The Total Cost of Outbound

All right. Nick and I are back. It's been a while. We've been gone for quite some time on the podcast. I had twin boys, uh, a couple, about 2 months ago. So podcast has taken a little bit of a backseat, but we're going to be picking it back up, bringing some more content on a regular basis. So definitely excited to do this one again. And for this one, we're going to be really digging into the, the all-in cost of doing outbound. So prospecting efforts, what are the true costs? Involved with actually running this in-house, outsourcing, what are all of the different considerations that you need to be thinking of. So should be a good one.

Yeah, excited to be back. Hopefully Harrison can stay the whole call and he doesn't get a crying baby and have to run out.

Yeah, they're on a walk right now and they're out and about. So hopefully they stay gone for the next couple of minutes while we can get this wrapped up.

Yeah, do it.

All right, we're going to talk about the cost of outbound. So I think it— there's a couple of things to consider here. One is, is outbound a viable channel for you and your company? And then the other, if you believe that it is, or you're unsure, it's how do you go about setting up your team, your processes to be most successful, but then also understanding what is the true cost of doing this? I think one thing that I see, it falls into two buckets. You end up in a situation where you have Either you hire a dedicated person inside sales, SDR, etc. They are doing the outbound and that's their full core focus. Or you end up in a situation where you put all of that onto reps to have to do. So you have your team that's out in the field visiting customers, going to conferences, and then it's on them to figure out how should I be prospecting? When should I be prospecting? How do I use all these different tools and technology that I have available? And I think those are the two core buckets that we see people fall into. There might be the third, which is, oh, we're just not even going to do outbound at all, which is, I don't know why you would not do that or why you would ever decide not to do outbound as a mechanism.

Yeah, I think that's probably the three, three scenarios we come across with people we speak to.

Um, but do you want to pick up like the first one of, okay, we're going to hire somebody.

Oh yeah, let's go with outbound.

Maybe it's early stage, you're deciding, do I want to hire the first person to come and do outbound for us to help drive pipeline, whether it be for founder-led sales to feed your initial set of field reps that you have. I think the sort of the historical, I would say, thought process here is, okay, we're going to hire somebody, we're going to build out a team. This is going to be like our way of figuring out like, all right, building our outbound motion, have somebody dedicated to it full time. And I think historically that was 100% like the only way that you could get high-quality outbound and you had to invest in tools and you had to have the person dedicated to it.

Even when it comes to that first piece, I think there's something that people, if you're gonna do that or did do that, often made a mistake and that was, oh cool, I can get someone junior in this role. Someone junior, they'll be cheap. They've just got to send emails. This is a simple task. Not realizing this is somebody who has to understand sales strategy and the science to be able to do this role. It's not a junior role. So that's the first sort of error I've seen, and that's become more and more prevalent and more and more important as we've moved on, because it's so easy to, as we say, shoot off the spam cannon and just blast out simple emails. Anyone can do that now. So you need somebody who has that higher seniority to be able to devise good campaigns.

And there's a key point, right? Which is historically it was a lot easier to get emails delivered. The inbox was slightly less cluttered. And so when you were to say, hey, I'm going to take a list of 1,000 people, I'm going to write a message and I'm going to send a message to them. You were able to get decent results that could fall out from that. And I think that made it to where it could become a junior role in the sense that, oh, I can go and I can write these messages and things for them, right? With our experts that we have. And then they can build, go through all the tooling, become the expert on the tooling, on the sequencer, on sending. If they want to do a level of personalization, they'll be able to figure that out. And I think that was also the case when you didn't have to be as precise and differentiated and have a way to really stand out in the inbox.

Yeah.

To where the junior person could do that. And so then, and then I think we saw this trend and shift where it's okay, maybe it's less of an inside sales as a junior person. And it's more of either we push that onto the field team, so the field team's doing it, who does have that expertise, who does know the market, who does know the personas who they sell to, generally speaking. You bring in like a person that is scientifically adept, so somebody maybe like fresh out of the lab who has a PhD or was a previous, I would say, like user of your technology or really understood the science, and then you're trying to then teach them and coach them on sales strategy, sales tactics, how to prospect, all that kind of good stuff. And I think the piece that really, that gets missed a lot in all of this is like, it's not just the salary costs that you have to be thinking about, right? You have obviously salary. If you're hiring somebody, you're probably going to have benefits, some version of 401k, pension. You're going to have all the buying equipment for them, right? You're going to have all of these sort of like extra costs that get added on to bring that person on. Then you have to think about onboarding. Then you have to onboard them. So they're going to have to learn all of your tech, all of the strategies, basically everything that you need to try and teach them. And that can take a couple of months to get up to speed doing that type of stuff. Then you're going to have to purchase all of the tools that they need, right? Because if you're going to have a person dedicated to prospecting, you're going to need to give them at least one database, probably multiple, because pretty much none of these databases are fully— like, they're not really enough on their own, right? Each database has their own little gaps and they have their own little quirks. They're good for one thing, not for others. And so you may end up actually needing to purchase multiple different databases. You need data enrichment, you need email validation tools. You'll need to set them up with their actual sequencers so they can actually run outbound with sending multiple messages in a sequence. So you end up actually with this whole additional software stack that you have to not only purchase, but then also train them on how to use and update all of it. And then the other piece that people don't even think about—

what about people that say, so what about people that say, oh no, I don't need any of that now. I got Claude or I got GPT.

You still need a way to deliver the information. Claude and GPT can build you a list of like 10 to 15 people in an alright way. They'll still probably hallucinate a bit. You still need the underlying data for how you're going to find the contact details. You're still going to need a way to make sure that those contact details are validated. You could just simply say, oh, I'm just going to use LinkedIn Sales Navigator or something as well. Also another cost that you'll want to add on. Yeah. But then you're also only using one channel, right? So you'll need tools that can handle multiple channels so they can handle LinkedIn outreach, email outreach, etc. So that tool stack obviously adds up. Now, granted, you're building an internal asset, if you will, by doing this, right? So you're having, you're hiring somebody, so that's a, an asset to your company. You're building, bringing in these tools and you're going to be developing processes, which could be conceived as a, an asset as well. But like, you're doing all of this without knowing if it's even going to work or what's going to work. Right? So especially if this is the first hire that's going to come and do it, you're putting a junior person in charge of trying to figure out what is everything that's going to work. They're basically putting the hands of the outbound processes and what's going to work and testing into the, to the hands of that person, which are a lot of, there's a lot of variables involved in that. Is the person the right person? Could be that is going to be a 6-month process to figure that out where you bring them on, you try them out and you see what works and what doesn't. If you have long sales cycles, it might take a while for those deals to close. Outbound deals do take longer to close because you're going out to them before they potentially even have a need. And then you have the, the other side of all of this too, which is just like the management time. So you're going to have probably one-to-one meetings with them. You're going to have to be coaching them. You're going to have to be managing them, training them. You're teaching them the ropes. Otherwise, you're just throwing them to the wolves and hoping that they're going to be successful, which does happen quite often where you bring in a new hire and you say, hey, go do this stuff. Good luck. And there's not really proper onboarding, training, coaching, et cetera, along the way. And this is a recipe for failure as well.

And I think that comes back to the, this is an easy task, let's give it to a junior person mindset that is no longer the appropriate mindset. So the person needs to be armed not only with the tools, the knowledge, and the support, or you're not going to get anything. And most people in life science sales and commercial are actually previously scientists, right? We've seen this. It's always, I fell into that role. So as a scientist, would you start an experiment with 18 different variables? And when the outcome doesn't work, say it was all of them, right?

Yeah.

No. And that's the way people test outbound.

Yeah. Yeah, it's, it's, it's interesting. And I think the other challenge to your point is that historically, this was the way and I think the industry, the world has changed drastically in the last hell, even 9 months, unless you have somebody who's on the cutting edge or thinking about and looking at these things, everything from like email deliverability to how to monitor bounce rates, to know when domains aren't performing well, to knowing what type of messaging is actually working today. All of these sort of like insights ground zero, unless you have or bring somebody in who has a ton of that experience already. So you're starting off with trying to figure this stuff out, to your point, 18 different variables for that experiment to see what's going to work. And then I think what people will do is they'll say, ah, it didn't work. It's either the person or outbound is just not going to work for us. And in reality, they didn't, they haven't seen probably outbound being run at a high level. They're used to, to your point, the spam cannon, right? They're used to, I'm going to create a list. I'm going to grab this message. I'm going to send this message to that list. And then I'm just going to look and see for who replies and get the results. And I think again, that was like, What a lot of leadership grew up on is how it worked. Obviously people do targeted prospecting. The problem though with targeted prospecting is that it just doesn't scale well. You can only do so much human one-to-one, high-level, high-quality prospecting. And so if you don't have that sort of always-on prospecting engine, you're going to end up in the situation where now it's being pushed to the sales team, which is like bucket 2, where you're reliant on the experienced sellers taking time out of closing, taking time out of working deals, taking time out of being in the field to actually have to prioritize prospecting. But even then, do they know what's working? What's the latest and greatest from a messaging perspective? Do they know how to handle, you know, what happens when you get an out-of-office reply and you have to set a follow-up? What happens when you get a bunch of bounces in a row because you don't have the right email validation or the right contact details? Do they know how to navigate every one of the different 9 different tools they might have to access in order to do outbound at quality? And then also just will they even prioritize it? Like how often do we see reps just like the first thing that drops is prospecting?

I was going to say that. So let's, in the hypothetical scenario, they have all of the tools they need. They know how to run all of those tools. They have all of the strategy capability, data around what's working right now and all of the ability to execute that. So let's say this hypothetical person you've hired, that unicorn, they're going to come into the company. You're like, cool, we've got a new resource. I wonder if they'll do this task for me. I wonder if they'll do this. Oh, it's end of quarter. They need to focus on all of their deals, right? The one thing that can psychologically can always wait is prospecting and outbound because nobody is normally waiting on it. Whereas someone's waiting on a contract, someone's waiting on the tech team follow-up, someone's waiting on you to do a review of your latest 6-month deals to give to the board. They've all got deadlines. They all get prioritized. So this is when you get this peak and trough scenario of pipeline. And it normally happens when you've emptied your pipeline, you've closed everything you can end of quarter, and then suddenly you look back and you're like, oh crap, I've got enough to make the end of this quarter. Let's prospect mad. And then you do that for 3 weeks and you start to fill your pipeline and then now you're back to trying to close it. And it's this kind of feast or famine kind of existence. Whereas if you have somebody in that role where they're just continually providing pipeline, then everything your rep does in that Feast or Famine approach is cream on top. That's what's going to take you above target because you've got your baseline covered consistently. And then they add to it when they have time with really high targeted one-on-one in-person kind of discovery prospecting.

Yeah, I've seen this all the time. It was like, we expect our reps to prospect. And then the question is, cool, you expect them to, but are they? Like, how are you actually holding them accountable to doing it? I think that's the level that most people don't really dig into. Are you act— and I think a lot of reps see this next step of what I'm about to say as micromanaging, when in reality it's just do your job and prospect. But you need to monitor outbound activity and you need to hold the team accountable to it. If you are expecting your field team to prospect, then you need to have the tooling and stuff in place to make sure that you can monitor and you can hold them accountable to actually prospecting. On a daily and weekly basis. And if they're not doing it, you need to hold them to the fire to ensure that they do it.

Right.

Then reps will complain all the time, sit there and complain because they're like, oh, I don't have time to prospect, or, oh, I just wasn't able to get to it this week because I had to deal with this customer fire. There's always going to be an excuse that field rep has for prospecting, in my opinion. And we've seen this across 100+ different companies, right? It's like these things are consistent. And if you're seeing them in your company, like you either need to build a new culture around accountability to prospecting or look at alternative methods.

So here's a really honest, really brutal admission that will show you just how real that problem is. We run a lead generation, uh, marketing sales funnel building company, right?

Succession.

Our job is to do that for clients. We do it and we do it really well for clients. We forget to do it enough for ourselves.

Sometimes we do.

Yeah. We have all of the tools, we have all of the capabilities, we have all of the experience to generate tons of leads for the people that are on deadlines, which is our clients, because we need to prove our value to them every month. Right? So they all get what they need and then we get busy. Right? So literally the only solution we have for that is to micromanage ourselves and myself and Jess who are taking charge of some of this, I've just put ourselves in as a client. And we are treating ourselves as a client because that is the only way. If we have the same alarms that go off when we don't have at least 4 campaigns going for them, if we have the same process going off and like holding ourselves accountable, we're going to have far more pipeline. And we'll grow it.

Exactly. That's the goal. So yeah, there's a lot of things to consider, I think, with all of this. And, but I think also the biggest one, and maybe this is the reason I think a lot of people don't think about outsourcing as a viable option. Is they're used to the sort of, I don't know, like overseas spam cannons, like little agencies, maybe even don't have scientific expertise. So they're like, oh, I tried to do this 2 years ago with another agency. It didn't really work. And it's again, it's thinking about who are the people that are executing those campaigns. If they don't have a scientific background, how can you expect them to filter a list properly to know the difference between a MD and a PhD, or upstream processing and downstream processing, or the difference between cell therapy and small molecule or whatever, right? There's all these sort of nuances that exist in the life sciences, which is quite specific. And then the other piece is I think it used to be the case that in order to get high quality, you had to look at, you had to bring it in-house because you needed that person dedicated to doing it. Whereas now, I think with all of the different tooling, with leveraging things like AI for efficiency gains, agencies have actually become more efficient as an economical option for this because they can come with— here's an example. If you go and you spend $40,000 a year on different tooling for different data providers, that's a cost of $40,000 to you as a company. Well, an agency can spread that out across all of their different clients. So the cost to them for a new client is actually cheaper and it actually offsets that cost of that, the, those different data providers. And so you can actually get access to a lot of the different data providers or a lot of that different data via an agency at a much discounted rate because they have the ability to access this at scale. And it's like the economics have flipped from I need to hire a person and I need to pay this person a salary, I'm gonna do it for junior, save money, et cetera, to actually being more cost-effective and more effective to outsource because you're hiring basically the talent who knows how to do this, who's run it across 100 different companies, who knows what works and what doesn't, who has all the tooling and all of the infrastructure, and it's essentially cheaper and you're gonna get higher quality results as the output of it.

And they also don't think that I'm not gonna ask for a promotion. I'm not going to ask for holiday and time off. Like when I say Successional, an agency, even if it wasn't us, right? We're there like 24/7 pretty much. We're there available to answer and deal with stuff and got your campaigns running. So I think there's that. I know that when you ran a whole team of inside sales, SDRs, whatever you want to call them, they would all work for about 6 months and then be like, can I be a rep now? There's this kind of funnel of people wanting progression, which is great. But this is seen as a, when you do hire an internal team, it's a stepladder. So you're continually hiring and training in that position.

Which is great. There should probably be that as well, right? You should have that sort of hiring and progression process. I think the downside is that most companies don't spend the time to actually train and onboard and upskill and teach them what's required. Or if they do, they just send them off to some sales training that was done from like 2001 with Miller Heiman and be like, yep, now they're trained. Good luck.

I guess one thing we haven't touched on though is an alternative that's coming out now, which is the AI SDR.

Yeah.

And how that fits into this as a viable option. And our views on that are we're not there yet, right? They're great if you're doing something more generic, less scientific, less targeted. But I also still think they're not as automated as you think. They still need somebody to run them. And you also generally still need to provide the data.

Yeah, I think they are, can be really good if you choose the right tool and you spend enough time to do that due diligence.

Exactly.

But, but the biggest issue that arises with those is that you have to treat them as an employee. You have to monitor all of the different sends. You have to be updating your prompts. You have to be updating the data. You have to be feeding it and you have to be constantly iterating on it all the time because if you treat it as this magic bullet where I can just turn on this thing and all of a sudden messages are going to go out and I'm going to get responses. It's not going to work because it doesn't have enough context of your business. You need the guardrails. You need the ability to go in every single day, look at every message that was sent, tweak all of those messages to make sure that they're accurate. And so you need that level of handholding in order to make it work. And I do think they can work for some people who are willing to put in that effort. Who are willing to hire the person who can dedicate time to doing it and treat it like an employee, I absolutely do think it can work. But using them and thinking they're going to be a magic bullet is just never going to work. You need to spend probably at least 30 minutes to an hour every single day simply monitoring and retraining and reworking that model.

And you're probably still going to need additional tools to feed into it.

Yeah.

Yeah, because like I'm saying—

A lot of the databases that you'll have access to are not going to be life science specific. They're, again, like the other sort of thing that occurs with a lot of these AI SDR tools is they leverage cheaper models, like cheaper AI models so that they can obviously save costs because if they're spending 50 cents a dollar on every send, they're going to lose money, right? So if you're looking at the cost of your tool, if your tool costs $50 a month, $100 a month, like you know that the output of what they're sending is going to be probably lower quality because they're not using models with enough reasoning in order to like truly understand that like this press release that came out is relevant to our company in this way, and then be able to write a well-articulated email to that person, accurate and scientifically relevant without it like hallucinating in some variety.

Yeah. And I think just to clarify what was said there for anyone who's not deep into the AI stuff, every model you use has a power of like reasoning and timescale it will reason for. So if you imagine when you're buying a laptop back in the day, you'd look at the RAM, right? They've got different levels of capacity capability and they're using the cheaper ones because they have less reasoning, think for a shorter period of time. They get you a result, but it's like rather than getting that PhD KOL opinion, you're getting a man on it as well. And that's what you've got to understand when you use those models.

Yeah. And if you want to get into the nerdiness on the AI front, even if you fed a model the context of your company, you're going to have tens of thousands of tokens, which are basically just like words that the AI is analyzing with every single message that you're sending, just to simply understand what it is that your company does. And so in order to keep costs down, the only way to do it is to use these cheaper models, which affects the reasoning, affects the output. And that's why it's so important to have that fine-tuning that you would have to do as a user of that tool or a manager of that quote, quote unquote, AISDR employee is the constant monitoring, updating, changing of things, tweaking the prompts, the parameters, etc.

So, cool.

We've got a lot of experience in there. What's the, what's the takeaway? Just come work with us.

I think that's the easy one, right? Come work with us.

We'll get you sorted.

Yeah, we'll get you sorted. Probably cheaper than it was to hire that person. I think a lot of people don't come to an agency because they're worried about, like, transparency and data. So that's one thing we've covered where you get everything. So just as a little pitch here, you go you're going to get absolutely everything is transparent, all the leads, all of the data, all of the messaging, it's all visible for you. So that's one of the bottlenecks. But in summary of this, not just thinking about pitching myself and our company, you're going to do one of these things probably nowadays. You're going to hire someone, but that person has to have autonomy, tools, tech stack. It's going to cost you like 40 grand a year for their capabilities, plus the salary, plus the person, and they have to be a senior person now. Because if you listen to the podcast we're about to do now and some more of them, the strategy is very technical and very focused now. You can't just spam people. So that's one option. It's an option, but you really have to invest in it like a real big, a big investment of a business unit. Upside is if you do, they can scale quite confidently now with the tools. So you don't have to hire a team of 20 of these people. You could have a few of them with lots of tools and they'll do a great job. AI SDR, but you're still going to need to hire that very intelligent person to connect the tools to the AI SDR. And you're going to have to manage that person plus your SDR. Third option, come to an agency like us, you're running in 2 weeks and it probably costs you about an hour a week of your time.

Well, you forgot the fourth option, which is push it onto your field sales team and hope that they—

I don't believe it's an option anymore. Teams are getting smaller anyway, but yeah, okay, it's an option. But sales teams are getting smaller and need to do more and their targets are higher. You give them this to do as well. I just don't think you're going to get a consistent output. Metric. I was, I had a sales team of 4 people and I gave them a metric to track and it still was a metric that went up and down because they'd still turn up and go, I couldn't do it because of X.

Right.

And we were probably doing more than most sales teams.

Yeah, that's fair. Yeah. All right. That was a good one. We'll have some more of these coming your way.

Yeah.

Good stuff.

Take it easy.

See you in the next episode.