The Trend Changing the Sales Landscape

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 2013. All rights reserved.

As featured in Harvard Business Review

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Over the past several decades, the structure of sales organizations has remained relatively unchanged. Sales teams have primarily

been composed of outside field salespeople who make face-to-face sales calls with prospective customers and current clients. In turn,

field salespeople have sometimes been supported by inside sales representatives who help them complete their daily tasks.

Today, the traditional sales organization structure is undergoing a significant change. Many sales organizations are transitioning from a

field sales model to an inside sales model, where more inside salespeople work independently from the field and are directly responsible

for closing business. To understand the magnitude of this trend, in-depth interviews and extensive surveys were conducted with more than

100 vice presidents and directors of sales at leading high technology companies and business services providers. The resulting research

provided insights about the evolution of sales organizations along with the following key finding:

More than twice as many study participants reported a bigger shift to inside sales staff than to field sales staff.

Though there are many macro factors that are fueling a greater shift to inside sales (which are covered extensively later in this report),

this study found that there are three key organizational factors that determine when a sales organization will utilize a field or inside sales

model. They are the sales organization’s stage of development, the complexity of the products sold, and to a lesser extent, the sales

leader’s perception of inside and outside sales model effectiveness.

Executive Summary

Decision to Implement Field or Inside Sales Model

Sales OrganizationDevelopment Stage

Complexityof ProductSales Cycle

Sales LeaderPerception

of Sales Models+ +

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Every sales organization can be classified into a “Build,” “Compete,” “Maintain,” “Extend,” or “Cull” stage based upon its development.

The challenges associated with each stage directly influence the sales organization’s structure and whether a field or inside sales model will

be deployed.

The “Build” stage is when the sales organization is first establishing itself and is challenged to create sufficient sales coverage to push its

product into market. The high-growth “Compete” stage is challenged to scale quickly and the “Maintain” stage is challenged to increase

productivity of sales staff. As the sales organization ages, it will enter either the “Extend” stage and be challenged to attain widespread

customer adoption or “Cull” stage, where it declines and is forced to reduce its size and is challenged with revitalizing a demoralized and

marginalized sales staff. The ratio of outside or inside salespeople changes as the organization moves from the “Build” to “Compete” to

“Maintain” development stages.

The complexity of the sales cycle determines the evolution of the sales organization and at what point outside field or inside-based sales

models will be implemented. Sales cycle types can be classified as Enterprise, Platform Cloud-based or Point-specific. Each of these sales

cycles vary in complexity depending upon the number of individuals and departments involved in the selection process, the size of pur-

chase, and sophisticated nature of the solution offered.

While the goal of this study was to gather quantifiable metrics, there is another aspect of sales model decision making that was revealed

in the research that cannot be ignored. Most sales leaders believe that outside salespeople have superior sales skills and that the most ac-

complished sales professionals are in the field. This in turn can influence sales model decisions because many sales leaders have a personal

bias toward deploying outside salespeople over inside salespeople.

This historical disposition is being offset by the changing nature of how customers buy today. Via the Internet, customers can research prod-

ucts, prices, and opinions, and when they are ready to buy are happy to do so over the phone. This situation is driving more sales leaders to

consider and then deploy inside sales models. Today, there is also a changing perception among sales leaders about the strategic role inside

sales teams perform. This change is due to the benefits that sales leaders believe the inside model provides in terms of scaling activity,

growing the organization, and attacking specific markets.

Sales Organization Development Stage

Sales Cycle Complexity

Sales Leaders’ Perception of Field and Inside Sales Models

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In an effort to quantify the scale of the perceived shift, sales leaders were asked to describe the change in the distribution of their

sales staff over the past two years, comparing the number of field and inside salespeople. More than twice as many study participants

reported having moved to an inside sales model (46 percent of respondents), as shown in the figure below. For 34 percent, the shift was

slight, but 12 percent of study participants reported a significant shift from a field sales model to an inside sales model. Conversely, only

21 percent reported a shift from inside sales to field sales, including 13 percent who reported a significant shift and 8 percent who

reported a slight shift.

Magnitude of the Shift

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

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50%

40%

30%

20%

10%

0%

20132015

Software Hardware Cloud Telecom

28%

20%

10%

20%

10%

50%

25%

0%

100% 50% 50%

50%

Percentage of Companies Deriving Over 90% of Revenues From Field Sales

In addition to more companies reporting having shifted their sales staff from the field to inside sales over the last two years, most of

the companies that still derive all or most of their revenue from field sales reported that they expect this to change considerably by 2015.

Trends for 2013 and 2015 projected annual revenue attributed to field sales as opposed to inside sales varied by industry, but the overall

trend is for the number of companies that derive more than 90 percent of their revenues from field-related sales to decrease dramatically.

For example, 28 percent of software companies expect to derive more than 90 percent of their revenues from field sales in 2013. In 2015,

none of these respondents expect to still derive 90 percent of their revenue from field sales. The number of hardware, cloud and telecom

companies with more than 90 percent of their revenues coming from field sales is also expected to be cut in half.

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Increasing pressure on business and buyers

0% 10% 20% 30% 40% 50% 60%

Technology advancement

Buyer acceptance of remote selling process

Societal Changes (mobile workforce & online purchasing)

Margin focus of the business

34%

34%

47%

54%

60%

The shift towards inside sales is being driven by a number of internal and external factors. The most cited factor driving a shift towards

inside sales was increased focus on margin. Sales teams are increasingly being asked to demonstrate higher returns on investment in addition

to delivering revenue. Inside sales teams are widely viewed as a better return on investment due to the lower cost of deploying and growing

those teams versus field sales teams. The chart below highlights some of the other top factors cited as strong contributors to the shift.

Factors Driving the Shift

Aside from external pressures, there are also perceived advantages that are driving the growth of inside sales teams.

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%

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The shift towards inside sales observed can be further understood in light of the challenges sales leaders face. 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. By comparing the list of advantages of inside sales teams cited in the previous section to the challenges listed below, one can

see how the shift towards inside sales can directly help alleviate some of the challenges most frequently mentioned.

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%

Sales Management Challenges

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It is hard to deny that a fundamental shift is taking place in the sales world. While field sales teams are unlikely to disappear any time

soon, data reveals that inside sales teams are growing rapidly and that fewer and fewer sales organizations are relying solely on field sales

for revenue growth. In most cases, inside sales teams are not replacing field sales teams entirely, but sales organizations are increasingly

employing hybrid sales models that capitalize on the advantages of both inside and field sales models. There is usually a place for both

inside and field sales teams within most organizations, at least at some stage of each organization’s development.

Through this research, it was discovered that the deployment of different field and inside sales strategies is highly dependent on three

organizational factors: the sales organization’s development stage, the sales cycle complexity, which has to do with the complexity and

nature of the solutions and products offered, and the sales leaders’ perception of and experience with inside and field sales models. Today’s

competitive landscape is requiring most organizations to adopt larger inside sales teams and there are numerous advantages to doing so.

Those organizations that are able to recognize this shift before their competition does and are able to successfully transition their sales

teams to the most effective mix of inside and field salespeople throughout their growth and evolution are likely to experience continued

success, while those that don’t, are likely to fall by the wayside.

Summary and Conclusions

As advantageous as incorporating bigger inside sales teams might be, the transition from field sales is not always an easy one. One research

finding that highlights the challenges sales leaders face is that 98 percent of them believe that the skills and characteristics of inside and

outside salespeople are different. This means that both sales leaders and salespeople alike need to be armed with the right training and

tools to help them develop the knowledge and skills necessary for a successful transition.

Perceived Differences between Inside Sales and Field Sales

Significantly Different

0% 10% 20% 30% 40% 50% 60%

Somewhat Different

No Difference

53%

45%

2%

How different are the skill sets and characteristics that make for a great inside versus a great field salesperson?

Top senior-level sales leaders from over one-hundred 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,

telecommunications, 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, which focuses on the shift to inside sales, is a condensed version 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 includes sales force effectiveness consulting,

comprehensive win-loss analysis studies based upon extensive customer interviewing, and advanced sales strategy training.

Steve W. Martin is an expert on the complex human nature of business-to-business sales. Steve is a regular contributor to the Harvard Business

Review and teaches at the University of Southern California Marshall Business School MBA Program. 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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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.

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.

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