Will inside sales continue to replace field sales?

Having spent a couple of decades selling software solutions for problems that prospective clients often hadn't fully described going in, I am prejudiced, but here is my take.

If you are selling "things' (fully describable, discrete, packagable and interchangable) then inside sales will continue to grow, backed up by equal growth in web-available background information on challenges, products,etc. so prospects can do their up-front research prior to deciding what to buy.

If, however, you are selling solutions to sometimes hazily defined challenges, or selling relationships with prospective who are leery about being left in the lurch once they buy (including firms like Boeing who are actually selling total lifetime cost of ownership, spares and technical support, etc.), then getting someone in front the them becomes extremely important. From this, I think we can also identify a trend away from straight "sales" by reps who know how to sell but are not particularly expert in challenges and solution approaches, toward "consultative sales" reps who know the problems and know how and why their products may be used to address those problems. This also means that reps are likely to be more involved in the definition of solutions based on their products hence staying more involved with new clients as they put the solutions and products into operation.

No. Not as long as Humans remain Humans. People still need to have face-to-face contact. Are things the same as 20 years ago? We've simply added other allied methods of communication, and have adjusted some of the age old methods. Events and environment are different; people are not.

Great question and response. Organizations should and will continue to shift sales to the most appropriate channels for their customers and which are most effective/efficient in achieving the organization's objectives.

Whether it's shifting what's sold by field sales to inside sales or shifting to web/eCommerce, shifting to channel or partner led sales. One of the mistakes too many managers make is they think a particular sales channel or deployment methodology is forever, staying with what they have started with, rather than changing based on how customers buy, the maturity of the product/category on the market, and a number of other factors.

Take, as an example, how the sale of PC's have changed. They used to be sold by direct sales people, now they are available through multiple channels, the most effective of which depends on how the customer will buy.

What does this mean for field sales and for sales in general? Probably the same as it has always meant, the numbers of jobs will shift, the locations of the jobs will shift. New products/services requiring a direct sales channel will be developed--driving demand for field sales. Others more appropriate for inside sales will develop.

Matt,
First, awesome blog!

Second, I would agree with your premise that inside sales will continue to replace outside sales in many cases, but not all. I attend the American Assoc. of Inside Sales Professionals (AA-ISP) events each year and the trend certainly suggests that inside sales is taking center stage.

One interesting item of note. It seems to me that many inside sales "experts" seem to be focused on "inside sales the old way". Topics like autodialers and how to trick voice mail systems are still a big part of the conversation and I'm not sure why. Very little is mentioned about using inbound tools to engage with increasingly indifferent and hard to reach prospects.

Matt - read your post and agree with all of your points. But the one big thing you left out (although Michael mentioned) is the cost of managing a field vs. inside sales organization. There is a HUGE difference.

I vividly recall an excellent presentation a few years ago by Joe Liemandt of Trilogy (documented here - http://johngannonblog.com/2009/12/06/shrink-before-you-grow-and-sales-2-0/) where he basically stated that he could not afford to run an outside sales force for deal sizes below $5M. He documented in great detail how he turned wildly unprofitable enterprise software businesses into highly profitable ones by making one major change - eliminating field sales and replacing them with inside sales.

Even if you believe that $5M figure is exaggerated, there's no denying that the cost - and risk - of having reps in the field is many times higher than having an inside team (and, as Michael also mentions, their productivity is generally significantly lower).

Unless your customers REALLY need the 'high-touch' of a local rep (and inside reps can always get on airplanes when needed) - and unless you have the deal sizes to justify the costs - companies really need to ask themselves whether the much higher costs of building & maintaining a field sales organization are truly worth it.

The product usually dictates the sales process and complexity of certain products. I doubt Boeing would sell many planes with only a inside sales force.

Today low margins are a problem with many companies today, thus the migration to inside sales. A common complaint with many of my software clients.

One system that worked well in 1974 may still be valid today, the sales person gets the account and flips it to inside sales for the continued sales process, i.e. reorders, etc. We
used this when I was with Dell Publishing. Then I was their sales rep, commission based and received full credit for all new and recurring sales in my area. I used the same system when I was with another company and we grew the region to a 72% market penetration.

As for PC sales history mentioned above. We sold PC's because businesses did not know the PC's and had to be educated and the PC'c potential and capability to run a business demonstrated. Today that is no longer the case, any businessperson can set up a PC and use it, well..most can.

Today sales has to be integrated more, again depending on the products. eCommerce being a low cost solution. Inside sales another, and outside sales for the more complex issues.

I have a friend who sells heart valves, he has to instruct the doctors in surgery. Just another example of outside sales requirements.

From the interactions and feedback I had from our customers, I think Inside Sales will continue to accelerate field sales. We are seeing a very heavy reliance on Inside Sales across industries for discovering right decision makers, identifying opportunities, prospecting, nurturing to some extent, setting up meetings and then passing on to field sales at the right time.
An effective Inside Sales team can make the field sales highly productive and help them close more sales faster.

Once you're used to having the high-touch of a local rep, it can be hard to let it go. But Michael's math makes a pretty compelling case at least to the CFO, and at least to be more proactive in testing inside sales concurrently with a smaller field presence.

Great question and equally great responses.
From my perspective some sectors are still partial to local representation, but it's mostly later in the sale. Early in the sale, most of the buyers I encounter are either engaging initially via inbound or web-based marketing, webinars, local lunch and learn, or via inside sales efforts such as cold calling or email campaigns. The latter seem to be shrinking a bit while the former are gaining in popularity.

Your question makes me wonder what will happen when, as analysts are predicting, larger U.S. companies begin to disperse their operations into regional geographies again because of increasing overseas operating costs and transportation costs. Will this bring with it a resurgence of local representation as well?

It might be more tempting to stick with or go back to field sales with regional business units, but the economics between field and inside sales are likely still going to be wide enough that, as long results are there, inside sales will likely still win out.

This is a very timely question as we are in an era of significant change relative to sales and business strategies. While I agree in principal with most of the answers already given, I would suggest the question must be clarified with “using what sales approach?” Chris Selland and Barry Schaeffer's reply identifies the issue. Today there are four distinct sales approaches; transactional, feature-benefit, solution and value add. The sales models for each of these approaches are very different one from the other.

I think the definitions of "inside" versus "outside" are a bit old. Today, most everyone is playing an inside role to some degree. Travel is expensive and time consuming. At the same time, technologies for delivery of online presentations are very flexible and effective. Further, many of the teams we need to reach at our customer sites are flexible in their work arrangements working from home or in remote parts of the country. They WANT web conferences.

Onsite visits are saved only for large opportunities near a closing stage. Before that closing, companies can use different people for different stages of the sales cycle.

1. There is always one account owner. He or she can direct different people to reach the customer, arrange demonstrations and presentations and if necessary, arrange a visit.
2. If the product can be tested, another rep can arrange a trial
3. Once these efforts have taken place, the regular account owner can then carry on having use others to "tee" the customer for his or her talents.

I had worked in PreSales for about a dozen years with Compaq / HP and saw ups and down in which accounts "merited" human contact (road maps etc.) There was serious disappointment in organizations who were "reclassified" from "Enterprise" to "Commercial" under new regimes (after Digital and HP mergers/acquisitions) and leadership decided to re-shuffle who was direct, and who was bounced to the channel. For more commodity kit (like client devices) I suspect Dell took a lot of low-margin business away. As we enter the "post-PC" era, where end-point logic moves back to the Data Center, the complexities involved require a much higher-touch approach to add value. Converged Infrastructure and Rich Media / Collaboration are not things you can drop-ship.

I agree with Kevin Timpy - it really depends on the type of product and the complexity of the sale. This is particularly true of a product that has not been widely adopted as opposed to a product that is well understood and somewhat of a commodity.

I have seen short-term exceptions - Over ten years ago the IT industry was hot because of the Y2K scare and the dotcom rush. Companies like Oracle, SUN and IBM had also done a tremendous job of building trusted brands. I saw many servers and even ERP software sold over the phone and even on-line. Companies actually purchased ERP systems for millions of dollars and then were shocked to discover they needed to spend millions more to have the product professionally implemented. We used to joke that the platform [insert your brand] software ran best on was PowerPoint. Keep in mind that our money supply was extraordinarily high and Corporate America was in a bad investment frenzy - hence the bust of the bubble and subsequent economic carnage. But even during this time of corporate uber-stupidity the vast majority of buyers and committees needed to meet with the sales people and see the actual product demonstrated in their environment. By the way, most of the businesses who used the traditional outside sales process as part of their due diligence made good purchase decisions and are in business today - hence the importance of an outside sales force.

This debate has been around since I have been in sales (18 years). In the dawn of eCommerce they were calling it disintermediation. The fact is, during a normal economy, complex, high risk products with long sales cycles cannot be sold completely over the phone. Either way, the customer makes the best decision in these types of purchases when the due diligence includes an outside sales force. This is because these types of sales require committee buy in and the product demonstration often involves the use of live data and/or actual environment. This is particularly true if the selling company is one of the majority of businesses that has not spent billions of dollars over a very long period of time building a brand that includes famous golfers wearing hats with their logos on TV. Albeit, much of the reason the outside sales force is needed is emotional. So if we can figure out a way to sell something without involving the customer's emotion we can eliminate the sale force altogether - I can think of a few CEOs that would like this idea:)

Seems like most respondents are in the IT business. I am a scientist who has been selling scientific instrumentation to researchers for 30 years. I started out as an inside sales rep covering most of the western US, phone selling consumables and low cost instruments. The instruments were commodities, and the consumables could be trialed, and did not require a demo. I did go in the field once, and it helped sales. I then transitioned into a field rep. The personal touch helps in a commodity business, especially when it has technical aspects. Nowadays, the web is a valuable selling tool. I have found webinars extremely useful, especially to go over results of customer samples run in house. Complex instruments can be started over the web and followed up by phone, but they frequently require an in lab demo.
The Metrics on inside vs. field sales may look great to a CFO, but ultimately the question is how many sales did you close at what volume and what margin. Field sales can be expensive, but balanced with webinars and the phone it can be very cost effective for complex products.

Hi Matt,

Will we ever buy a car without going to a dealership and/or somehow experience an in-person test drive, even though we're able to do research from features to price online?

I don't belie e inside sales will totally replace field sales any time soon, because not all products are simple enough to be sold via the "self-serve" model. Buyers, be it businesses or consumers, as in the case of cars, are not quite willing to forego the "in person" buying experience totally.

Effective inside sales people using conference meeting technologies can do a lot. But until humans are willing to foregot the "let's meet in person and show me exactly how the widget will work in my environment" need, we will continue to need field sales at least for certain product types/businesses.

There are so many great answers here and I wish I would have read them all before rushing to reply. Barry Schaeffer makes a great point about buyers who are seeking a longstanding relationship. The switching costs for many products and solutions are way too high to risk doing business without the development of an in person relationship with each and every stakeholder. Imagine the purchasing relationships you have where upgrades, parts, support and service are crucial to business continuity.

I was also speaking with someone recently on a similar topic where we used Nancy Chou's car buying example. There are a couple of automotive brands I love and always buy. Even with all my trust in those two brands I still feel compelled to do the test drive. Again, I know most of this emotional, but I cannot imagine buying a car sight unseen only to discover there is some small nuance that just drives me crazy and ruins the entire experience - I might do this for a desktop printer, that I can give away, but I am not ready to do this with a car that I plan to drive for at least two years.

Inside Sales has always played an important part of sales but has gained a lot of ground lately in the technology industry. As self service portals continue to make decisions easier and pricing models become more utility and consumption based, inside sales will have the advantage of online chat, mobile apps and contracting vehicles that have already been vetted. RFP's have become costly and cumbersome. Customers have a wealth of information at a click of the mouse. The outside sales rep is usually not as well informed with trends, competition and product knowledge as the internet or the ability to ask a question on line, quick research and respond. The outside sales rep will sit in the meeting and say I know that answer is available, let me find it and get back to you. The efficiency and speed of information is not to the outside sales rep.

But let's never forget the value of personal relationships. The type of buyer and age of the buyer may be more important than ever for the outside sales rep to know. They say you should prepare 3hr for every hour of the meeting. This has always included profiling the buyer and WIFM.

Both will exist and continue and after 40 years it is interesting to always watch when the pendulum swings back the other way

Great question: I apologize if all my response is primarily a recapitulation of the previous. I think Michael first mentioned what I refer to as a resource allocation strategy/concept as he details the idea surrounding Cost-to-contact. While at HBD during the '90's we identified the cost per contact from email up through phone call, snail mail, catalogue, special event, to face-to-face. I had a large chemical company client, with a cost-to-contact for their Blue Suited salesforce of $1600 per visit. Given the need to optimize the market-coverage model, isn't it really impossible not to incorporate more phone into the process? Now call centers as they grow up and become customer management centers face a human fulfillment as well as a customer experience fulfillment strategy. This, for me, is where the issues become most complex. Sadly, there is not the same quality of life for an inside customer management center person, tethered to a phone, as there is for those of us who still get to make those face to face visits. Profits , thus, have taken the place of job fulfillment for some firms. It is one of the reasons why the 99 are upset - but I digress too politically for some I am sure. best, ngp

Several organizations with whom I've worked user a "tiered" approach, where ISRs do the first-blush qualifying, and following up on leads. In some cases they have closed small deals, but anything substantial usually required a follow-up in-person with a Sales Rep / SE team. This is probably a reasonable model. In many cases, the Inside Reps have the bandwidth (because they are not traveling) to do configuration and licensing models. I have had good experiences with Inside Systems Engineers, some of whom had physical disabilities (and others who flat-out lacked social skills) but were able to do "detail work" that field personnel tend to want to avoid. This approach DOES increase job satisfaction for all parties, and eliminates higher-salaried resources from going on "fishing expeditions" to "tire kickers."

Not with the immature direct sales calls I've received lately.

@Stephen, that response is "interesting"!
Several things might be at play; let me suggest you entertain 2:
1. poor, less than idealized, selection of personnel, complemented by less than ideal coaching, training, metrics, and purpose / mission
and
2. poor purpose or definition for the role of those calling out
- a possible subset of this is not explaining it to customers and not aligning it according to proven principles of targeting/segmentation/ & grading
Let me explain:
Simplistically, Customer Management Centers (fka, call centers) can serve a number of function, e.g.,:
in-bound customer service
in-bound customer complaint resolution
planned outbound
integrated account management
account management (with no field force)
and some variations :
Often these varied, various and best-separated functions are all handled - for the sake of economy - by the person rather then appropriately shared;
The other part that I still see (and in some instances believe it has worsened with the current economic depression) is that all too many employers try to find short-cuts to creating an ideal force of individuals in their Call Centers
- they see them as interchangeable bolts in an assembly.
Planfulness in this
skimping in the investment into this force is just the same as skimping in the sales force that shows up in a suit and tie.
I hope that makes some sense. best, ngp

Many fine comments already, especially those focusing on the economic issues.
I assume you are referring to B2B sales. As you know, there are many sales channels that use what could be called inside sales for example, clothing stores, auto dealerships, phone company stores, computer/electronic stores, etc. In each case the customers come to the inside sales person for demonstrations, test drives, fittings, etc. But in most B2B sales organizations, "inside sales" seems to refer more correctly to sales personnel who connect to the customer remotely by telephone, email, webinars, virtual meetings, etc. Today, many of the things that previously required an in-person visit to the customer's site can be accomplished by a virtual presence. Most equipment can now be demonstrated - and even operated by the prospect - using remote connections via the Internet; multimedia presentations can be made using Virtual Classroom technology; and the sales rep and customer personnel can interact both visually and audibly in virtual meetings. So one must examine to need for sales reps to always travel to the customer sites.
However, given human nature, it is likely that a physical human presence will always win over a virtual presence when other things are equal. So if the sale is important, a local field rep can be the difference between success and failure.

I have a different take on why this trend is happening to the reasons set out in your blog. I would agree that many companies are finding that inside sales produces a better ROI than field, however, underlying that improvement is a change in the way companies are marketing online.

In the last decade the internet has driven some seismic shifts in buyer behaviour which have driven corresponding changes in marketing focus. It is now generally understood that the first thing an interested buyers is going to do is google you, your competition, and other sites which carry relevant content. It has become a crucial marketing challenge to get buyers onto your website where you have the best chance of influencing them before they are ready to speak to a sales person. Once you've got them onto your website, you need to keep them there, and get them to tell you who they are. This is achieved through content - the huge array of case studies, white papers, sponsored analyst reports, demonstrations and other content that vendors have made such massive investments in. Prospects downloading content are required to register, to part with their contact data - name, telephone number, email address, company type etc: Content downloads create sales opportunties by introducing new prospects for the inside rep to talk to - without this constant stream of new potential customers, inside sales would have to go back to cold calling and wouldn't be nearly as effective.

I think it is really dependent on the product/service one is selling as well as the markets it is being sold to. I recently did a consultancy for a company that totally relied on inside sales and found they were missing out on a huge prospect opportunity to sell their product more effectively. In the case where there is a centralised procurement department for an entire group there needs to be a sales presentation deeveloped for the benefits of the product/service as well as a personal relationship to ensure sales occur. Phone calls can't do this. It's about balance!