IDC outlines best practices for an oft-overlooked selling job, and shows that it's more important than some realize.
Posted Jan 10, 2008
The members of your sales force who handle "inside sales" may never leave your office, but they've got a rep on the street nonetheless -- and it may not be flattering. Popular misconceptions of inside sales abound, according to a telebriefing held today in support of a new report by analyst firm IDC. According to Lee Levitt, host of the briefing and an author of the report entitled "Best Practices in Sales Productivity: Inside Sales," inside sales are of more value than those misconceptions imply, and, far from playing merely a support or telemarketing role, they can be a vital, revenue-creating function on par with other sales jobs.
Levitt, who is also director of IDC's sales advisory practice, opened the session with references to Boiler Room, the 2000 film about the quintessential inside salespeople: stockbrokers. The image of the brokers' stark environment and their rapid-fire calls is summed up by advice given by Ben Affleck's character to Giovanni Ribisi's:
"[T]here is no such thing as a 'no sale' call. A sale is made on every call you make: Either you sell the client some stock or he sells you a reason he can't. Either way a sale is made, the only question is, 'Who is gonna close -- you or him?' "
But the characterization is flawed, according to Levitt. "That 'boiler room' is the customer's view of inside sales, but that's not what it has to be -- or should be," he said. Many inside salespeople work in cubicles and offices, dress professionally, and spend as much time strategizing and nurturing customers as the stereotypical road warrior does -- just without leaving the building. "Inside sales can be as effective and productive as any other type of sales," he told the telebriefing audience.
IDC's research indicates that, among the firm's clients, 30 percent of all revenue generated in North America is "influenced by" inside sales. That influence can come in many forms. Inside salespeople often initiate contact with hot leads at the top of the sales funnel, then handle all normal aspects of shepherding the deal along through close. They often provide post-sale support as well.
Anonymous IDC clients quoted in the report provide some insight into how some forward-thinking companies are utilizing inside sales:
Key findings of IDC's research include the following:
- (Telecom-equipment company:) "Outsourced inside sales is our primary strategy for penetrating emerging markets."
- (Enterprise-software company:) "Any deals that can be closed by inside sales should be."
- (Telecom-services company:) "Prospecting is done by [the direct] sales force...inside sales reps do nurturing."
As further evidence of the value of this approach, Levitt noted IBM's Wednesday announcement that, as the primary method of reaching "general business" (what IBM formerly classified as small-to-midsize business), the company would assign 1,000 of its inside sales people -- telesales and Web-sales personnel -- to that segment.
Another thing to realize when considering the value of inside sales is the efficiency such a unit can have. Direct salespeople spend much of their time (and much of their expense accounts) on travel and entertainment, something that simply isn't a factor for inside sales. Direct reps can't be as available to prospects and clients as inside reps can, because relationships built by inside sales are phone-based. And insiders can be trained and can begin producing revenue in as little as one week to one month, according to Levitt.
With these points in mind, Levitt advised the following as some of the critical success factors in deploying and optimizing an inside sales force:
- Companies take their inside sales seriously: investing in systems, planning career paths, and developing processes (such as account-planning, team-building, and handoff).
- Inside sales leaders provide scripts or otherwise prescribe processes and activities no more than the leaders of outside sales do.
- Inside sales people typically receive three to four times more training than outside sales people do.
- Typical ratio of inside sales rep to direct rep ranges from 1:3 to 1:6 (if teamed).
- Typical ratio of inside sales to inside sales manager ranges from 1:2 to 1:4, versus 1:5 for direct sales.
- Average tenure within inside sales at some companies exceeds three years -- far longer than the typical salesperson's tenure.
Most of all, though, Levitt said the implementation of traditional outside-sales functions -- such as account planning, team building, internal competition, and career-path planning -- were essential to properly nurturing an effective inside sales force. "Treat them like salespeople," he urged.
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Make the most of those in-person interactions.
- Don't have inside sales "owned" by direct sales -- the insiders would then likely be used as support staff. Inside and direct sales executives should be at the same reporting level;
- have clear rules of engagement and a coverage map for inside reps, especially where there could be conflict with direct reps;
- have sales force automation and processes in place to facilitate communication between agents and discipline; and
- get feedback from your customers on how they wish to be engaged by inside reps.
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