Tech and SaaS sales challenges
Mar 17, 2023
4 min
Julien de Vonarkha-Varnak Director Sales Development

How to Mitigate Sales Outsourcing Risk

Effectively implement a risk-sharing agreement with your sales partner

Outsourcing sales functions can provide SaaS companies many benefits, such as access to new markets, cost savings, and increased revenue. However, it also exposes you to some risks, from vendor performance to regulatory compliance risks. 

Risk management is crucial to any business operation, especially when a third-party organization is involved. But working with a partner also results in the opportunity to spread business risk across multiple parties. 

Managing risk in sales outsourcing can seem particularly challenging. Risk sharing is an effective way to manage these risks and ensure the success of the outsourcing relationship. This article will discuss mitigating sales outsourcing risk and implementing a risk-sharing strategy with your partner.

What is Risk Sharing?

Risk sharing is the distribution of potential losses or liabilities among multiple parties. In the context of sales outsourcing, it involves sharing the risks associated with sales functions with a third-party vendor.

Risk sharing is essential for a successful sales outsourcing partnership. It allows both parties to mitigate the potential negative impacts of unexpected events, such as economic downturns and employment or health crisis. Diversifying the risk among a larger group lessens the effect of any single event on an individual or entity.

Common risks of sales outsourcing

  • Miscommunication 

Communication failures between you and your partner will lead to problems. Ensuring the two parties can work collaboratively towards the same objectives is critical. A reliable feedback process is necessary to identify and synchronize challenges and quickly and efficiently address and resolve them.

  • Bloated budget

It is important to note that while outsourcing can provide opportunities for increased revenue, it also comes with an initial financial investment. Avoiding financial strain is crucial to maintain a realistic budget and monitoring expenses related to outsourced work to ensure they align with initial projections. Keeping spending and revenue under control is essential for a sustainable and profitable outsourcing project.

  • Delays

Outsourcing can lead to delays in project completion due to miscommunications, lack of experience, or lack of resources on the part of the outsourcing company. This can negatively impact a company's operations and ability to meet deadlines.

  • Security threats

Outsourcing can also introduce security threats, particularly when sensitive information is involved. It is relevant to sales outsourcing since you'll have to share data about your business and clients. Ensure you account for data breaches, intellectual property theft, and other risks potentially leading to significant financial loss.

  • Reputational damage

Sales outsourcing providers are an extension of your company. Mistakes, poor-quality work, and lack of experience can result in reputational damage in your market. Ensure your partner has expertise in your field and is a good representative for your business.

Mitigating Risk in Sales Outsourcing 

There are several strategies that companies can use to mitigate the risks associated with sales outsourcing.

  • Conducting thorough due diligence on potential vendors

Before outsourcing sales functions, conducting a thorough audit of potential vendors is essential to ensure they have the necessary experience, resources, and track record of delivering the required services. Verify the vendor's references, review their financial stability, and conduct on-site visits before committing. We have listed the 10 most crucial factors you must evaluate to choose the most suitable sales outsourcing partner.

  • Clearly defining roles and responsibilities in the outsourcing agreement

A clear and detailed outsourcing agreement that defines both parties' roles and responsibilities can minimize misunderstandings and disputes. It should include services, performance targets, payment terms, and a dispute resolution process.

  • Regularly monitoring and evaluating vendor performance

Monitoring and assessing the vendor's performance is essential to ensure that they meet their obligations and that the outsourcing relationship meets the company's objectives. Planning regular performance reviews, quality assessments, and financial audits would be best. We have listed the essential KPIs to measure the success of your sales outsourcing initiative.

  • Implementing a risk management plan and contingency plans

It's essential to have a risk management plan in place to identify and mitigate potential risks before they occur. This can include conducting regular risk assessments, identifying potential risk triggers, and developing contingency plans to deal with them.

  • Building a solid and open communication channel with the vendor

A strong and open communication channel with the vendor can help identify and address any issues or concerns promptly. It can also help build trust and a partnership between the company and the vendor.

  • Regular training on industry best practices

It's essential to continually train them and vendors on industry best practices and how to apply them to the sales cycle. You will ensure the company's processes are performed correctly and updated on industry standards.

Final words

Risk sharing is a powerful tool to mitigate risk and ensure the success of a sales outsourcing relationship. It requires companies to establish clear expectations, draft a detailed contract outlining the risk-sharing process, engage in regular assessment exercises, and monitor the risk-sharing process to ensure it works effectively. 

At Salescode, risk sharing is an essential component of a successful partnership. Book a short meeting with an expert today if you’d like to know more about our process.

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Julien de Vonarkha-Varnak
Director Sales Development

With his vast experience in the sales and Inside Sales industry, Julien is globally acquiring new customers and winning projects for Salescode. Mostly engaging in high headcount project bids, he is the first wave of expertise, when working with Salescode. Knowing all global markets he is our go-to-professional for strategy and structure to generate value for our clients.

Click here to connect with Julien on LinkedIn.

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