Are you focusing on the right market segments? What stages are your customers engaged in? Below is a blog post from the Harvard Business Review by Andris A. Zoltners, PK Sinha, and Sally E. Lorimer.
The number of inside sales jobs has increased dramatically in recent years, far outpacing the growth in jobs for field salespeople. We spoke with Mike Moorman, a senior leader in ZS Associates’ B2B sales and marketing practice and a leading authority on sales management, about how inside sales (which refers to sales positions done remotely from headquarters, without face-to-face meetings with clients) is transforming the way that B2B companies interact with their customers.
Mike, can you give us some examples of companies that are shifting resources into inside sales?
Yes absolutely, over the last several years B2B companies have been ramping up their inside sales investment.
- Astra Zeneca has replaced virtually all of its field sales force support for its mature brand Nexium with a 300-person inside sales team. The team provides for most doctors’ basic needs for samples and information at a substantially reduced cost.
- IBM has invested in social media training, toolkits and personalized digital pages to help its inside salespeople generate leads and manage account relationships. Early results include a 55% increase in Twitter followers and a significant increase in the number of high-quality inbound leads.
- SAP has refocused its large and growing inside sales team towards working with channel partners, rather than directly with customers, as part of a strategic initiative aimed at increasing channel sales to 40% of the company’s total sales by 2015.
Many B2B companies are making inside sales a priority. I’ve seen companies investing to create new inside sales teams, adopt advanced analytics to measure and improve productivity of those teams, realign inside and field sales to optimize market coverage, provide value-based selling tools tailored to inside sales, and upgrade their inside sales customer engagement processes and skills.
Why do you think so many companies are turning to inside sales?
Three primary factors give momentum to inside sales. First, B2B sellers feel competitive pressure to cut costs, and they’re seeking more efficient ways to sell. Second, B2B buyers are becoming more comfortable purchasing and collaborating remotely; they use the web to research product information, are comfortable communicating and collaborating with sellers using methods such as email, social media, and conference calls, and in fact prefer these methods over face-to-face communication for some sales tasks. Third, new easy-to-use online webinar and videoconferencing technologies make it possible for inside salespeople to create customer intimacy without field interaction.
What types of selling situations or tasks are most compatible with inside sales?
Most B2B selling models include both inside and field sales, and the challenge and the opportunity come in determining the sweet spot for inside sales within an overall selling model. Effective use of inside sales requires partitioning the sales job and dividing it among inside and field salespeople according to some or all of the following dimensions. Different companies divide it in different ways:
- By market segment. Use inside sales for the entire sales process in small-to-medium-sized businesses that have straightforward needs and moderate-to-low potential. Use field sales to manage large accounts with complex needs and buying processes, and more opportunity.
- By stages of the customer engagement process. Use inside sales to supplement field sales activities in large accounts, especially early in the sales process (e.g. lead generation) or late in the sales process (e.g. repeat purchases). Use field sales for tasks that benefit from a “high touch” approach.
- By products/services. Use inside sales to sell transactional offerings and solutions with lower buyer risk that don’t require on-site assessments or collaboration. Use field sales to sell more complex products and services that require a consultative approach and customization.
- By geography. Use inside sales to reach non-strategic accounts in remote areas and field sales to cover accounts in metropolitan areas.
How does increased use of inside sales impact the job of field salespeople?
I see two main implications for field salespeople. First, many companies are experiencing a bifurcation of sales jobs. Inside salespeople are taking over more sales tasks to drive cost effectiveness. In conjunction, the bar is rising for field salespeople. Buyers are no longer interested in meeting live with “information providers”; they expect field salespeople to bring new ideas and to create and prove substantial value.
Likewise, executives are increasingly reluctant to invest in expensive field sales resources unless those resources clearly provide greater customer and company value. The role and profile of a field salesperson is becoming similar to the role and profile of a key account manager — someone who brings business acumen and problem solving skills, and that can help buyers define opportunities and tailor solutions. Field salespeople need to develop new competencies as consultative sellers, and often companies find that some field salespeople who were successful in the old world lack the characteristics required for success in the new one.
Second, although field salespeople still have a clearly defined role as face-to-face sellers, technology enables them to accomplish more sales activities remotely to optimize efficiency (smart use of time) and effectiveness (impact with customers). Increasingly, field salespeople are selectively leveraging email, social media, webinars and video conferencing to maximize their own productivity and enhance the customers’ experience. In this regard, the line between field sales and inside sales is blurring. For field salespeople, this means developing new technology and communication competencies.
What kind of results can companies expect?
When appropriately utilized, inside sales reduces cost-of-sales by 40-90% relative to field sales, while revenues may be maintained or even grow. Benefits include:
- Reduced sales force cost-per-contact and increased number of contacts per day
- Increased revenues in accounts that were lowest priority for field sales, but are high priority for inside sales
- Greater access and faster response times for customers
- Increased effectiveness by specializing inside salespeople by industry, product or activity, without the increased territory size penalty that specialization creates for field sales teams
- Flexibility to scale up the size of inside sales teams without relocation of salespeople
- Better coaching and development for inside salespeople who share a working location with their manager, resulting in shorter ramp-up and more apprenticeship.
When focused on the right market segments, stages of the customer engagement process, and product/services, inside sales drives huge sales force efficiency improvements with little or no effectiveness loss. As customers get more comfortable buying in this way, I expect the impact will become even greater.