the top of the list of hard things: Customer Acquisition. It’s so hard that sometimes, it seems like it would be so easy if only you could hire someone else to make it happen. Enter outsourcing.
Yes, there are many a firm out there that professes to be the solution to your Customer Acquisition challenges. On offer are services that allow you to outsource customer calls, appointment setting and turnkey inside sales solutions. There’s no question that these services, for the most part, are run by professionals with sales street cred and that they are well-intentioned (in the best cases, their service offerings include win-win provisions so their fees are tied to results). Yet the challenge is this: talk to most companies, founders and sales and marketing leaders who have used one of these services and their stories are similar: “We tried and it didn’t work”; “We tried it and the number of conversions from it: 0”; or “We tried it and we got appointments but they weren’t the right people.”
So what’s up with that? It seems like such a great (and needed) idea. Great in theory, if you will. Yet typically not so great in practice. Hmmm. After twenty years of adventures in tech growth companies, we have some thoughts on this. Read on!
We’ll start with some (unsolicited) advice on the Customer Acquisition front:
Keep your customers (and the process to land them) close. Retain leadership of Customer Acquisition in-house to maximize learning and results.
And hastily we’ll add what I’ve come to call the Houston Law of Customer Acquisition, which is:
Customer Acquisition: Augment, yes! Outsource, no!
Let’s dig in deeper to explore this further…
Core vs. Ancillary
Here’s a question to ask before outsourcing (anything, really): what is core and what is ancillary? If we have a tech company that has fully outsourced all product development (i.e. has no in-house developers and no in-house point person overseeing product development) is it really a software company? Likewise, if we have a tech company that has fully outsourced all aspects of customer acquisition, processes or person leading the charge of acquiring customers) are we really a tech company, or just a “dev shop”? In the spirit of radical candor, on both fronts, we’d bet against you. In other words, we believe product development (including owning and overseeing development of your product or service) and customer acquisition (including understanding the why, who, what and how of acquiring – plus retaining and expanding – customers) is critical. Customer acquisition is a core activity that you need to know, lead and continuously improve in order to grow and thrive. It’s just too important to fully outsource.
Learning
In growth companies, learning is growing. When you start out, your first order of focus is to find (strive, try, fail, learn, try something new!) product market fit. And part of that is acquiring customers. That acquiring customers part then becomes even more important to continued growth and scale. When you try different approaches, different traction channels and different tactics, you end up with heaps of learnings. These learnings inform your future customer acquisition (since you can change course, build upon things that work, try another tactic, etc.) as well as other aspects of your growth. For example, through the trials and tribulations of customer acquisition, you’ll also glean client and market feedback that will help inform your product direction, your customer experiences, and your sales and marketing efforts. And if you’re leading this in-house, you will have the opportunity to use all of this valuable learning. Trust us, it’s gold. Sadly, though, these nuggets will be lost if you fully rely on a third party.
Outcomes
We alluded to this earlier in this post: when companies fully outsource their customer acquisition function, the typical results are less than stellar. Between the two partners at 321, we’ve both lead sales and marketing in over 8 startups and have worked as advisors and in senior marketing roles at many more. We’ve drunk the kool-aid on service provider pitches only to be… disappointed. Reflecting earlier today we recounted at least 5 such experiments where the cumulative number of conversions was… 0. Gulp. How can this be? It’s not because, in our experiences, the solution providers didn’t do anything or shirked out of the scope of work. It’s more, in our vide, because, even though they were amply briefed (here’s the space, market, target customer, process, scripts, etc.) they just didn’t fully understand and internalize the prospect’s needs and the value proposition. And even though they were conscientious professionals, they just didn’t have the same level of commitment and passion for acquiring new customers.
Augment and Continuously Learn
So here’s what can be helpful: augment instead of fully outsourcing. Ensure that you have someone internally who “owns” Customer Acquisition, who is the lead person that will oversee the process, who will act on (and share!) the learnings, and who will shift course when the results are not headed in the right direction. And keep building your internal skills and competencies by developing your people and cultivating customer acquisition as a core skill. It’ll pay off. In growth.
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