Four Ways Proactive Inside Sales Drives Dollars to the Bottom Line
By Debbie Paul
Many companies use their inside sales team to process orders or provide technical support. In other words, their inside sales teams are in a customer service role. It’s relatively rare for an inside sales rep to make an outbound call to generate more business or employ active selling techniques.
But training the right people with the right skills to execute an effective proactive inside sales strategy holds many clear bottom-line benefits for distributors. A proactive inside sales strategy not only boosts sales per customer, but saves distributors money.
Here are four ways proactive inside sales can grow a distributor’s bottom line.
A lower cost to serve
Think of a proactive inside sales team as a field sales team, but without the car. Distributors that use their proactive inside sales teams to target high-potential mid-sized accounts save money, removing the cost of travel and higher commissions from the equation in accounts where that kind of expense may not be warranted.
Instead, dedicate a proactive inside sales rep, with a cost of sales 25% to 30% lower than that of a field sales rep. It boils down to simple logistics: Between visiting existing accounts, a field sales rep can make three or four new-business calls a day. An inside sales rep at a desk can make 20 contacts on that same day. Considering the average annual salary of an inside sales rep is $60,000, compared with $100,000 for a field sales rep, the cost-per-contact is significantly lower. Our data show that inside sales making outbound calls costs 33% less to reach more than 6 times the contacts each year. While your field sales reps may be best at finding new clients, your inside sales reps can be used to successfully grow existing mid-sized accounts and support customer retention.
As part of an omnichannel strategy, inside sales teams can also help shift order taking to the web, which saves the cost of customer service having to key in orders.
Better gross margin
Distributors usually see their margins grow with a successful proactive inside sales program. In addition to the lower cost to serve, mid-sized accounts are higher gross margin than large accounts. Inside sales accounts in industrial segments are usually 8 to 12 points higher in margin, and construction/trades see margins that run 5 to 9 points higher.
Improved customer retention
Increase retention of profitable mid-sized accounts by three to four times with a proactive inside sales team. Followup by an inside sales rep can both protect and grow wallet share. In fact, for some distributors, an annual increase of 1% in customer retention over each of 10 years results in 20% increase in annual earnings.
Increased sales
Chances are, field sales reps are not paying attention to accounts on the bottom of their list, spending three-quarters of their time on their 10 biggest accounts. But without those touches, customers will either continue ordering what they already have, or they will be picked off by the competition.
A proactive inside sales force can focus on growing mid-sized accounts with potential, connecting with these customers to better understand their needs so they can cross-sell or upsell other products and services that could benefit them. These acorns could then grow into large field sales accounts, or solid and profitable inside sales accounts.
The key to success is selecting and targeting the right accounts for growth. Distributors won’t see the return they are seeking if they select accounts that are too small or don’t have the potential to grow. It’s not about total revenue size, but rather current and potential spend with you.
But with the right customer focus, a proactive inside sales program can drive double-digit growth within six months or less – with relatively little investment while lowering cost to serve and increasing wallet share.
Debbie Paul is a partner with Distribution Strategy Group with a background in developing and growing revenue streams with inside sales and direct marketing. Contact her at dpaul@distributionstrategy.com. Learn more at DistributionStrategy.com.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
