Get Offshore Leverage
I get it, we all want to feel we’re fairly compensating our team while creating financial leverage. That being said, you are creating a 3x-10x operating leverage as an opportunity cost to onshore already.
Relax, be happy with the profitable leverage. There are bigger fish to fry.
- Penny wise, pound foolish – don’t over-obsess about over paying offshore talent.
- My $800,000 onshore marketing budget forced >$3,000,000 in sales to create profit.
- Can offshore talent run your entire marketing department? Resounding YES!
- Remote VPN into your LinkedIn for surgical prospecting.
Penny Wise, Pound Foolish – don’t obsess about potential overpaying offshore talent.
A customer of ours was worried that they were overpaying for CX talent. If they reviewed our Operating Leverage Benchmarking (OLB) document, it would appear so. But that is making an operating leverage jump at a magnitude of 3x-10x. That’s a LOT of profit. In analyzing offshore CX talent at $1,000 USD/month, when another can be acquired for $750 USD/month, we’re now talking about a -$250 USD/month delta. Now factor in other elements to the opportunity cost:
- Time to acquire
- Time to onboard
- Time to equal productivity
- Employee morale/retention (should that offshore talent be a friend/well-liked in the organization).
As an example at my company Pipeline Signals, there are different pay structures amongst our analyst team. Some teammates are legacy (where we perhaps over-paid), some live in geographic locations that warrant a higher pay, etc. Results are great amongst the team – why play with fire and disrupt that?
Just accept your potential over-pay reality and focus on creating greater pay structure for future hires. If it ain’t broke, don’t fix.
My $800,000 onshore marketing budget forced >$3,000,000 in unnecessary sales to drive a profit!
If you haven’t already, take a moment to scare yourself with “profit opportunity cost” using our Operating Leverage Benchmarking (OLB) document. What it will show you is how much revenue you are forced to create to pay for financial anchors – whatever those might be.
In early 2018, my “chickens came to roost”. I woke up in a multi-million dollar business, unprofitable, in fact losing money fast on route to bankruptcy. I was producing lots of sales leads and deal flow, but I was paying for today’s expenses with tomorrow’s expected revenue. After applying Zero-based Budgeting to my company, I realized I had a marketing budget that had ballooned to $800,000 per year. What shocked me was all the access:
- Multi-year licenses on tools we don’t use (now a deferred liability).
- Highly, highly paid onshore teammates that required massive sales production to justify
- Executing on campaigns (like conferences) we just couldn’t afford.
Don’t focus on the denominator ($800,000) for a second. Focus on the numerator. If I was to generate 25% Profit that year (best practices for a sales training company), I would need $3,200,000 in revenue to pay for that marketing department! If my marketing expenses were cut to ½ ($400,000) and I could maintain sales production, I would remove $1,600,000 of revenue burden off sales to maintain the same profitability. $1,600,000 at $100,000 Average Contract Value is 16 deals a year. I also don’t the same sales force to manage a reduced deal flow – all to maintain the same profitability!
Go ahead, shock yourself. See what bloat and excess can cost you.
Can offshore talent run your entire marketing department? Resounding YES!
Part 2 to my story above. Imagine feeling like a prisoner to your own business. You begin to resent the day-to-day and you look at other Founders/CEOs and say to yourself “why are they so happy, and I’m not?’ Turns out, many/most are in this situation every day as well. I decided to break myself out of this trap.
Step #1 – Profit First: create a profitable business, focus on the bottom line and not get caught up in the hyperbole of other Founders bragging about:
- Topline revenue
- Number of employees
- Amount of VC capital raised
I was going to build companies that spit $$$ out to myself and other stakeholders in the
business – every month, quarter and/or year.
Step #2 – Zero-based Budgeting: every expense was now going to be assumed $0 and needed to be justified as a Yes to spend, and then how much can/should we spend.
Step #3 – Hire offshore in the Philippines: we saw a labor and talent arbitrage in Philippines where we had great success in other roles. We hired a Marketing manager and basic content marketing team for fractions of the cost.
Step 4 – Scale CMO and team in Bangladesh: when we launched Pipeline Signals, we wanted to make an impact, but fit within a bootstrapped budget. We hired a CMO in Bangladesh, and 6 teammates to manage a full-stack marketing process. That team rivals the productivity of my 2018 onshore team, and costs 1/10th to cost.
Net Effects – This allowed us to be aggressive with our pricing model and also go “downstream” with the customers we served. Rather than focusing only on the global mid-market / global enterprise market, we can help SMB and lower mid-market companies as well. This exponentially grew our Total Addressable Market.
Remote VPN into your LinkedIn for surgical prospecting.
You are part of the sales process. Perhaps you are the best lead generator in your company – while also founding, owning and running it. I’ve been there off and on for years. I’m still the greatest source of lead flow for my start-up Pipeline Signals.
Challenge – I have +20,000 1 st degree LinkedIn connections – chalk full of CEO’s, CRO’s and CMO’s. Problem is TIME. I couldn’t prospect this network in 10 lifetimes.
Opportunity – offshore talent manage your LinkedIn profile:
- Share Content
- Make Connections
- Engage in Prospecting Campaigns
We’ve tested every conceivable model. 3 rd party tools – don’t work at scale. Have people log into your profile from a remote location (actually inside your profile)… fast track to LinkedIn jail. The model that works is Remote VPN. Think about when the IT guy takes control of your computer to fix something.
My process is simple. At 7 am EST I log into my spare laptop, and an offshore seller takes control of my computer. My computer is registered with an IP address of Toronto, Canada – my home. We found even those masking VPN’s would fail over time. The only thing that seems to work is prospecting with a laptop AT MY ACTUAL LOCATION.
The team is also cognisant of keeping to modest prospecting levels. We build our list 1 week in advance and prospect 50 contacts (10-15 accounts) per day. We have taken this to maximum overdrive before in which we prospected 24/5 (8 hour shifts per day @ 500 messages a day) – but again, LinkedIn jail.
The results – you (the key rainmaker) is now booking meetings on the regular, with a hyper low Cost of Customer Acquisition.
Get ready to be shocked!
Don’t Forget to Benchmark your team against offshore talent.
- What is the profit increase you could expect?
- What is the sales relief / reprieve you could expect to generate the same profit?