Selling: Outsourcing Your Sales Force
Outsourcing the part of your business that potential customers first come into contact with sounds risky. But in January 1995, when Bob Trussell of Tempur-Pedic, a three-year-old importer and distributor in Lexington, Ky., wanted to roll out his orthopedic mattresses in 10 regional markets in six months, he didn't want to spend time tracking down reliable sales representatives to do it. Instead, the then $6.5-million company turned to Sales Staffers International, in Danvers, Mass., for transitional outsourcing help.
"It's not cheap, but it's a lot faster," says Trussell, who, with only one sales manager and a handful of independent representatives, lacked the in-house resources to instantly build a national medical-sales staff. Instead he paid Sales Staffers $275 an hour to set up video-teleconferencing interviews with about 75 candidates (some interviews Tempur-Pedic's sales manager did in person); a $12.50 base hourly rate for the reps, plus a 50% to 60% surcharge that went to Sales Staffers; and a $2,000 release fee that Tempur-Pedic paid to retain certain salespeople after a 90-day period. That was still 20% less, Trussell believes, than it would have cost him to employ a full-time staff dedicated to recruiting.
Although the sales representatives were paid by the outsourcing company, Trussell set the pay rate and created the goals. Representatives were expected to visit five nursing homes and two hospitals a week. Commissions were set at 5% of paid sales on contracts ranging from $200 to $150,000. After 60 days the salespeople were evaluated by Tempur-Pedic. "They understood it was a trial period," says Trussell. "If someone didn't cut the mustard, they would be replaced at no charge."
Which happened a lot. "We were disappointed by some and pleased with quite a few," says Trussell. In the past, too, he says, his own reps hadn't worked out, and the phone wouldn't ring. "Meanwhile, I was paying a draw against their commission." But when he used Sales Staffers, if the phone didn't ring, he got someone new. In fact, half of the 25 representatives were replaced.
Nevertheless, Trussell was satisfied with the results. "Although it's a lot of cash to allocate up front, it makes sense when you're small and growing, because you can't get bogged down trying to recruit a sales force." Currently at $14 million in revenues, Tempur-Pedic now boasts its own sales staff. Out of the 25 sales representatives who originally came from the outsourcing service, 14 are now full-time employees who will ultimately become regional managers.* * *