Inside Sales Managers’ Community: The Telebusiness Alliance

Communities  — and not just the online varieties — seem to be in vogue.  As our world changes, buying and selling practices evolve, and our jobs become harder and more competitive, Sales 2.0 leaders realize they don’t have all the answers — there is a lot to learn by looking outside one’s own company and comparing experiences with others.

The Telebusiness Alliance, a community of inside sales managers, was founded because of my own desire to connect with other managers whose teams sold by phone and Web.   After I started Phone Works after a 10-year, nose-to-the-ground career at Oracle,  I knew that to build a a successful consulting practice providing  trusted advice,  I had a lot to learn about how companies other than Oracle viewed and implemented inside sales.  So 17 years ago, I called six inside sales managers at companies known for their inside sales prowess and invited them to join me for lunch at a local restaurant. I was eager to hear from my peers about their successes and challenges,  how their departments fit into their companies’ overall sales strategies and how they approached key issues such as integrating with marketing and other sales channels, mapping to buying processes, finding good people, motivating them, measuring their performance, and enabling their productivity.

Today the Telebusiness Alliance has grown to almost 200 members in the San Francisco Bay Area, is led by a board of dedicated volunteers and meets every quarter to share industry best practices and provide support and mentoring. The group consists of noncompeting inside sales managers, running both quota-carrying and sales development/lead generating teams, who see value in discussing mutual business issues, both at meetings and online via our LinkedIn group.  Perhaps because we manage inside functions, we especially welcome face-to-face gatherings, and the meetings are well-attended.  Attendees come from the newest start-ups, as well as the who’s who of the valley, and everyone learns from each other.

Inside sales managers aren’t the only ones looking to learn from their peers. Last year, my longtime colleague, Phone Works General Manager Sally Duby, helped form the Silicon Valley VP of Sales Executives Forum to serve the needs of local chief sales officers. Sales operations managers can join their own special interest community, the Sales Operations Forum.

Inside sales managers, you can join our community at the next meeting of the Telebusiness Alliance on February 9 from 8:30 to noon in Redwood City, CA.   We’ll be asking:

• What did you do to change behavior to increase productivity in 2009?
• What are you looking to implement to gain efficiencies in 2010?
• What are the top sales productivity tools you are using today or planning for tomorrow?

Do you have a local community for sharing ideas and best practices? What are the benefits of being part of a community?

Tags: Community, inside sales, Telebusiness Alliance

Looking for Incremental, Recurring Revenue? Optimize Renewal Sales

Many companies miss the huge incremental revenue opportunity of renewal sales: a dedicated phone-and-Web-based sales team that follows up with customers every month or year to insure they renew their contracts or service.  By relegating renewals to an administrative overhead function, you could leave millions of dollars on the table.  With a quota-and-commission-driven inside sales approach, you can not only increase revenue at a high profit, but also engage customers more fully and insure they are actively using the most current version of your products or services.  This leads to happier and more loyal customers – ones that are less likely to be lured by your competition – as well.

After presenting early findings and trends in inside sales compensation this week at the San Francisco Bay Area Telebusiness Alliance meeting, I sat in on a breakout session with managers of renewal sales to discuss issues pertinent to their sales groups.  The group consisted of managers representing companies selling big ticket items: hardware, software (perpetual license as well as SaaS) and medical devices.  While some groups are selling annual service or maintenance contracts, those in SaaS businesses have a subscription-based model and are trying to make their products “stick” by selling additional months of product access. What these groups have in common is the incremental, recurring revenue potential of their territories.

Many managers reported compelling productivity gains by dedicating a sales group to renewals, refining the renewal process, and hiring commission-based renewal sales reps, including:

• 17%-200% increase in renewal rates
• increasing multi-year contracts
• decreasing churn rate
• decreasing headcount while growing revenue
• increasing on-time renewals by 50%
• identifying additional revenue opportunities (e.g. new product or service sales)

In some companies such as those selling Software as a Service (Saas), renewals are often considered the territory of an “installed base” or “customer sales” (aka “farmer”) rep, or rep selling to customers that have previously been sold by a “new business” rep (aka “hunter”).  There have been numerous webinars, articles and blog posts recently questioning how current or accurate the “hunter/farmer” labels are in today’s Sales 2.0 world, so I am making these role distinctions using different (more politically correct?) words.

In the debate over whether or not to separate out renewals from other customer sales,  I fall on the side of creating distinct roles in companies that renew service on an annual basis when it can be justified by revenue potential, budget and resources, if only because the customer contacts are often different. Renewal purchasing is often handled directly and solely by an administrative or purchasing person, while a new product or service purchase is typically driven by a business or technical buyer.

As for when to pass a customer from new business to renewals or customer sales, companies are all over the map. In some SaaS companies, new business reps are given 60-90 days or more to sell additional months of service while others ask the new business team to turn over the customer the day after they purchase.  If your company objective is aggressive market share growth, I suppose you would want your new business reps to turn over new customers asap for nurturing while they pursue the next set of prospects to bring into the fold.  In any case, teamwork and collaboration (and compensation to support that) are essential to making your customers’ experiences good ones, as the hand-offs occur.

Whether or not field reps get commission credit for renewal sales varies from company to company.  Some companies pay a small bonus of a few hundred dollars to renewals-only reps who find new product or service opportunities and pass these to another sales group; the bonus is only paid if a sale happens.

Some other things I learned from the group of renewal sales gurus:

• In the Bay Area, comp ranges from 60-70% guaranteed pay with 30-40% incentive or commission pay with an OTE of $75-120K
• Companies have special incentives to motivate reps to close renewals in the quarter the renewal is due, but there are also incentives to bring in past-due renewals
• Clean and correct data are critical to the success of a renewals sales team
• Other administrative issues, such as co-terming renewal dates, can be a significant part of the job
• Churning in the smallest customers can be very high. Some companies forgive churning (and don’t “debook” them in commission calculations)  in opportunities less than $6K rather than penalize and demotivate reps
• Outsourcing renewal sales can be a viable solution, especially in certain markets (e.g. outside North America), given the pay-for-performance model offered by vendors focused entirely on renewal business such as Encover and ServiceSource
• “Reinstatement fees”, applied to months after a renewal date has passed, motivate customers to renew on time
• Pairing inside reps with partners can help close renewal sales in smaller accounts, if an onsite visit is required; company field sales resources are called upon if the order size is large enough
• Dedicated “win back teams” can help address the special challenges associated with lost or non-renewing customers while increasing the productivity of other  sales teams

Do you have a sales team dedicated to renewal sales? Do you have experiences to share?

Tags: Incremental revenue, inside sales, Recurring revenue, Renewal sales, Sales 2.0

The Importance of Face-to-Face Meetings in a Sales 2.0 World

I am one of the people who writes and speaks about the importance of phone and Web communications in today’s selling and buying processes. I am passionate about sharing ideas about using social media and sales productivity technology to improve the quality and quantity of customer contacts, accelerate sales cycles, and reduce cost of sales.  I earn my living in a consulting business that helps companies launch or improve their inside sales functions and transform the way they sell. But I still believe there is nothing quite like a face-to-face meeting.

There is still an important place for in-person visits in Sales 2.0.  Until high-resolution teleconferencing technology becomes less expensive and more ubiquitous (and our culture changes to fully embrace online relationships),  there is no better way to make a connection with someone than meeting them in person.   There is certain special je ne sais quoi that most of us experience when sharing a coffee or meal, engaging in an activity together, or attending the same meeting or conference.  It seems to be hard-wired into our human experience.

I experienced this last week when presenting Sales 2.0 opportunities at a global inside sales leadership meeting to a multi-cultural audience, consisting of sales, marketing, operations, sales training and enablement, strategic planning and lines of business leaders from Europe, Asia, Latin and North America. The purpose of the meeting was to share best practices, identify group and individual challenges, and draft an action plan for addressing the highest priority opportunities and obstacles to success. One would think that the most natural thing for this phone and Web sales group would be to have an online meeting. Could this meeting have been done by web conference? Sure. But since many of the participants had never met before, the executives made a wise call to bring everyone together in one location. The result was that everyone left the meeting feeling like a team, working toward common objectives. This feeling will carry over as the group disperses to their home bases around the world and their relationships are continued by phone and e-mail.

Consider these other possibilities:

1. Phone/Web relationships between inside sales reps and customers can be strengthened considerably with periodic face-to-face check-ins, perhaps at an annual conference or a quarterly individual or group customer meeting.

2. Integrated inside and field teams work better when inside reps are invited to regional kick-offs or recognition events.  It can send an important message, not only to the inside team, but also to key customers about your company’s sales collaboration if occasionally both inside and field reps appear onsite together and present a unified company message.

3. Inside reps in a centralized location can work in concert with local field or partner resources and offer customers personal visits when required. On our web event panel discussion this week on sales innovation, Dan Freund explained that this is how Oracle is managing its “emerging markets” (smallest customer) territory.

4. Inside reps can be allowed some leeway in visiting customers when a particular opportunity size or customer lifetime value warrants the expense.  In a previous post on hybrid reps, I wrote about how Bill Lohr implemented this innovative approach.

These are just some of the ways for phone/Web and face-to-face selling approaches to peacefully coexist and work together to best serve customers as well as your bottom line.   But keep in mind that the natural tendency of many reps is to visit customers when it just isn’t necessary or justified by the value or stage of the opportunity.  Many customers prefer the convenience and efficiency of phone or online communications, especially in the early part of the sales cycle. And most sales managers appreciate their reps who focus on sales productivity – and phone/Web sales are inherently more efficient and profitable- especially when they are paid on margin. But once in a while, for certain situations, it’s important for sales people and their customers – or sales teams internally – to step away from their computers and telephones and get together physically.

What do you think? Is face-to-face selling disappearing in today’s selling environment? Can inside sales people travel in your organization? Are field sales people traveling less?

Tags: inside sales, phone/Web sales

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

Innovation in Business Practices: Part of the Oracle Culture

I was honored to be included in the “Conversations with Early Innovators” section of Oracle Corporation’s  Innovation Showcase, which is now being featured on its website along with a 100-day countdown to Oracle OpenWorld. As the founder of Oracle’s inside sales group, I stressed the innovation of Oracle’s business practices while others interviewed focused on the company’s technology innovations.  There’s a fun story about Ted Codd – the father of relational database – in there, too.  Here’s the interview in its entirety:

Anneke Seley was the twelfth Oracle employee and the designer of the company’s revolutionary phone sales operation that is now called OracleDirect. She helped to organize Oracle’s first user conferences, which were the predecessor events to Oracle OpenWorld. Currently, she is the CEO and founder of Phone Works, a sales strategy and implementation consultancy that specializes in helping companies incorporate phone and Web selling into their sales models. Seley is also the coauthor of a new book, Sales 2.0: Improve Business Results Using Innovative Sales Practices and Technology (John Wiley & Sons, 2008).

Q:What was innovative about the telephone sales organization that you started in 1985?

A:It wasn’t typical for a company to sell complex enterprise software by phone, but in 1985 that’s basically what I was recruited to do. I had joined Oracle in an entry position in 1980, but in 1985, when we were releasing products for the PC, the old distribution model of having a field sales organization sell every single copy of Oracle was no longer practical or economical. So I started the phone sales organization, which everybody in the field thought was going to be a total disaster. They said, “Who would buy software on the phone? This is really important, complex system stuff that people run their companies on. Who’s going to buy it, without seeing somebody in person?”

Q:How successful was this new sales organization?

A:We started out with two employees. By the end of the first year, we had about 20 people. It was the fastest growing sales organization in the company. And now, you can see what happened—OracleDirect brings in hundreds of millions of dollars. We did very well. Prospective customers were very happy to talk to us—and buy products—on the phone, as long as we knew what we were talking about.

Q:Did your sales staff do a lot of cold calling in the early days?

A:No, because we had a very active and successful demand generation marketing program that would drive leads into the company. We also had advertising. I recall one early ad, created by Rick Bennett, which had a picture of a biplane [representing Oracle's competitor] being shot down. It got a lot of attention for being so aggressive.

Q:The book Sales 2.0, which you coauthored, has a chapter about Oracle. Would you give us some highlights?

A:It shows how Oracle in the 1980s was very forward thinking. Nowadays, it’s really common for organizations to launch or have a big part of their distribution strategy include an inside sales or phone and Web selling component. It wasn’t so common in 1985. But a key point about Sales 2.0 is to sell in the way the customer wants to buy and to align your resources appropriately—given the profitability, the size of the deal, the size of the customer, and whatever makes sense. For a lot of customers, it was totally fine not to see a salesperson. Sales 2.0 is about more effective and more efficient selling for both the seller and the buyer that’s enabled by technology. Innovation is not just about the technology, but also about the business practice that you enable with the technology.

Q:You also helped to organize the first Oracle conference—what do you recall about that?

A:It was in 1982, if I remember correctly. I think we called it the Oracle User Conference, and we held it at the Hyatt Union Square in San Francisco. I know we had fewer than 1,000 attendees because I remember it was a big deal when we had the second annual conference and attracted 1,000 attendees. The audience was mostly developers. It was an incredible success—and a useful venue for enabling direct contact between the Oracle developers and the Oracle staff and the customer base.

Q:Any speakers stand out in your mind?

A:Tedd Codd, the father of the relational database, was the keynote speaker at our second user conference. It was held in San Diego at the InterContinental, which was a big step up. I was a kid then, and here was this historical figure who was so important to the company, and we were honored to have him at our user’s conference. I believe he was retired from IBM at the time. My job was to keep the conference on schedule and to deal with the logistical side of things. And here was Ted Codd speaking before the audience, and he wouldn’t stop talking. But we had to get to our next session. So I asked him at least three times—you know, “Thank you, it’s such an honor to have you here, and now we’re ready for the next session.” But he just kept on talking. It was definitely a moment that I’ll never forget. He wasn’t a schedule kind of guy. I think he was really enjoying himself. And, I don’t want to assume anything, but these technically brilliant people want to see their inventions become reality. It was meaningful to him that Oracle had done just that, by creating the first commercially available relational database. [Editor's note: Oracle founders used Codd's published description of a working prototype for a relational database as a model for the Oracle database.)

Q:What drives Oracle’s culture of innovation—does it come from the top?

A:Absolutely, it comes from Larry. Larry was a technical guy. He loved technical innovation, and he hired people that were really, really good. We didn’t necessarily follow the rules that other businesses follow. We’d hire people like me—who graduated with a degree in human biology from Stanford—and let them start a sales division with no sales background. The idea was to give smart people a project and let them figure it out. That’s the essence of the culture at Oracle. It started with technical innovation, and then it expanded to other parts of the business.

How is your company’s culture innovative? How are you transforming your business practices to be as innovative as your product or service offerings?

Tags: innovation, Innovation Showcase, inside sales, Larry Ellison, Oracle, Oracle OpenWorld, OracleDirect, Ted Codd