Hiring for Inside Sales vs Co-sourcing

When a leader has made the decision to add inside sales resources, there’s an adrenaline factor.  The pent-up demand in the market that is about to bust out.  The flood gates are going to open and your rainmakers (closers, best salespeople) are going to be drowning in buyers.

Then someone in the process has to translate that to an execution plan. Buhm Buhm Buuhhhhhhm.  This post is designed to be a pre-think teaser to a critical point in the plan, internal vs. co-sourced inside sales resources.

Things people usually consider:

• Pricing of outsourced work
• Partial cost of hiring internally
  • Recruiting cost
  • Training cost
• Ease or difficulty of training – most people don’t know exactly how easy or difficult it would be to bring on either an internal or co-sourced inside sales person, but most people also ask. Typically, it depends on the situation but is not as costly or difficult as expectations before asking.
• Outcomes – usually executives have an idea of the math they are looking to drive, framed in the size of the CRM database or purchased lists, additional revenue, leads, meetings, etc.
• Scope – how big are you looking to go? What do you want to accomplish?  What tools, channels, approaches are you wishing or willing to try?  Are you looking for immediate results?  What information or intelligence can be gathered with an effectively designed contact strategy?  How integrated will your closer need to be?

Things usually not considered:

• Full cost of hiring internally
  • Recruiting and training time – time spent by key individuals
  • Ramp-up time – how long will it take you and your key sales person to coach/develop/push this person to top effectiveness (when that cannot be your only focus)
• Average tenure of inside sales hires (recurring recruiting/training/ramp costs)
  • These are typically high-energy go-getters. This role is susceptible to factors like high career ambition, compensation sensitivity, and in some cases boredom.  It is hard to hire and retain these candidates long term for many companies… especially if they are good.
• Fixed cost of an internal hire
  • Can be a positive, if you have other administrative or appropriate skill-level work to share with them (and they are willing/enjoy doing it). Inflexibility of workload or skills can lead to underutilized overhead.
• Scalability – volume
  • Goes somewhat with flexibility, but on a grander scale. You will have periods where you are scrambling to keep them busy like holiday weeks when no one is in the office.  You will also have periods where you wish you had three of them, like the couple weeks before a trade show or conference.
• Scalability – focus
  • Executives tend to initiate the conversation around a specific activity, group of leads, etc. As they learn and innovate around the possibility of additional inside sales resources, things like alternate channels, new markets, unique content, A-B testing on communications, market research paths, etc. are exciting possibilities with potentially big rewards.
• Cultural fit/core competency
  • When you define what you’re looking for in an ideal candidate, how well does this align with your current culture, the individuals or team they will be working with closely, etc. Is your culture going to naturally attract/develop/retain a top inside sales person, or will this take special focus and attention from you or other critical leaders in the business.
• Communication – from your sales person
  • You may end up with an inside sales employee, dedicated outsourced inside sales agent, or outsourced team of reps. Your salesman’s ability to provide information to that person or people will have a direct impact on their ability to achieve what you’re looking for.  If they are waiting for information, script change approval, responses to interested parties, availability for meetings, etc. you will lose critical time in the sales process and possibly leads and eventual revenue.
• Communication – to your sales person
  • That same potential individual or team should gather TONS of information that will be critical to immediate results, as well as potential market intelligence that could feed into marketing, product development, and even operations. What are the expectations for that communication?  How often and to what depth are these things shared vs recorded vs analyzed for trends/themes?

Please reach out with other questions that you either have asked, have thought of asking, or popped into your head while you were reading this post.  I’ll be posting at least ‘Volume II’ version of this to help people go even deeper into their decision making process, and your comments will help encourage my writing energy, as well as shape the content of future posts.

Get your rising-star sales person their batting practice

Picture your short-tenured, high-potential sales person working on a close.  He’s at the critical end of a challenging sales process with a big prospect.  This prospect has great strategic value and a revenue potential to match.  Now listen to your stomach.  Are you nervous that your experienced closer isn’t having that conversation?  Or are you excited at the opportunity the new guy is getting at this moment?  Yes, you obviously want to win the business, but if you’re not also thinking about the value of the experience for their development, win or lose, then this post is dedicated to you… and your education on why those big at-bats are absolutely critical to their future success.

There is no substitute for game-time. 

I tend to lean heavily on sports analogies, but this one runs so true it’s unavoidable.  Training, parallel experience, shadowing, role-playing, scripting, etc. can get you comfortable with the content and the mechanics.  Providing your future rainmaker with the situations to be able to sharpen their self-awareness, listening skills, self-control, etc. will yield a difference in your revenue and margins more than any other development path.

What to listen for?

Typical sales training focuses on providing the sales person with all the answers.  Unfortunately, almost every market is seeing a more informed buyer before they even talk to your sales person.  Filling the salesman’s head with great answers is becoming a more dangerous tactic every day.  If their approach is focused on pitching and selling, they are inherently going to make assumptions about the buyer’s situation that risks turning them off or discrediting the salesman as a knowledgeable resource.  Worst case, the prospect gets bored hearing information they’ve already gathered or irrelevant content.  Listening will be the key to their ability to first build credibility and then offer a solution.

How to ask the right questions?

There is no better way for to build credibility than to ask great questions at the critical points in the sales process.  It can show that you know your business and theirs, and can offer valuable insight.  There is no better feedback and memory burner than a distinctive “That’s a really great question”… or on the developmental side, “of course, but that question’s not relevant to this conversation”.

How to respond to the difficult questions?

Some buyers still feel they need to “qualify” the person their buying from.  It may be a deep technical question, or something important from the industry, but some buyers will play “stump the chump” to see if this sales person is worth their time.  The answer is typically not as important as how it’s handled.  The stress management and confidence, combined with training content, are difficult to put together in the moment without practice.

How to ask the difficult questions?  When to push the prospect?

Repetition is the mother of skill.  Asking the difficult questions of a prospect is inherently counter-intuitive to young sales people.  It causes them and the prospect stress, so everything in their being is telling them not to push.  But pushing at the appropriate time can be a huge multiplier in the speed of the sales process and also the level of understanding and relationship with the decision-maker.  I don’t have to tell you what pushing with the wrong difficult question at the wrong time can yield.

If your rising star doesn’t get the opportunity to hone all of those skills, you’re leaving future money on the table.  You’re also likely to lose them pretty soon - future all-stars don’t stay on the bench long.

Keeping your All-Star Closer on the Mound

This installment seems pretty intuitive at the surface, so stick with me as I go a little deeper on the concept of why taking less value-adding activities away from your rainmakers makes sense.  Also, we’ll spend a little time on the collateral benefits to the organization of freeing up your best closers’ time.

There are essentially two paths where this initiative can go once things start moving and your rainmakers have more time:

1. More energy with/on current volume of prospects
2. Same energy with more prospects

Most likely, the end result will be a combination of the two, but it’s important to be purposeful about which way you intend to lean.  Here are some simple considerations to help determine which way to tip:

Potential drivers for (A) – spending more/deeper energy on the current volume of prospects

• You have a very tight market with limited prospects
• A strategy that involves a limited number of key whales
• The ability to go bigger on the initial solution or sale would have more than an incremental benefit to the bottom line
• New product launch (requiring depth of talent and solution)

Potential drivers for (B) – Similar sales process with more prospects

• New market vertical investigation or launch
• New product launch

Talking through the impact of either of these with the sales team can yield great conversations about opportunities and the expectations that come with it.  If you’re going to invest in freeing up their time, you as the leader have a responsibility in situation (A) to set clear goals and expectations for either an increased close ratio at the stages of the funnel that they will be spending their time in, or hold those ratios steady and speed up the sales cycle.  In situation (B), the message to the sales person is a straight numbers game; just keep doing the same good work, we’re just going to have you do more of it.  Your responsibility as the leader in situation (B) is just to make sure that they have the resources and horsepower to keep their calendar full.

In case the idea of having more revenue and customers dropping out of the funnel isn’t enticing enough, here are a few other thoughts to get you revved up or to woo your sales manager down this path:

• Sales people, just like everyone else in the organization, perform better and stay longer when they spend their time doing what they enjoy and are good at.
• Use some of the freed up time to engage them in continuous improvement.
  • The sales team is typically one of the last to get involved in continuous improvement for a number of reasons. Requiring some of this time to be reinvested in the business can draw them closer to operations, admin, etc. and be an emotional boost for everyone.
  • Have them work on documenting or developing processes will lead to knowledge transfer, scalability, and business continuity down the road.
• You’ve eliminated one of the biggest excuses for CRM usage and accountability. If they aren’t using the CRM exactly how you need them to, here’s an inflection point to clear that up.

Sales is about getting your hitters their at-bats

Hopefully your sales team is made up of one of two types of people, or both:

1. a) experienced closers
2. b) young guns that are quickly on their way to being closers

If you have lingering mediocrity in your sales team, or even worse, you don’t have one or aren’t sure, let me know and I can point you to some great books or consultants to help you get the right people on your sales bus. 

This piece is about execution and results, so we will assume you have already scouted and selected your team. We’re going to talk about a critical step yielding the sales growth you’re after.

I consistently hear other executives, clients, prospects, etc. reiterate what local and national surveys tout as the number one objective of business this year (and last year, and the year before): sales growth.  We’re always looking to grow the top line, add new customers, scale up.

But when you talk to the Salesman or Saleswoman, not the VP or Sales manager, one of the things that rarely gets the attention that it deserves is the time they are spending not selling.  I’m not talking about internal meetings and emails, travel time, and admin; that gets plenty of attention from lean experts.  I’m talking about all of the activities in the sales process that aren’t actually closing the work.  Early in the sales funnel, there are a lot of activities that are important, but are NOT CLOSING.  They frequently get lumped in with selling, and therefore taking up the time of your best sales people unnecessarily!

Early funnel activities that ARE NOT SELLING:

• List building, purchase
• Data cleanse
• Point-of-contact validation
• Contact info gathering, validation
• Introduction, information sharing
• Content delivery
• Initial investigation, opportunity identification
• Follow-up, lead nurturing
• Appointment setting or warm-transfer

Where my last post focused on the overall sales management process, the next 3 posts will focus on the benefits of taking a close look at these early funnel activities and the chunk of time that your sales people spend doing them, as well as some of the pitfalls of (excuses to) not looking at a different way to go about driving early funnel activities.

For now, focus your mind’s eye on the end-game.  Resist the urge to come up with all the execution detail or things that would be challenging.  Picture what your top-line could look like one year from now if 20-75% of your best sales person’s time was freed up to close more sales.  For your product and organization, does that lead to a faster sales cycle?  Does that lead to a better close ratio in the final stages of the funnel?  Does that lead to faster development of your best and brightest? 

Ultimately, all of these things are consistent with everyone’s end-game: more and bigger closes.

Inside Sales, science feeding art

There is absolutely an aspect of art in the execution of a successful sales process.  But there is also absolutely a needed aspect of science to sales in order for your business to be as successful as it should be. 

This post, and a series of posts to follow, are intended to be at least thought-provoking, if not instructional, on how to approach your own sales funnel and client acquisition planning.  In later posts, I will share thoughts and processes on how to make decisions on execution plans related specifically to inside sales activity and early-funnel movement.

Inside Sales Math

The analogy of the funnel has leads flowing from top to bottom, becoming prospects, opportunities, and eventually clients.  However, we’re going to build the sales plan from the bottom of the funnel upwards.  Pre-work to this planning exercise lies in your business plan and growth goals for the company.  The two initial inputs to the process are the revenue target and the number of opportunities closed.  Most leaders start with the revenue target, based on where they want the organization to be 1-2 years from now, and then calculate the number of closes based on a desired or historical average revenue per opportunity closed.  The figure below shows the inputs, as well as an example to help illustrate.

From here, we work our way up the funnel.  Each ratio should be filled in with either historical ratios if known, or realistic estimations/goals.  The mathematical stack-up of these ratios can cause significant issues if you don’t use precise and realistic ratios.  The only other inputs that need to be determined are at the convergence point at the top of the funnel.  Strategically estimating or targeting what percentage of initial conversations come from each channel allow us to move even further back in the sales process.

Here’s an example:

Now that you’ve worked your way to the top, take a step back and look at a couple of potentially interesting interpretation points.  Hopefully these will lead to a few very clear action items as well:

Number of closes, proposals, meetings

• Mentally divide each of these numbers by 50, and you will get an idea of how many closes/proposals/meetings per week you should be seeing from your sales team.
  • Are these numbers reflective of recent activity?
  • Do you have the depth and quantity of talent to handle these activities? Who can execute each of these late steps in the process?
• Where is there opportunity to increase the ratios in these steps? The closer you are to the bottom of the funnel, improvement of the ratio has a very linear impact on the final outcomes, as well as the cost to make that improvement.

Upper Branches of the funnel

• Do you have the tools in place to generate that many interactive leads?
• Do you have the partners/network to generate that many referrals?
• Do you have the tools, talent, raw material to generate the leads? What is your biggest challenge, the size of the potential lead universe, the qualification process, or the quality of the leads?

As you’ve probably noticed, the bottom of the funnel is highly dependent on the capacity and skills of a few critical sales people or executives.  Alternatively, the early-funnel activity at the top is driven more by statistics and processes.  In most businesses, referrals have the highest conversion ratio, but require costly resources and can be difficult to generate, more similar to the “artistry” that the closers are employing at the bottom of the funnel.  Inversely, lead generation can be done very effectively with internal or co-sourced capacity at very reasonable costs and can have great impact on the number of touches and awareness in the marketplace, but the conversion ratios are much lower. 

The artistry that is driving the big, exciting close at the bottom of the funnel is fueled by the science at the top of the funnel. 

As you’ll consistently hear from me in posts, I’d love to hear where you went with these thoughts.  What additional questions came to mind? What innovative thoughts were spurred? And what holes did I leave?