SMTA Dallas Expo: A Novel Approach to Outsourcing Sales
Caleb Townsend is the co-founder of Factor, a new kind of recruiting agency that specializes in filling marketing and sales positions. I met with Caleb at SMTA Dallas and asked him to discuss the creative ways he’s helping contract manufacturers to practice Lean principles in their sales department. As Caleb says, his company helps sales departments embrace methods similar to those used on the shop floor, which sometimes means updating their filing system from a “shoebox full of business cards.”
Andy Shaughnessy: How’s it going, Caleb?
Caleb Townsend: It’s great to be at this show. I’ve talked to a lot of people today who say they haven’t been to a show in a while. It’s just really good to be back talking to people in person.
Shaughnessy: Factor is a recruiting company, but what makes it different? Tell me about the company philosophy.
Townsend: I would say we are unique; I call us more of an agency. Companies come to us when they have sales and marketing challenges. We are producing leads for salespeople within their organization, so instead of always cold calling, they can use the leads and opportunities that we’re producing. We’re walking prospects deeper into the sales process for them.
We also have a prospecting service where companies outsource their inside sales to us and we’re delivering quotable opportunities. Finally, we have a recruiting service to help companies find employees for sales and marketing.
Shaughnessy: It sounds like you offer three different opportunities.
Townsend: The vision for our company is to solve all sales and marketing challenges that a manufacturing supplier might face. These are some of the services that we offer.
Shaughnessy: How long have you been in business?
Townsend: We were founded eight years ago, but it’s the last five years where we have seen a lot of explosive growth.
Shaughnessy: What is the current job climate like these days? We hear about people quitting in record numbers, and that there are three or four jobs for every person looking. How does that affect what you are doing?
Townsend: It has an impact on everything. From the standpoint of a contract manufacturer, it’s harder for them to scale their business, because it’s harder for them to source talent. We help them because they can outsource part of their sales process to us, in which we deliver new sales opportunities and they can just focus on running a good, effective shop. If they want to hire their own sales talent, then can outsource that to us as well.
Shaughnessy: You offer both ends of the sales team and process.
Townsend: In our business, there’s a fork in the road where we have models to equip you to do things on your own to grow your organization from a revenue standpoint, or we can do it for you because that’s more in your interest.
Shaughnessy: Your lead generation strategies are really interesting. Are you from the industry? How do you have access to these warmer leads?
Townsend: Yes, I cut my teeth in electronic contract manufacturing sales by selling wire harnesses. It’s what got me into the industry. But the secret to our lead generation is good data, knowing the right companies to go after, the decision makers in the organizations. And one of the challenges in the last couple years, going back to what you said before, is that there’s been a lot of turnover within organizations on decision makers.
People are just more likely to change jobs these days. For a company that always worked with one decision-maker and then that person jumps ship, it makes it more difficult. We have tools, systems, and people that keep a fresh database. The secret to lead generation is we have a robust database on who are decisionmakers are at OEMs across the country.
Shaughnessy: That’s cool. So, it’s not quite like “Glengarry Glen Ross.”
Townsend: Exactly. I like that famous line, “Coffee is for closers.” Actually, instead of “Always be closing,” I like to say, “Always be qualifying.” “Always be closing” is a really bad philosophy, because with a lot of prospects, you shouldn’t try to close when they are a bad fit for your organization. Rather, you should be qualifying, getting people out of your sales pipeline if they’re a bad fit and just try to find the ones that are a good fit.
Shaughnessy: It sounds like you’re trying to fill a gap; is that because the industry has changed?
Townsend: That’s right. For example, my business partner, Gabe Fleck, was president of a contract manufacturing company. I ran sales and marketing for a contract manufacturer. The challenges we faced were trying to scale those organizations. So, that’s what we designed Factor around. I wish we had this when we had those previous challenges.
Another example is when companies tell us, “I have all my eggs in one basket,” meaning they have too much of their business with one customer or one industry, such as a medical device or automotive customer. We help companies facing those kinds of challenges.
Shaughnessy: What does your company look like on the recruiting side? It is all salespeople, or do you handle the occasional engineer?
Townsend: We don’t do engineers or maintenance people. We find account managers, sales hunters, and sales engineers.
Shaughnessy: Are there other companies doing what you’re doing?
Townsend: On the recruiting side, I think that some companies don’t want to work with variable compensation. They take a percentage of the comp of the role that they’re filling, and the sales roles are heavy commission. We just have flat rates depending on the level, so it’s just more simple working with us.
Shaughnessy: So, I understand that you have some thoughts on division of labor and Lean.
Townsend: When we go into manufacturing plants and tour the shop floor, we observe that there are good, defined processes. Operations leaders are looking to find two-minute savings here, 30-second savings there. These efficiencies save a lot of time and reduce costs. But then you go into the sales department; They’ve thrown out all those concepts and they’re using super inefficient processes, like a shoebox full of business cards. We like to take those same shop floor principles—the division of labor and Lean concepts—and apply them to the sales department.
For example, instead of having one person be responsible for A-to-Z sales, we recommend doing it like your shop floor: have a specialist, either inhouse or outsourced, managing a database so you have someone who is doing more lead generation. Then, you have people who close with the technical salespeople aiding in that process. Additionally, your account managers follow the same concepts. You wouldn’t have your operator sweep the floors, and you wouldn’t have your quality inspector set up machines.
Along those lines, the pick-and-place machines have made assembly a lot quicker. A lot of times you can find automation tools for parts of the sales process. You can find ways to automate some of the manual work or outsource it to somebody who’s figured out how to automate, much like you do on the shop floor.
Shaughnessy: So, you’re taking some of the principles that we’ve seen in the shop floor and then applying them sales.
Townsend: Yes, exactly.
Shaughnessy: I like that. How do you see this changing over the next couple of years? What are some of the biggest changes in this industry as far as sales and marketing?
Townsend: It’s hard to have that conversation and not talk about supply chain delays. Eventually, everything will get caught up. I’ve been quizzing people here at the show about when they think things will normalize. The typical response has been about 15 months.
What’s critical now is to continue selling. Even though some companies say, “We couldn’t possibly take on any more customers because we don’t have the material for our existing customers.” Well, sales cycles typically are long, so the companies selling right now are planting seeds; when the supply chain normalizes, they will be the ones coming out on top. Tough times make better companies.
It’s just a critical time to continue selling and marketing your company. Don’t just sit back and say that sales you have enough business so sales aren’t important. I’m biased because this is my world, but I still think it’s important to keep selling.
Shaughnessy: Thank you, Caleb. This was really interesting.
Townsend: Thanks for stopping by, Andy.