The Changing Economics of Customer Acquisition in HR Tech

For a long time, selling payroll meant having a seller in every ZIP code. Door knocking, office drop-offs, customer routes. Companies grew by putting more people on the street.

When I started my sales career, the playbook had shifted to outbound: a CRM, a lead list, a mail merge, and a lot of persistence.

At the same time, another powerful acquisition engine was developing around Google. Paid search and organic content could put your company in front of buyers at the exact moment they were researching a purchase.

Both were a little art and a little science. The outbound rep needed bigger lists, better copy, and tools that could get emails past spam filters. The inbound team needed smart keyword bidding, backlinks, and articles that ranked.

Those playbooks shaped how a generation of HCM companies found customers. Now, both are under pressure. And the response is sending a growing share of the industry toward the same place: someone else’s trusted customer relationships.

The Limits of Outbound

A little-known part of OutSail’s history: the name actually comes from outbound sales.

When I left my corporate job to start a company, outbound was the only thing I really knew how to do. So I called it OutSail. For a few months, we were an outsourced sales development shop before pivoting into the business you know today.

Part of the reason for that pivot was that I didn’t like where the outbound arms race was heading.

If success meant sending more emails to more people, and every new sales tool made that easier, the destination seemed obvious. Eventually, the noise would become so overwhelming that buyers would tune it out.

That is the recurring problem with customer acquisition channels. Something works. More companies discover it. Tools make it easier to scale. Everyone piles in, and the effectiveness starts to erode.

Outbound hasn’t disappeared, but the effort required to earn someone’s attention has grown. AI makes it even easier to produce seemingly personalized messages at enormous scale.

For a while, inbound offered a different path. Create something useful, get found by a buyer, and earn the conversation.

Now that bargain is changing, too.

How AI Is Changing Search

Google’s search business is one of the greatest business models ever built. Part of what made it work was an implicit agreement with the people creating information for the internet:

Publish something useful, and Google will help people find you.

Whether you were writing a French onion soup recipe or an HRIS comparison, you had a reason to share your expertise openly. Good information could earn traffic, and that traffic could eventually become advertising revenue, subscribers, or customers.

AI answers weaken that exchange.

A person can now get the substance of an article directly from a search result or an AI assistant without visiting the source. In many cases, that is a better experience. Nobody particularly enjoys scrolling through someone’s life story to find out how many onions they need.

But the economics for the person supplying the information are much less appealing.

At OutSail, we used to get roughly 20,000 website visitors a month. Much of that traffic came from detailed articles answering questions like “How much does Workday cost?”

We explained pricing mechanisms and what buyers needed to understand. HR leaders, CIOs, and procurement teams would read those articles, then reach out because they could tell we knew our stuff.

Today, those same questions can be answered before someone ever reaches our website. We haven’t updated some of those articles in roughly a year and a half because the incentive to keep investing in them has weakened.

That creates a problem beyond our own marketing budget. Search engines and AI assistants need fresh, useful information. But if the people creating it receive less value in return, fewer will make the investment.

Meanwhile, vendors still have every incentive to publish content designed to get themselves recommended.

There’s an important difference in how that content gets consumed. A buyer looking at ten search results can recognize “Ten Reasons Our Product Is the Best” as an advertisement and skip it. When an AI system assembles an answer from sources behind the scenes, that judgment becomes harder for the buyer to make.

The competition shifts toward influencing the answer itself.

The Shift Toward Partnerships

This leaves HCM companies with a difficult acquisition equation.

Outbound is crowded. The return on search content is less predictable. Marketing teams are experimenting with ways to appear in AI answers while revisiting events, sponsorships, outdoor advertising, and other ways to build awareness.

Some of those efforts will work very well. But turning visibility into a repeatable flow of new customers is a different challenge, and attribution can be difficult.

In the previous newsletter, we talked about growing wallet share within existing accounts. That will remain a major priority.

For new logos, I expect more attention and investment to flow toward partnerships.

When buyers are surrounded by spam, AI-generated content, and cheap personalization, a recommendation from someone they already trust becomes more valuable.

In HCM, those relationships tend to fall into two buckets.

The first is technology partnerships.

Imagine an Ashby or iCIMS customer asking their customer success team which HRIS platforms they should evaluate. They like the product. They trust the team. It is reasonable to assume that team knows something about the surrounding technology landscape.

Those recommendations happen through conversations, integration marketplaces, and increasingly through embedded partnerships that bring another provider’s capabilities into an existing product.

The second is advisory partnerships.

Benefits brokers, CPAs, HR consultants, and private equity firms already have relationships with dozens, hundreds, or thousands of employers. They have earned access and credibility that a vendor cannot manufacture with a better email sequence.

That is an attractive place to look for growth.

The Cost of Channel Growth

You can see the shift in the attention vendors are giving these relationships.

Broker partnerships used to feel like a particular strength of a smaller group of HCM companies. Now, they are a much more common part of the growth playbook.

The strategy makes sense. The harder question is what it costs to keep expanding it.

The brokers who understand HR technology, enjoy the work, and want to participate in selection conversations are often already doing it.

To reach the next group, vendors have to engage advisors who haven’t made technology a priority. That takes education, follow-up, lunch-and-learns, incentives, and people on the ground.

Each additional referral can become more expensive to generate.

And vendors are competing for the same advisors’ attention. More channel managers. More partnership pitches. More requests to get in front of clients. More incentives to favor one platform.

I predict some will go as far as signing arrangements that steer a significant portion of an advisor’s book toward a single vendor. But many trusted advisors will be uncomfortable with that approach. Their clients have different needs, and their credibility depends on making recommendations they can defend.

This is where I see the potential for the same cycle that pushed me out of outbound sales.

As HCM vendors recognize channel sales is the sole reliable path, the people in those trusted advisory positions will become increasingly overwhelmed.

Some advisors will opt out: “We don’t do technology. Please stop asking.”

Others will want to participate but discover how much work it takes to do it well.

Understanding the market, assessing client needs, comparing vendors, and supporting a decision requires real capacity. Some large brokerages and private equity firms have built dedicated teams for this work. Many other firms have valuable client relationships but limited resources to support technology advisory.

A bigger referral incentive doesn’t solve that capacity problem.

The Opportunity for Partners

If you run a technology company or an advisory practice with an established customer base, expect more vendors to come looking for access.

Your relationships are becoming more valuable as other ways of reaching buyers become harder.

That will bring noise. It should also prompt a more deliberate conversation about the role you want to play.

What help do your customers need? Which services should you provide? What expertise do you need to deliver them credibly? How can you make that work repeatable across your book?

And if you are helping vendors acquire customers, how should you participate in the value you create?

That might mean a revenue-sharing arrangement, reciprocal referrals, an advisory service, or a partnership that gives your team the resources to help clients without building an entire technology practice internally.

The opportunity deserves more thought than forwarding a lead whenever a vendor asks.

The vendors approaching you are trying to solve an increasingly difficult customer acquisition problem. You have something they need: relationships built on trust.

Know what those relationships are worth. Build a model that serves your customers, rewards your contribution, and gives you the capacity to do the work well.