OVERCOMING TOP SALES CHALLENGES Leveraging Inside Sales

Spotlight on:

“The Truth About the Field Sales to Inside Sales Migration Trend” Full Report

Researched by Steve W. Martin Sponsored by: Copyright Steve W. Martin 2014. All rights reserved.

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Sales Organization Stage Challenges

Sale

s Or

gani

zatio

n Ev

olut

ion

Adolescence Adult Middle-Age Seniority

Company Lifecycle

CoverageCritical MassSales Model

ScaleRepeatabilityOrganization

Thrashing

ProductivityPredictabilitySpecialization

Competitive LeapfrogEntitlement

Revenue Care

Widespread AdoptionRelationship Justification

Customer Intimacy

BUILD

COMPETE

MAINTAIN

EXTEND

CULL

11

All sales organizations face similar challenges today. At the most basic level, given the nature of the sales function, the number one hurdle

is generally achieving the monthly, quarterly, or yearly revenue target. However, the specific sales challenges that inhibit a company from

achieving revenue growth vary based on each sales organization’s development stage and the stage of the company or product the sales

organization represents. In his recent study of more than 100 leading high technology and business services companies, sales author and

USC professor, Steve W. Martin, examined the challenges at each development stage and the most common issues faced across sales teams.

The insights and quotes provided by top, senior-level sales leaders who participated in the interviews and surveys illustrate the nature of

the challenges faced and some of the methods being used to combat these obstacles. The results of the study suggest that many of the

challenges can be overcome or at least alleviated through the use of inside sales teams, which helps explain the trend towards inside sales

that the study also uncovered.

Executive Summary

Sales Organization Development StagesEvery sales organization can be classified into a “Build,” “Compete,” “Maintain,” “Extend,” or “Cull” stage based upon its state of devel-

opment. The Build stage is when the sales organization is first establishing itself. If successful, it will proceed to a high-growth Compete

stage and then to a Maintain stage that is contingent upon predictable success. As the sales organization ages, it will enter either the

Extend stage and enjoy longevity or the Cull stage, where it declines and is forced to reduce its size.

In the Build stage, a small group of salespeople must push themselves into new accounts and introduce their solution and its benefits. Con-

versely, a well-known company in the Maintain stage is pulled into new sales opportunities because of its market position. The figure below

highlights the different sales organization challenges in the Build, Compete, Maintain, Extend and Cull stages.

22

Build Stage

The top sales challenge in the Build stage is creating sufficient sales coverage to push the product into the market. It takes time to hire, train,

and build a critical mass of capable salespeople who can penetrate new accounts. It is during this stage that the sales model is first established,

whether the sales organization will sell directly via outside field salespeople, over the phone with inside salespeople, or through channel

partners.

Interview Excerpt from a Build Stage Sales Leader:

“We are continually learning from every sales cycle and adapting our message to be more effective when we are in front of customers. We are trying to create a repeatable sales process but our product focus is changing as much as our sales model.”

The bulk of sales for most companies in the Build stage comes from small business and mid-market accounts. Large, enterprise level accounts

are harder to win during the build stage because the product usually isn’t established enough to win against larger competitors. Seventy-six percent of survey participants indicated that inside sales teams provide a better strategy to penetrate SMB and mid-market accounts. For

this and other reasons, inside sales teams tend to be very effective during the Build stage.

Compete Stage

The Compete stage challenge revolves around quickly scaling the sales organization so that it can compete effectively against more estab-

lished competitors in existing markets or grab as much marketshare as possible in new markets. In this stage, the sales organization begins to

develop its collective intuition of where it can win new business and where it is likely to lose. If these attributes are not instilled into the new

salespeople, “organization-thrashing” occurs. The newer salespeople will chase business they cannot win and precious pre-sales resources will

be wasted. They won’t make quota and are likely to either be let go or leave on their own merit because they lack a sufficient pipeline of busi-

ness to make commission. In this situation, there is organization-thrashing because of the continual replenishment of new and under-performing

salespeople.

Interview Excerpt from a Compete Stage Sales Leader:

“One of the challenges we’ve had is that we’ve been growing so fast that there has been a lot of territory realignment with the addition of new people. Unfortunately, we aren’t upstream on deals and most of the early deal influence is through our marketing activity. In a perfect world, our salesperson has enough time in the territory to build those relationships over time. There is huge value when you get in before the sales cycle starts. I’d say the influence is maybe thirty-five percent before you get into an actual engagement. We walk into a deal and can tell there is a bias. But, if we have a really effective first engagement and understand their needs we can position our company advantages.”

The challenge of fast growth is generally a good one to have, but that doesn’t necessarily make the challenge any easier to overcome. Results

of this study suggest that inside sales could help in this area since 79 percent of participants indicated that inside sales teams allow sales organizations to scale faster.

3

Maintain Stage

The sales challenge changes radically during the late Compete stage and into the Maintain stage. The focus shifts from scaling the organiza¬tion

to maximizing sales productivity by lowering the cost of selling and increasing the average sales price. This may result in moving business from

outside sales to inside sales or less expensive partner and distributor channels. Another challenge revolves around the predictability of revenue

and the size of the sales organization. Since the sales organization is fully staffed and the territory coverage model is complete, the challenge is

where to find the additional revenue to meet the growing annual target. Since territories have been split numerous times, the answer revolves

around specialization. The sales force is segmented by size of company to be called upon, national accounts are segregated, and industry verti-

cal sales specialists covering finance, government, retail, distribution, healthcare, etc., are created.

Interview Excerpt from a Maintain Stage Sales Leader:

“I have to balance capacity with productivity. What this means is how do we get more leverage from the sales model? When you start a company, it is about going as fast as you can to separate yourself from the pack. Now we have to take the next step as a company and say, ‘What are the sales per employee? What’s the cost per rep? What commissionable costs are we paying?’ All of these things become relevant. The only way you can have an impact on those is to increase productivity and lower cost.”

Productivity is often measured in terms of increased call activity and selling volume. Since 78 percent of survey and interview participants believe inside sales teams enable organizations to increase call activity and selling volume, it’s no wonder many companies in the Maintain

stage are turning to inside sales when it comes to increasing productivity and lowering costs.

Extend Stage

Sales organizations in the Extend stage seek to deflect the attacks from Compete and Maintain stage competitors by extending their presence

within existing customer installations. The challenge is to attain such widespread customer adoption that their solution becomes the de facto

standard. From an account management perspective, the challenge is to build irreplaceable customer intimacy by understanding the customer’s

business issues and goals. Even though there might be superior products available from competitors, through the building of strong personal

relationships and the sharing of best industry practices, the customer feels justified to continue on with the relationship as opposed to ending it.

Interview Excerpt from an Extend Stage Sales Leader:

“Our sales organization is in the process of changing from a regional account management to a global account structure as we ma¬ture as an organization. We want to make it simple for someone to have a global relationship with us. It has been a problem for our larger custom-ers because they have to execute different contracts that have to be signed locally and deal with different price lists around the world. We believe we can capitalize on our existing presence and dramatically increase revenues at these accounts.”

The account management aspect of sales probably becomes most important during the Extend stage of a company’s development cycle. One

way sales organizations are able to provide effective account management to build customer loyalty is through a hybrid sales team approach.

Having inside sales reps working jointly with outside sales reps enables companies to have a more dynamic relationship with their clients by

pairing the benefit of immediate support through inside sales staff with the leadership and continuity of a more senior rep covering the field.

Top Sales Management Challenges

Difficulty differentiating yourself from competitors

0% 20% 40% 60% 80%

Generating enough leads

Sales cycles are too long

Hiring and retaining sales talent

Difficulty meeting senior level decisionmakers

Long ramp up time before new reps become effective

30%

61%

67%

72%

79%

71%

44

While many of the challenges covered so far have been dependent on each individual organization’s development stage, there are a num-

ber of other challenges that are common across stages and generally shared among most organizations. Study participants were asked to

describe the high level sales challenges they were personally facing along with those they felt were common across all of their sales teams.

Study participants most frequently mentioned the following issues:

Top Sales Management Challenges

Cull Stage

In the Cull stage, the company has been leapfrogged by competitors who provide superior offerings or the market faces decline. How does

a demoralized and marginalized sales force revitalize itself? The Darwinian answer is to cull the herd and remove the bottom performers and

those with disenfranchised attitudes. The attitude of entitlement must be eliminated for the spark of the competitive spirit to be reignited.

Equally important, key existing accounts whose run rate revenue is central to the survival of the company are separated out and placed in “Rev-

enue Care” programs where they receive dedicated account management, customer support, and executive level access.

Interview Excerpt from a Cull Stage Sales Leader:

“We eliminated over forty quota-carrying field salespeople and contrary to what you might expect, our revenues actually went up signifi-cantly last quarter.”

Many companies in the Cull stage are finding that reducing the number of field salespeople while maintaining or even increasing the number of

inside salespeople can be an effective way to reduce costs while maintaining or even increasing revenues and profits.

Easier to track the pipeline and forecast results

0% 20% 40% 60% 80% 100%

Allows sales organization to scale faster

Provides a better strategy to penetrate SMB and mid-market accounts

Enables sales organization to increase call activity and selling volume

Easier to train, develop, and promote for field roles

Easier to onboard new salespeople and share best practices

34%

61%

76%

79%

83%

78%

Advantages of Inside Sales Teams

5

Overcoming Top Challenges through Inside SalesAfter looking at the complete results of the study, one theme that surfaced in obvious proportions was that many of the top challenges

expressed by sales leaders are solved in whole or part through the establishment or expansion of inside sales teams. The most common

challenge, ”long ramp up time before new reps become effective,” is one that is clearly more of a challenge when it comes to field sales-

people. The fact that field salespeople often work from remote locations and travel frequently makes it much more difficult to provide ongo-

ing coaching and training that could help accelerate their ramp up time and effectiveness. The most cited advantage of inside sales teams,

as reported by survey participants, validates how inside sales can help overcome the most significant challenge faced by sales organizations:

Having larger inside sales teams can certainly shorten the overall sales team ramp up time since inside salespeople are easier to onboard

and train, but this also has a positive impact on the third most noted sales challenge, “hiring and retaining sales talent.” Inside salespeo-

ple tend to be less experienced than field salespeople and are therefore easier to find and hire. Also, when employees receive better train-

ing, they are more likely to be successful and more likely to be retained. The fifth most commonly cited advantage to inside sales further

supports this point-- inside salespeople are “easier to train, develop, and promote for field roles;” they are more likely to remain with the

same company for an extended period of time. Of course, there is also the higher turnover that might be expected due to the heavy toll

that extensive travel usually has on field salespeople.

Less than 30 days 31-60 Days 61-90 Days 91-270 Days 271+ Days

60%

40%

20%

0%

Inside SalesOutside Sales

46%

8%

24%

15%

24% 23%

6%

38%

16%0%

Sales Cycle Length

6

The fourth most commonly cited sales challenge, “sales cycles are too long,” provides yet another opportunity for the increased use of

inside sales teams to make a difference. Seventy percent of companies indicated that their average sales cycle length for inside sales is 60

days or less, while 77 percent of companies said their average sales cycle length for field sales is longer than 60 days. Average sales cycle

lengths may vary largely because of differences in size and type of sales opportunities typically handled by inside and field sales, but at

least part of the difference is due to the speed and volume with which inside sales teams are able to work through leads compared to field

sales.

Significant Shift from Field Sales to More Inside Sales

Slight Shift from Field Sales to More Inside Sales

No Change in Mix Between Fieldand Inside Sales Staff

Slight Shift from Inside Salesto More Field Sales

Significant Shift from Inside Salesto More Field Sales

0% 10% 20% 30% 40%

12%

34%

32%

8%

13%

Shift in Sales Staff

7

Although the challenges faced by sales organizations can vary significantly based on each sales organization’s current development stage,

inside sales teams can help overcome some of the biggest sales challenges facing sales teams today, regardless of what lifecycle stage a

company may be in. Inside sales teams help address some of the most common sales challenges, starting with reducing the ramp up time

needed for new salespeople to become effective, the most commonly cited sales challenge.

The important advantages inside sales teams provide make it easier to understand why one of the most significant findings from the research

was that there is a general migration taking place in the sales world from field sales to inside sales models. Over the past two years, more

than twice as many study participants reported moving to an inside sales model as shown in the figure below. For 46 percent, there was at

least a slight shift from a field sales model to an inside sales model. Conversely, only 21 percent reported at least a slight shift from an inside

sales to a field sales model.

These results don’t suggest that all sales challenges can be overcome by switching to an inside sales model or that a switch to an inside sales

model is right for every company or situation, but the results do help explain the general trend observed. These findings should also serve to

heighten the awareness of sales leaders that are struggling with some of the challenges identified in this study and how they could potential-

ly be alleviated through the strategic implementation of inside sales teams.

Summary and Conclusions

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8

Top senior-level sales leaders from more than 100 leading high technology and business services companies participated in this study. These

senior executive sales leaders manage the sales organizations of computer software, computer hardware, Cloud-based/SaaS, telecommunica-

tions, and business services companies.

The research included in-depth interviews and extensive surveying of the participants. The average interview lasted 42 minutes and the

survey required 82 separate responses. The goal was to gather qualitative information, including trends and future predictions along with

quantifiable sales organization metrics. Participants were also asked to share their top sales challenges and future sales strategies. They

candidly shared their experiences, opinions, and advice. In exchange for their candor, it was agreed that their names and organizations

would remain anonymous. This particular paper only highlights a few of the key metrics and findings of the full report entitled, “The Truth About the Field Sales to Inside Sales Migration Trend: Sales Organization Structure Study Based upon Interviews and Surveys with Vice Presidents of Sales at Top Technology Companies.”

In addition, the interpretation of study results was augmented by Steve W. Martin’s personal experience working with and studying hundreds of

technology sales organizations. The services he has provided these companies include sales force effectiveness consulting, comprehensive win-

loss analysis studies based upon extensive customer interviewing, and advanced sales strategy training. This research project was sponsored by

Velocify, a market-leading provider of cloud-based intelligent sales software, designed for high-velocity sales environments.

Study Methodology

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Email: sales@velocify.com

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Visit our blog: velocify.com/blog

9

Velocify is a market leading provider of cloud-based intelligent sales automation solutions that drive more effective and efficient sales

processes and increased revenue. With unmatched expertise, drawn from a dedication to helping more than 1,500 clients automate and

improve their lead response and selling processes, Velocify has become the platform of choice for organizations focused on improving

customer acquisition practices and business performance. Velocify is a privately held company, recently recognized as one of the fastest

growing companies in North America on Deloitte’s 2012 Technology Fast 500. Please visit www.velocify.com for more information.

Steve W. Martin is an expert on the complex human nature of business-to-business sales. His “Heavy Hitter” series of books for

senior salespeople has helped over 100,000 salespeople become top revenue producers. Steve is a regular contributor to the Harvard

Business Review and teaches at the University of Southern California Marshall Business School MBA Program. You can learn more

about Steve at www.stevewmartin.com.

About Velocify

About Steve W. Martin