The challenges of attracting customers for a small BPO firm

by Michael Riek
Practice Leader at Charles Aris Inc.

As someone who started several nearshore and offshore BPO companies, I understand the challenges of signing new logos when you are small or new. Here are some of the challenges I experienced:

Business development representatives are a big investment! Hiring good sales talent is always a challenge. Junior-level salespeople are more cost-effective but may have a difficult time engaging executives. It can take tenured BPO sales professionals six to 12 months to build a solid pipeline – and longer to bring some of those opportunities home. These tenured business development representatives command a larger base (typically $100,000 USD) and a strong commission model (3-2-1 or some variation). Be prepared for eight to 12 months for solid opportunities to close, but strong pipelines should develop within six months.

It’s hard to provide references when you’re a new BPO option. You can’t use the one or two clients you have as references each time you’re in a sales cycle. Typically, a new or smaller BPO firm projects scale and expertise that it may not be able to demonstrate on a client visit. The “build it and they will come” model is always harder than that.

Being a smaller or new BPO firm provides clients leverage to negotiate favorable rates. It’s common practice for a BPO company to provide heavily discounted rates to win its early business. This is a double-edged sword that may provide short-term growth in sales and help fill your center while holding your organization back in several ways. If the new client organization is large, its leaders can use much of your capacity and impede your ability to bring in higher paying clients. This can also create dependency. A large client’s decision to cancel its contract can seriously harm a small BPO operation.

Cultural, linguistic and logistical barriers can make it difficult for nearshore and offshore BPO companies to gain market traction with clients based in the United States. It’s critical that key operational and account management professionals understand this challenge and act accordingly. New clients want to know that their outsourcing partner understands B2B and B2C customers in the States. They want to know that their teams can effectively communicate with their BPO partner to resolve challenges quickly.

Remember, we all have to start somewhere. Build a good team and a solid plan to attract new customers. Have realistic expectations based on the plan you create. BPO companies experiencing these challenges may want to work with a third-party BPO lead referral company such as BPOXchange or a reputable lead broker to augment their business development strategy. Feel free to contact me directly if I can be of assistance.

Good luck and happy hunting!

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