This month we talked with Kathy Meehan, co-founder with Dina Sarti of Five Star Connection, a sales outsourcing firm. Five Star Connection provides sales outsourcing to small and medium companies, as well as consulting with these companies to develop a process to manage marketing campaigns, the sales pipeline, and customer relationships.
No longer just for the Fortune 500 and no longer simply relegated to IT deals, business process outsourcing, or BPO, has seen a dramatic rise in the past two years. According to a recently released IDC report, the share of BPO and processing services outsourcing deals increased from 15.2 percent in 2003 to 25 percent in 2004.
As our interview with Meehan shows, technology is helping to make this all possible. In fact, the team at Five Star Connection is an entirely virtual one, relying on technology to keep them coordinated, organized, and in touch with their clients and each other.
Q: So tell me about Five Star Connection. What service do you provide?
A: Five Star Connection is a sales and marketing consulting and sales outsourcing firm. We provide small and mid-sized businesses with the sales power they need during peak times, or for companies that can’t afford to hire a full-time sales executive. When you have a small or mid-sized business, it’s very hard to hire sales executives. They cost a lot and if they’re good, they’re going to leave unless you really make it worth their while. Our company also provides the benefits and best practices of the sales processes used by Fortune 500 and 1000 companies but make it accessible to the small and medium business. We adjust them for practical application in these smaller markets.
Q: Can you give me an example of what you mean by “adjusting the sales processes”?
A: Sure. The way we utilize CRM for a small business is dependent on our client’s specific needs. Often we recommend CRM software, for instance, salesforce.com, which is a very extensive and powerful tool. But when you only have 10 or 20 clients, you don’t always need a complete CRM software package. Some clients may simply need an Excel spreadsheet to track their sales. Or, perhaps the client wants to use an Excel spreadsheet and the contact manager within Outlook. Or, do they want to implement ACT!, a mid-tier CRM package? The choice of the CRM tool that we use is often dictated by the size of the business, the client’s budget, their familiarity with technology, and also, by what the client is currently using. If the client is familiar with Outlook, then we can marry that with a process for forecasting and sales pipeline management.
That’s one of the things that’s really important about what we do. I’ve been through many professional sales trainings and have spent a lot of years putting together sophisticated pipelines for Fortune 500 and Fortune 1000 organizations. What I found is that if you’re overloading the client with features and functions of the CRM package, people just aren’t going to use it, and it’s not going to be perceived as a valuable sales tool. At Five Star Connection, we strive to develop sales and marketing processes that are useful and valuable to the client. We take this very seriously.
Q: Walk me through what happens when you’re working with a client.
A: What we’ve found is that a lot of small and medium businesses are run by entrepreneurs who are really good at what they do, but they may have limited professional sales or marketing experience. These companies can have a full sales staff, or perhaps just a few people, or, in some cases, no sales force at all. We consult with these companies and help them understand that after you run out of friends, you have to have a sales and marketing plan in place if you want to keep growing your business and attracting new sales. This is where we provide the biggest impact–helping them to figure out who they want to target. For instance, we ask: Is it a vertical market? Is it people who perform a certain function within an organization? What size organization? We have these conversations and help our clients develop their target list. Then we develop and drive a process that includes introductory letters, follow-up phone calls, e-mails, presentations, and, finally, we support these efforts with a marketing campaign, if the client’s budget allows for that.
Q: Do you build the campaigns in-house or do you outsource those?
A: We do both, depending on the project. We have great resources for newsletters, for Web and brochure design, and for high-level marketing campaigns. We’ll manage the process for the client and, when appropriate, we’ll outsource the work to these firms.
Q: What’s an example of a high-level campaign for a small or mid-sized business?
A: Let’s say you’ve created your target client list. You now want to take your 50 top targets and contact each of them once a month through a letter, newsletter, e-mail, an invitation, or sending a small token, if it’s appropriate, and finally, a phone call. The power behind this high-level campaign is that you are contacting the 50 people on your list at least once a month. It’s really very similar to the sales tactics of an enterprise company but on a smaller, more manageable level. It’s a very cost-effective way to keep your pipeline semi-warm and keep your name in front of prospective clients.
Q: What type of customers are you working with now?
A: Technology and professional services companies. Technology companies–outsourced IT solutions–make up the bulk of what we’ve been doing so far.
Q: It’s interesting–you provide outsourced services and some of your clients do, too.
A: One of the things that we believe we need to stay competitive is to be scalable. So we build in partnerships with people–even our clients–so that we can be scalable for the clients we’re working with. It’s a model that works. Take our sales outsourcing model: When you hire a sales executive–let’s say for $100,000 per year–you’re really paying them $133,000 per year when you figure in taxes and benefits. Many small and medium businesses don’t have the budget for that. Outsource to us for three to six months and we will create the sales processes, the sales plan and training, and then bring on either a junior sales person to sustain the campaign or continue with a lower-volume sales outsourcing arrangement with us.
Q: Do small and medium businesses that are managed so closely by their owners have difficulty letting go of control and allowing you inside the company to do outsourced sales?
A: It’s a really good question. What we do in the beginning is explain the sales process. It takes eight to 10 contacts before we even get a meeting with someone–and that’s someone who is already a warm lead. A lot of time goes into developing the relationship before we even start talking about the product. Once we get the meeting, we can bring along an expert from the business. We don’t pretend to be experts at knowing a company’s business. We’re experts at sales and marketing. Industry knowledge and product knowledge alone doesn’t make you a good sales person. First and foremost, you have to understand the sales process. We learn everything we can about a business to book a high-level meeting–understanding the client’s selling proposition, what problems their product or service will solve–and then once we get the meetings, we can connect the prospect with the industry experts to help close a sale.
Q: Isn’t that true of an internal sales person as well? They’re not usually an expert on the business.
A: That depends on the business, but it is true in many sectors–such as certain technology or pharmaceutical companies. Good salespeople are experts in driving the business and building relationships.
Q: What is the biggest challenge facing your business?
A: Growth, managing all the activities required for running a business. We do our client work and then we have to come back and manage our business, too. There’s a lot of balancing that happens when you’re growing a business. It’s exciting; it’s also very challenging. And, you know, outsourcing has been a way of doing business for about 10 years now, but I think people were more familiar with IT or HR outsourcing than sales outsourcing. So we’re breaking new ground as we build relationships with our clients and educate them on the value of sales outsourcing.
Q: So, how does technology help with all this? How does it help you stay competitive and manage your growth?
A: The technology that we use–PDAs, BlackBerrys, laptops, cell phones–we couldn’t run our company without it. We’re always out working with clients, so we post our information and our whereabouts on a shared electronic calendar. That way, we always know what each other is doing. We’ve got a person managing our back-office tasks. Since she is working remotely, she needs access to our calendars, our database, our sales plan and pipeline, and to see how much we’re billing against certain projects. Without technology, this information would be unavailable, and we would be forced to work in a more restrictive fashion.
Q: Is your entire company virtual?
A: Yes. It works for us because of technology. One of our clients, Managed Systems, is an outsourced provider of hardware, software, and help desk. When we’re ready to establish an office, I can imagine that we’ll use them to develop our infrastructure. They are currently using our outsourcing service because they’ve identified that keeping business as flexible as possible is the way of the future.
Both of our businesses show you how entrepreneurs are looking for ways to lower their overhead. In the case of hiring Five Star Connection, our clients know that each month this is the dollar amount they’re going to spend and here is the deliverable. However, as I mentioned earlier, when you have a full-time employee, you’re looking at 33% of the cost of that employee going to benefits and overhead. A company may have budgeted $25,000 for sales and marketing. If they hire someone for $25,000 per year, it’s not going to make a difference to their business. But, when you outsource to professionals, people who have been successful in sales for more than 15 years, people who have a track record, that will make a difference, a very big difference.
About Five Star Connection
Five Star Connection is a New York City-based corporation that provides cost-effective sales and marketing consulting and sales outsourcing services to small and medium businesses. For more information, please go to www.fivestarconnection.com. To contact them, e-mail firstname.lastname@example.org or call (917) 885-9195.