Andrew Angus is the founder and CEO of Switch Video, which serves clients in 15 countries and eight languages. Here's how he recovered from an error in judgment that cost his company hundreds of thousands of dollars.

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A Decision Made in Fear

A few years ago, when my understanding of our company and its purpose in the world was clouded by fear, I made a decision that nearly sunk us.

We had produced some high-profile videos for big names, such as World Bank and IBM, and interest in Switch Video was skyrocketing. Our sales team was swamped with unqualified leads, and I wanted to ensure that our reps were nurturing the leads that mattered.

When someone expresses interest in hiring us, it's our policy to follow up within five minutes of initial contact. We're meticulous about tracking communication via Salesforce, as well as doing background research on all potential customers.

I was afraid that our sales reps wouldn't be able to provide exceptional customer service if they were chasing ghosts. Panicking, I began searching for a silver-bullet solution.

Then, it dawned on me: Hiring someone else to manage top-of-the-funnel leads would enable our reps to operate at maximum efficiency and focus on the leads that were ready to convert.

I quickly found a company with an impressive pedigree and a team that was young, aggressive, and driven. It was part of an acclaimed startup accelerator, and its funders inspired confidence.

The company didn't have much of a track record, but I was eager to see what it could do for Switch. I began checking references. Everyone gushed. I decided to expedite the process and hire it to manage our qualifying process and appointment setting.

What Went Wrong?

As soon as we brought the company on board, our sales team's workload went from too heavy to almost nonexistent. The team was getting less than half of its original leads, and team members waited for appointments that never appeared on their calendars. When an appointment was scheduled, the lead was almost always a no-show.

The sales reps became resentful. They were convinced that their precious leads were being mismanaged, but they were powerless to do anything about it. A gap began growing--not only between sales and the outsourced team but internally as well.

Our sales team had every right to be angry. Eventually, we conducted an audit of every lead processed since we had outsourced the job. What we found was horrifying.

Hundreds of leads had been prioritized incorrectly. Many potential clients had received no follow-up communication from our end. Some had even been promised meetings, only to be left hanging. In very little time, we had lost hundreds of thousands of dollars.

We were plunging into bankruptcy, and because of the lack of cash flow, I had to borrow a significant amount of money to get us back on our feet. The damage wasn't just financial, though. Morale was at an all-time low, and our reputation had taken a serious hit.

We almost lost everything, but we eventually pulled through. Though the memories are painful, the experience yielded powerful lessons.

  • Never outsource a core aspect of your business. This debacle illuminated the link between our lead-management process and our ability to provide an exceptional customer experience. Keep the core aspects of your business in-house, where you have total control.
  • Trust your team, and be transparent. My team members were always capable of handling leads internally. All they needed was time, support, and access to information to determine the optimal division of labor--something that they've since done successfully. Keep your team members in the loop, and listen to them always.
  • Be wary of references. When checking the startup's references, I heard only positive things. Its association with the accelerator brought the company lots of goodwill, and the leaders had strong individual networks. Be skeptical about references, and only use them as deal breakers, rather than deal makers.

The Way Forward

Once we were back on our feet, I decided to hire another consultant--not to handle leads but to give us feedback on our sales processes. The consultant understood us in a way that the outsourced sales team didn't, and the insight has been invaluable.

Though we deal in new media, we are still a traditional, service-based business. We're not just selling technology; we're offering customers an experience rooted in human connection. That wouldn't be possible if we allowed another company to manage that first point of contact with our prospective customers, and we won't make that mistake again.