The May 25, 2012, issue of MDM featured an article on the state of proactive selling in distribution on both outbound and inbound calls. Proactivity was defined as making planned outbound calls and/or leveraging inbound calls using a variety of techniques such as cross-selling and probing for additional needs. Nearly half of all respondents to a recent survey of MDM subscribers said that their inside sales reps proactively sell less than 10 percent of the time.
This article examines how a proactive inside sales force can be critical to serving mid-market and small customers as part of a broader multichannel strategy; it includes steps for initiating an effective program.
If created and managed well, outbound and inbound calling programs can be very effective. What’s more, implementation does not have to be expensive or overly complex.
Proactive inside sales is essential for channel alignment and ensuring effective channel coverage.
Figure 1 (below) shows a mapping of different sales and customer service representatives to market segments. The largest accounts have field sales representatives assigned to them. The smallest accounts are serviced by customer service representatives and e-commerce as appropriate. Mid-market accounts are handled by proactive inside sales representatives and customer service representatives. This approach aligns the cost to acquire and the cost to serve an account with its size.
There are several benefits:
Field sales representatives are freed up to focus on the largest accounts. The large accounts are typically 80 percent to 90 percent of total revenue. They need more customer service support, and typically have lower margins.
Underserved and unserved mid-market accounts now have inside sales reps and customer service reps who will be more responsive than field sales. Because these accounts are now served proactively, they will grow significantly. We have found that even one touch from an outbound salesperson can yield incremental sales.
The business from the mid-market and smaller accounts is typically higher margin. In contrast to revenue from large accounts which can be lumpy, a larger number of mid-market and small accounts creates a smoother revenue stream.
This channel alignment also allows all of your customers to feel important to your company regardless of their size.
Where to Start: Outbound Calling
Creating a small outbound calling program does not require a large bankroll. For the small to medium-sized distributor, it can be as simple as getting a single person on the phone making outbound calls.
Here are some suggestions for where to start:
Find a salesperson with a “hunter” personality. Look for someone who likes to pick up the phone and make things happen. The hunter personality is curious and is inclined to ask questions when speaking with the customer. They truly want to understand your customers’ business and how they can add more value. They are typically motivated by achieving financial goals.
Create a call guide designed to probe for customer needs. Each call will be different based on the customer, but there is basic information to be learned. Is the customer growing their business? If not, why not? Are there other individuals within the company that would benefit from learning more about your company? These are just a few of the questions that should be considered when creating a comprehensive call guide.
Track productivity using the phone reporting system or have the salesperson keep a daily tally of calls made and contacts they spoke with. This will enable managers to track program effectiveness and list cleanliness. A good rule of thumb is to expect your representative to make a
minimum of 70-85 dials per day. This number will vary based on the cleanliness of the list, as well as the corrections/updates made to the list. Initially, the number of contacts (qualified people to speak with) may be low, until the list is updated, but once cleaned, the number of contacts made should be at least 20-30 per day.
Another way to view productivity is to track total talk time. This will account for time spent on both inbound (customers calling back in response to a voicemail left) and outbound calls and will give a more accurate view. The amount of talk time will depend on several factors, including the type of business and the follow-up required, but should generally be in the three to four hours per day range.
Create a database of the good contacts for use in future campaigns. You will be gathering some good information that you didn’t have before, so a place to enter this information is paramount. If you have a customer relationship management (CRM) system, use it to store and manage this new data. If you don’t have a CRM system, a spreadsheet in Excel will be sufficient to keep the information in one place. Do not depend on your salespeople to keep this information in their heads.
Create goals that reflect the behaviors you want. If the initial goal is to reach as many customers as possible to probe for needs, then create a goal around contacts reached. If you are trying to increase margins by cross-selling product, then reward salespeople on margin growth. Lifecycle management metrics also play a key role here.
On-boarding, growth, retention and reactivation are all key measurements that will reflect the efforts of this group and should be measured carefully. This is the group who will be calling customers who are no longer buying to find out why. They will also participate in growth programs such as presenting new product lines and finding other buyers within the organization. It is imperative that customer lifecycle measurements be in place.
If done effectively, outbound calling can result in year-over-year double-digit sales revenue growth. A leading electronics distributor saw sales to small and medium customers grow 20 percent in the first six months of the program, while a leading electrical distributor saw revenues grow over 25 percent the first year its program was in place. One of the largest national construction supply companies saw revenues grow 27 percent in six months using a combination of inside sales and direct marketing.
The other advantage of an outbound calling group is scalability. The largest expense associated with this capability is payroll. An experienced outbound representative compensation package can typically run from $40,000 to $50,000 per year, depending on where your company is located. The payback from outbound calling is relatively quick, with results appearing in as little as four to six months. As revenues grow, the program becomes self-funding and justifies additional representatives.
Where to Start: Inbound Calling
Today, most distributors are not using their inside salespeople to proactively grow sales. Many are using a service model to create customer loyalty by providing consistent reactive order and customer service on the inbound call. While there has been a lot of discussion about customer relationship management, few distributors really practice it.
For example, how frequently do inside salespeople ask customers how they can make them more successful? We often find that inside salespeople say they are “overwhelmed” with service tasks and simply have no time to ask these questions. But realistically, how much time would asking a few probing questions really add to the call? Not much, but most inside salespeople don’t do it because they are not trained or comfortable performing this function.
If you already have an inside sales team taking inbound calls, leverage this activity by training them to be more proactive on the inbound call. Train them to cross-sell key product lines. Many distributors have said that customers don’t realize the breadth of the distributor’s product base, so cross-selling should be a key component of your inside sales strategy. If the inside salesperson has a good understanding of the customers’ business – which they should – they can intelligently suggest
other product lines that the customer may need.
Create a list of common items and their crosses, such as flashlights and batteries, and put the list in a visible location on the salesperson’s desk. If you have a more sophisticated ERP system, you may be able to “screen pop” these crosses when the salesperson brings up the initial item.
Don’t confuse cross-selling with upselling, however. Upselling is asking customers to purchase additional quantities of the same item; cross-selling will expand your customers into your other product lines. For distributors, cross-selling is usually more important than upselling.
Since this is a new activity for most companies, be prepared to track it closely. Your management team must be committed to keeping this top of mind until it is a regular part of each salesperson’s role. Once cross-selling has been mastered, begin to add other activities, such as asking for other contacts within the organization and uncovering additional needs.
If you don’t have an inside sales team already, here are some basic guidelines for creating one:
Look for individuals with more of a service orientation (“gatherers”), who are outgoing and curious. Members of your inside sales team should enjoy building relationships and have good probing skills, but they should also have the ability to service customers quickly and efficiently.
Set up a basic multiple line phone system, so that more than one call can be managed at a time. As you grow the group, a small investment into an automatic call distribution (ACD) system could be a plus, as it would enable routing calls to the first available individual. This enables faster, more efficient customer service.
ACD systems also come with basic reporting packages to track the total number of calls per rep, total call time, average hold time and abandoned calls. These are your efficiency and service measurements. Couple them with sales measurement such as sales revenues year-over-year per customer, average order size and number of product groups ordered from.
If you don’t have an ACD, you can still get key statistics by having the representatives tally the number of calls they take and the results of each call.
Set up a database for the customer information being collected. As with outbound sales, inside salespeople will be collecting a lot of good information that can be used in the future. If a CRM system is not available, using a simple Excel spreadsheet to capture key contact information (not already captured in the ERP system) such as position, order/quote preferences and email address.
Specific call guides are not usually necessary because inbound call content is usually set by the caller, though it is necessary to train the team how to manage the call once it is understood what the customer need is. Inside sales is a balance of sales and service, so each representative must learn how to manage the call for optimum balance.
Goals for inside sales should be a combination of sales and service. Some examples would be percent increase in average order size, percent increase in profit dollars and percent of calls abandoned (ideally this should be 3 percent or less).
It is easy to define incentives for inbound selling programs. Have some fun by creating daily or weekly contests around a particular program. Recognize those individuals who consistently perform with compensation and recognition programs. Have senior management hand out rewards. Publish results in a weekly email to the sales organization or in the company newsletter. Make it important, and your salespeople will make it a habit.
As we said before, both outbound and inbound calling programs can be very effective if created and managed well. And combined with lifecycle management campaigns, and excellent website and direct marketing programs, you will be well on your way to becoming a world class sales and marketing company.
Jonathan Bein, Ph.D. is a senior partner at Real Results Marketing. Debbie Paul, a partner at Real Results Marketing, was vice president of call centers at Newark, an electronics distributor, and has held positions at Sears and Allstate Insurance. Contact them at firstname.lastname@example.org or visit www.realresultsmarketing.com.