Important Insight into Leveraging Inside Sales Teams

Every company has its own creative methodology, strategy and theory for creating and measuring lead generation and inside sales teams.

But for all the variation in approach, there’s one truth that applies across the board: inside sales is science, not art. If you structure your sales team it any other way, you’ll never successfully leverage your inside sales operation.

Sure, there’s some artistry in how your inside sales reps engage potential customers on the phone and how your lead gen teams perform their jobs. But, as The Bridge Group founder and CEO Trish Bertuzzi explained to Ardath Albee of Marketing Interactions, productivity, performance, motivation, training and systems need to be measured and evaluated scientifically with metrics and data, not gut feelings.

Bertuzzi’s argument stems from research that her consulting firm performed on inside sales and lead generation metrics two years ago. In The Bridge Group’s 2009 Inside Sales Report, Bertuzzi and her staff uncovered how the 125 North American expansion stage technology companies they surveyed were leveraging inside sales.
There were variations across the board, but a few common themes emerged:

• Most of the companies The Bridge Group surveyed had adopted inside sales after the startup phase, targeting early majority technology buyers and beyond.
• The average inside sales team was 12 reps. I suspect that number correlated to the size of the companies included in the survey, but I believe an inside sales team should have a minimum of four reps, with a recruiting ramp in class sizes of 4-5 reps.

Inside sales teams can be the starting point for any distribution model, including startup and early adopter phases. Getting it right is crucial, which requires knowing when to build the team and how best to scale it over time. A scientific approach undoubtedly mitigates the risk involved.

On that note, The Bridge Group also released a report on inside sales lead generation metrics and compensation. That research revealed that software companies have begun to leverage their inside sales teams – rather than their marketing departments – for lead generation.

In some marketing circles, that last sentence is blasphemous. But as Steve Watts points out on Inside Sales Insider, lead generation should be the inside sales team’s responsibility in B2B sales.

Two main reasons that inside sales should be responsible for lead gen

• Marketing is passive and lead generation is proactive. The Bridge Group’s lead generation report data speaks directly to that point. If an inside sales team can take on lead generation efforts, a company can shift its marketing team’s focus from generating leads to fostering and nurturing them into qualified leads.
• Lead generation metrics are more appropriately tied to the sales process. Once a lead comes in, Watt argues that most of the remaining work is directly tied to sales, including calls, collateral, appointment setting and demonstration.

Companies seem to be going that route too. The Bridge Group’s report revealed that only 26 percent of companies now assign their lead generation teams to the marketing department.

I do think it’s unfortunate that The Bridge Group’s data and Watt’s blog seem to suggest that typical marketing managers are not process-oriented enough to run a process-intensive lead gen team. After all, lead generation has always been a key marketing responsibility, and human-based lead qualification is an essential component of that function.

But that’s beside the point. Whichever department your lead gen team works out of, the key is to strike the right balance. I agree with The Bridge Group’s research, which concluded that a ratio of one lead generation rep to three sales reps is appropriate. A ratio of 1:4 makes the sales team cost heavy, while 1:2 makes it resource heavy.

Understanding Sales Compensation

While you’re researching ways to get the most out of your inside sales organization, I suggest looking over Phone Works’ 2010 VP Sales Compensation Report and 2010 Inside Sales Compensation Study. The inside sales consulting company picked up on some interesting trends in the last year.

Here are a few that stand out:

• The Average Target Compensation for inside sales reps in 2010 was $103,000, with $63,000 of that coming from base salary.
• Respondents to Phone Works’ survey listed their top five priorities for improving inside sales team performance as: better training (29%), new technology/tools (13%), improved processes (10%), improved compensation plans (10%), and increased number and quality of leads (8%).
• In the VP Sales Compensation report, the 2010 average base salary for VP Sales was $176,000, while the average total compensation was $330,000.

There are numerous other interesting subsets of information in the report, but I’ll let you dive into them on your own.

There’s a lot of research and data collection that goes into building and running an effective inside sales team. And once that team is built, it’s important to track its performance with a scientific approach, employing historical data and relevant metrics to evaluate performance, productivity and opportunity.

Be sure to check out our guide to building a scalable sales compensation plan that your entire sales team will be happy with.