Inside Sales Best Practices

Latest Aberdeen Research on Inside Sales Interesting, but Misses Bigger Picture

Christopher Tuttle

Peter Ostrow, the VP and Group Director of Customer Management has just finished one of the largest and most comprehensive studies on what he calls Inside Sales Enablement, or the techniques, trends, and technologies that are empowering the growth of inside sales (not capitalized) in the United States.

Our company, XANT, participated extensively in helping define the research and in inviting our database of companies to contribute to the research survey that was used to pull together this data. Right now the report can be accessed at https://www.bit.ly/6nK0pm until March 5th, 2010 through corporate sponsorship, at which point the data will only be available for a fee of $399.

All in all the study was quite interesting, but was limited by the biased definition that Peter applied to inside sales:

“For the purposes of this study, “inside sales” refers to any internal departments tasked with early-state sales activity, usually in the context of narrowing down larger quantities of “suspects” into well-vetted “leads” that are passed along to “closers,” field or channel sales representatives or account managers responsible for closing the deal.”

This basically means that Peter only studied what we call “Lead Gen”  and “inbound response management” departments, and our experience is showing that Inside Sales (capitalized) is becoming far more than that. At least Peter admits that Inside Sales does not include customer-care in his definition.

“Inside sales reps for surveyed organizations average 50 phone calls and 17 connects per day; interact with prospects an average of 3.87 times before passing leads to closers; and have a direct impact on 38% of overall corporate revenue.”

“Passing leads to closers” definitely means Lead Gen. It’s funny, because right in Peter’s research he shows that most of the Inside Sales teams focus far more on new customer acqusition than on lead generation or up-selling:

51% – Acquisition: outbound from marketing leads
37% – Upsell or cross sell to existing customers
28% – Lead generation
26% – Acquisition: sourced by sales with no marketing support
23% – Acquisition: inbound from marketing leads

I don’t know about you, but I see 3 of the 5 categories, including the top category, focussing the responsibilities of the inside sales teams on new account acquisition, that means closing sales, not just Lead Gen (though I love Lead Gen!)

We define Inside Sales differently, and much simpler: Inside Sales is remote sales. Outside Sales is face-to-face sales.

My first point is this, in many companies the only kind of sales they have is Inside Sales. I recognize that in more traditional companies where Outside Sales has reigned for decades, the Inside Sales reps are still relegated to second-class citizens. But who is getting fired first? The higher cost Outside Sales or Field Sales Reps are the ones getting lopped off and not replaced.  The Inside Sales teams are hiring, not firing, because they have a better ROI.

The infoUSA survey we sponsored that was conducted by SKKU and MIT was done in May of 2009 shows that Inside Sales is growing at 7.5% annually, while Outside Sales is stagnant, with almost no growth at all at .5% annually. (click here to read more.)

My second point is that Outside Sales is by necessity spending more of it’s time selling remotely. The same infoUSA survey showed that 41% of the time spent by Outside Sales is spent selling remotely (and it would probably have been more except the surveyed lumped travel time and commuting time together to make Outside Sales seem to spend more time travelling than selling remotely.)

The big picture is this: Inside Sales is not just about Lead Gen and responding to leads; it encompasses the full sales process and is out-pacing by a significant margin the older model of Outside Sales.  Inside Sales will not exclusively replace Outside Sales because going face-to-face is still more effective to close sales. But it takes time, travel, and lots of money. Technology enables remote sales and has allowed Inside Sales teams to mimic the face-to-face sale at a rate that makes far more contacts and closes lots of business. Many companies use a hybrid model that focusses the majority of time selling remotely with only the largest deals going face-to-face.

Marc Benioff reveals in his latest book “Behind the Cloud” that when he started salesforce.com, he built it for six years using nothing but Inside Sales (or telesales), then added Outside Sales later to get the really big deals. Many high-tech companies use nothing but Inside Sales and never travel at all except to occasional trade shows.

It will be interesting in future studies to answer the question, what percentage of time is spent selling remotely, and what technologies most enable the world of remote sales, which is Inside Sales.

Author: Ken Krogue |
Summary of Ken Krogue’s Forbes articles

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