Making The Decision To Outsource or Insource Your MSP Marketing
There comes a time in every IT company’s growth trajectory where relying solely on referrals for lead generation is no longer a viable option. While referrals are a great source of low cost/high quality leads, it is difficult to control the flow of referrals and rely on them to produce new customers on a consistent basis. Once you decide that you are ready to actively market your business, you will have to decide how exactly you are going to do it. The first fork in the road that our firm came across was figuring out if outsourcing or insourcing lead generation made the most sense. Since we ended up doing both, I figured I would share with you the pros and cons that we recognized when outsourcing in comparison to our insourced efforts.
Pros Of Outsourced IT Lead Generation
More Experience & Brain Power
In today’s IT channel there is a lot of specialization happening. Part of this trend is that marketing and lead generation companies are beginning to focus entirely on the Managed Service Companies. It is to be determined whether or not the marketing firms will benefit from this, but Managed Service Providers that render their services surely will.
With a focus on Managed IT clients, Lead Generation providers are gaining an incredible amount of experience in the industry. What they learn from one client experience can help another and vice-versa. This experience can shave months of campaign development time and save significant campaign spending as they are optimizing campaigns with all of their customer’s money and not just yours.
Saves Valuable Time
When you hire an outsourced lead generator it can save you one of the most valuable assets; your time. Since time is not a renewable resource, you should be extremely intentional about how you spend it. On the contrary, money is renewable, and thus spending money to save time is probably your best bet, especially when it comes to marketing your business.
If you insource your lead generation efforts, your marketing personnel will require constant direction, management and oversight. This takes a significant amount of your time that you could be spent focusing on more important tasks. In comparison, hiring an outsourced firm is far less hands-on, needing no day-to-day management to maintain progress and produce positive results.
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Guaranteed Positive Results
One of the most important advantages of outsourcing is that most firms will guarantee results. If the firm you decide to hire is pay-per-appointment, then you know that you only accrue costs when results are achieved. If they charge only a flat fee, be sure to mutually agree on a minimum amount of appointments per month that you will receive. If the firm does not produce the minimum agreed upon, they will typically issue a partial credit for the following billing period.
We experienced a similar issue when outsourcing lead generation for our Managed Services company. While a vendor failing to meet their obligation is not exactly a “pro”, the fact that the transaction is refundable is. When you pay an insourced marketing employee a wage, at no point can you ask them to pay it back if they fail to produce results. This is what makes outsourcing more attractive, even in the case of under-performance.
More Efficient Expense
Hiring an internal Marketer (preferably one that knows what they are doing) is not a cheap endeavor. Anyone who is willing to take less than $60k per year in salary probably doesn’t have the experience you need to really minimize your risk. On top of their base salary, you are also required to pay additional expenses including insurance costs, overhead, and payroll taxes. When it is all said and done, you are looking at a cost of at least $70k per year (or close to $6k per month) for someone to lead your marketing efforts, not including advertising spend and the costs associated with generating leads.
Considering the costs involved with hiring internally, outsourcing your lead generation can be a significantly more attractive option. Even an expense of $5k per month paid to a vendor is more efficiently spent than paying the same amount to an internal employee. This fee is not subject to payroll tax and requires little to no additional expense to produce leads and generate new business.
Cons of Outsourced IT Lead Generation
Less Brand Control
When someone is generating leads on behalf of your company, they are essentially responsible for the first impression of your brand. I am a firm believer in the mantra that you only get one first impression and you should always look to make it a good one. This can be challenging when you hand over this responsibility to someone else and expect that they execute it with the same level of quality and integrity as you would.
When our firm outsourced lead generation, we found this to be a constant struggle not isolated to one particular vendor. We went into the relationship with the opinion that we would hand over as much creative control as possible, assuming everything would fall within our brand guidelines. The quality of messaging in the form of copy, artwork, and even conversation rarely met our standard which ended up being a constant point of contention.
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Managed Service Providers have a reputation for getting cold feet. While they might know that generating leads is a priority for their business, some chalk it up as a loss and move on as soon as they come across the slightest bit of adversity or poor results. This is what causes most IT Lead Generation Firms to mandate 3-6 month commitments in their agreement with a new MSP client.
While this lengthy commitment is completely justified to wait out the long sales cycle and see positive results, it can also be a major issue if those results never come to fruition. Some smaller Managed Service Companies simply can’t afford to gamble $30k on a lead generation campaign over a six month period and if it doesn’t generate new clients it can literally bankrupt their business.
We discussed previously that insourcing lead generation requires an excessive amount of communication, oversight, and time. While this might be true, outsourcing is not without its own set of communication issues. When you are working with an outsourced vendor, communication can present a challenge as well. You are not their only customer and thus may find it difficult to schedule meetings or get support when you need it.
This is a challenge that we also faced when outsourcing parts of our marketing. We liked to move quickly when executing new ideas and tactics internally. When these changes required looping in our outsourced vendors, it often slowed progress significantly. In some cases we waited weeks just to get calls scheduled, only to discuss action items that needed to be followed-up on for weeks after, grinding progress to a near halt.
One thing that I am noticing recently in the IT channel is that as specialized marketing vendors are getting larger, the industry’s marketing strategies are becoming homogenized. This is not a knock on the vendors themselves that are selling these “systems”, however if multiple MSPs in the same area are using the same “proven” tactics, messaging, and materials then it just becomes a race of who can get to the prospect first.
When insourcing your marketing you are essentially baking your marketing from scratch, and thus do not have to worry about market homogenization. While it is far more challenging to do this than to follow a pre-built system, it ensures that your go-to-market strategy is unique and will be met with far less direct competition.
At the end of the day, I think that outsourcing lead generation in some capacity makes business sense for most Managed Service Providers. Hiring internally is a much larger risk and can really set your company back significantly if not executed properly. If your company chooses to outsource, make sure that your team is capable of managing your vendor effectively. This means learning key performance metrics, reporting, and even lightly familiarizing yourself with the platforms they are using. While this might take some of your valuable time, it is a skill that is worth having as it can guide you into make the right marketing decisions for your business for years to come.