Analysts & Management Consultants Weigh in on Phone/Web Selling

Having been an inside sales manager in a professional era when inside sales was typically thought of as the redheaded stepchild of the sales organization, it’s nice to know that top management consulting and industry analyst firms are recognizing the strategic nature of this oft-misunderstood revenue-producing group. In their article  “Cutting Sales Costs not Revenues,” Anupam Agarwal, Eric Harmon, and Michael Viertler of McKinsey describe how one Business-to-Business (B2B) wholesale company reduced its sales cost by more than 50% and increased the number of profitable customers twofold to 90% by moving prospecting and account management functions to a phone and Web-based sales organization. The company also implemented a dedicated telesales team to provide a better, more consistent level of service to purchasing departments than a traditional traveling field sales organization. Shifting from face-to-face to inside sales can actually increase satisfaction and renewal rates, according to the authors.

Lee Levitt, who heads the sales advisory practice at IDC, recently wrote, “the best sales executives today are reassessing the role of inside sales in their overall mix of sales resources.” Those executives who think of inside sales as “pounding the phone” and “dialing for dollars” are woefully out of touch with today’s highly trained and educated, customer advocating, and professional telesales organizations. Levitt, who claims, “IDC expects the use of inside sales to grow as sales organizations find increasing productivity and efficiency via inside sales,” is one of the most forward-thinking proponents of strategic phone and Web selling in the analyst world. Earlier this year, he released IDC’s 2009 Sales Barometer and Top 10 Predictions, a report that highlighted the importance of inside sales, both telesales and sales development (lead generation).

Levitt’s most recent research report focuses on the mid-market (small to medium-sized businesses, defined as 100-999 employees). He writes that the keys to cracking the mid-market are:

1. to implement inside sales, and
2. to employ remote selling strategies and tools

Mid-market companies are geographically dispersed and deal sizes are smaller, but they are an important segment because the number of prospects and opportunities is huge and growing, which can fuel market share growth.

Levitt’s sales executive brief, based on this research, Winning the Midmarket: Cost-Effective Strategies to Improve Sales Performance, is available for  download from Citrix Online. Here are some of Levitt’s key points:

• Too many companies employ the same approach to midmarket customers as they would with larger companies with bigger orders.
• According to IDC research, midsize company buyers want “relevant, accurate information delivered at the right time – more than they want face-to-face meetings.”
• These buyers are willing to give up personal meetings in favor of access to information and expertise.
• A single visit is all it takes for many customers to feel comfortable making a purchase decision, even one over $1M.
• After the initial purchase, midmarket customers often have the confidence to buy additional products by phone and Web.
• Many buyers are willing to communicate remotely to speed the sales cycle.
• From a customer interaction standpoint, inside sales reps are at least four times more productive than field sales reps; in some companies, inside sales reaches six to eight times more customers.

Are you questioning the value and acceptance of inside sales in your organization and customer base? What are your concerns?

Tags: IDC, inside sales, Lee Levitt, McKinsey, midmarket, SMB

Why the Recession is Making it Imperative To Change the Way We Sell

Every customer we talk to is trying to figure out how to make their numbers in the face of shrinking headcount, smaller budgets, and decreasing travel and entertainment approvals. Though the slow economy is having a negative impact on sales in many companies, Sales 2.0 can help companies avoid disastrous business results in the coming quarters.   Sales 2.0 reduces cost, increases productivity and improves sales effectiveness.
One important thing that distinguishes Sales 2.0 from other strategic business initiatives is that it produces measurable business results. One $25 million software division that is part of a $1 billion company increased its sales 12% while decreasing headcount 17% and increasing its sales team’s productivity 15% after reinventing its sales organization using Sales 2.0 practices. After embracing a Sales 2.0 philosophy, a $140 million medical device company increased its qualified lead volume by 20% and generated over $7 million in incremental revenue, while increasing its average sales price by 25%.
Sales 2.0 requires a change in mindset and then a rethinking of strategy, an assessment of sales people’s skills and the implementation of a measurable sales process, enabled by technology. A Sales 2.0 mindset includes recognizing that sales is not just an art – it can be a measurable, predictable “scientific” business function when the right processes are implemented that focus on what our customers need to achieve by buying our products.
Data from CSO Insights’ Sales Performance Optimization Report show that surveyed Chief Sales Officers in companies that practice Sales 2.0 are the best-performing companies in terms of percentage of company revenue achieved, percentage of reps making their sales quotas, and percentage of deals won.  Sales 2.0 practices include implementing consistent, dynamic sales processes, establishing long-term, trusted relationships with customers, and using the Internet in the sales process. Venture-backed companies with Sales 2.0 business plans are also having an easier time securing investments from venture capitalists. Gordon Ritter, founder and general partner at Emergence Capital, says, “Those companies employing Sales 2.0 practices give me the confidence I need to provide initial funding as well as continued investment.”
Furthermore, in many business-to-business companies, the cost of selling traditionally, using expensive field sales forces that travel, is no longer justified when many customers prefer to research and even buy products using the Web and phone.  One highly-effective Sales 2.0 strategy is partnering face-to-face salespeople with inside sales professionals that serve customers in the early parts of a sales cycle and build a pipeline of qualified leads.  This frees up the field sales professionals to work with only the largest, most profitable customers that are most likely to buy.  In this way, Sales 2.0 decreases costs and accelerates sales cycles, which improves revenue and profit.
IDC’s 2009 Sales Barometer and Top 10 Predictions report highlights the need for organizations to adopt Sales 2.0 best practices quickly. It states,  “savvy organizations will use the economic downturn as justification to replace direct sales “laggards” with well enabled inside sales. Customer (and employee) satisfaction and sales productivity will rise accordingly.”
How is your company using Sales 2.0 to improve business results in these slow economic times?

Tags: CSO Insights, decrease headcount, Emergence Capital, IDC, increase ASP, increase qualified leads, inside sales, recession, Sales 2.0, sales effectiveness, sales productivity