Inside and outbound
Many distribution companies not only want their inside sales staffs to perform the traditional customer service functions of inside sales, they want these same people to make outbound telesales calls. However, this may not be the best way to use inside sales personnel, says Peg Fisher, president of Peg Fisher & Associates, a Racine, Wis.-based sales and customer-service consulting firm.
"Outbound sales are not the same as inside sales," she says. "A separate outbound sales force would be more productive."
Because of the overwhelming number of incoming calls handled by inside sales, many calls are production-driven rather than sales-driven, Fisher explains. In a production- driven setting, inside sales personnel are encouraged to handle customers' inquiries as quickly as possible. The quantity of customers served takes precedence over the duration or quality of each call. These sales reps do not have the time to perform tasks such as suggestive selling. Suggestive selling techniques include adding on items that "go with" the customer's purchase, substituting an item for one that is out of stock and recommending a higher quality product.
In a sales-driven model, the objective is to make sure that all of the customer's product and service needs are met in one phone call. The model allows inside sales personnel to take the time with each customer in order to increase the sale by asking questions and documenting the responses.
Management needs to examine the company's existing sales structure and develop methods to measure productivity levels for departments and individuals, Fisher notes. This may mean re-evaluating the sales staff and their responsibilities or adding to the department. Allocating the proper resources to the right types of customers should be the main objective.
"The selected sales strategies for a business should be customer-focused, not internally focused," she explains. "When managers are motivated by the wrong reasons, such as quantity vs. quality of sales coverage, they do a disservice to their company; to their field reps, who cannot cover all the accounts assigned to them; and to the customers, who get no sales contact."
Further analysis suggests that field or outside sales only cover 8% to 12% of a wholesaler's total existing customer base comprised of key and target accounts. Key accounts are large existing customers. They represent 80% or more of a firm's sales volume. Target accounts are strong prospects who buy from a competitor but whose business outside salespeople actively pursue.
That leaves about 88% to 92% of the account base with little or no sales coverage; the only personal contact they have with the company is if they call for information. This group is comprised of smaller users, house accounts, prospects who call the wholesaler and accounts assigned to outside sales that do not get contacted because of lack of sales time.
A tremendous opportunity to increase wholesalers' sales volume is being lost because the inside sales staff is occupied with handling inbound calls from customers, Fisher says. In many instances it may be more cost-effective to transfer phone sales from inside sales reps to a sales staff dedicated to making outbound calls.
Outbound and dedicatedPeirce-Phelps, a Philadelphia-based HVAC distributor, was wrestling with this problem of capturing more of its market when, in 1995, it set up a dedicated sales force to make outbound sales calls.
"The little guys were being left at the wayside," said Michele Ippoliti, inside sales supervisor at Peirce-Phelps. "There were all of these mom-and-pop operations out there, and the field salespeople only had enough time to see the big dealers."
She says many of these smaller contractor operations do not need an outside salesperson to call on them; they just need a first contact to familiarize themselves with the company and get an order placed.
Ippoliti's group started with three people with the goal of increasing residential sales for the company. However, despite this focus on new residential accounts and equipment sales, the group has also uncovered a tremendous amount of lucrative commercial work. The staff now numbers six and has increased sales 38% to 50% every year for the last three years.
In this, its fourth year, the group has shown a 28% sales increase so far and is on target to meet its year-end goal of $6.7 million.
Each member of the team goes through three months of training, including extensive product training, so that the customers receive the most complete information about the firm's products and services.
Setting up the group was not easy. Ippoliti says there was a high turnover rate at first.
"It was difficult for some to learn all the products and deal with all the different personalities encountered on the phone," she explains. "But now I have a solid staff. It takes about three years to work out all the kinks and really feel solid."
Ippoliti and her staff work closely with the inside and outside sales forces. Contact notes are entered into a database program, which is updated daily. In addition, while the telesales group primarily calls on active and prospective new customers, it also tries to get former customers to return to the firm.
"We try to determine what more we can do for that former customer to get him to come back to us," she says. "I tell my people that we're here to establish relationships."
Outside sales gets a boost from the telesales group by way of new residential leads passed on to them. Once a month, each telesales team member goes on the road with an outside salesperson to better understand the industry and the company's customers.
Not all distributors think outbound telesales is a good idea. Bruce Hoch, director/sales and marketing for Lebanon, Pa.-based APR Supply, does not think such a sales force has merit. He says the smaller contractors do not want to be bothered with phone calls and typically spend more time on the job than in the office.
"It took a while in the beginning for the smaller HVAC contractors to take the time and listen to us," Ippoliti admits. "Some either didn't want to talk to us at all, were too busy or already had a strong relationship with a distributor. But to be successful at this, you have to prove you have something of value to offer them.
"You can't hard-sell these guys; you have to let them know that the services this company offers will benefit their businesses. The smaller dealers love to work with us now. They know they'll always be able to talk to a person, even if they're calling from the jobsite."
To further spread the Peirce-Phelps message, Ippoliti's group sends out monthly direct-mail pieces. Even if a contractor is too busy to receive phone calls and wants off the call list, his name remains on the mailing list.
"It's a good way to keep our name in front of them," she says. "If they start to have problems with their regular distributors, they'll remember that piece of mail and call us."
Peg Fisher says that outbound sales personnel can actively manage 250 or more accounts compared with 50 or fewer actively managed by those in field sales. Outbound salespeople introduce more new products faster; meet customer demands for timely, accurate information through autofax, e-mail, the Internet and the telephone; and automatically build market intelligence data.
According to an informal survey by the Northamerican Heating, Refrigeration and Airconditioning Wholesalers Association, members report that only 6% of their sales forces are involved in outbound telephone sales exclusively, while 53% are in inside sales and 41% in outside sales (see chart on page 76). Of those involved in inside sales, 61% make outbound sales calls in addition to answering inbound calls; many of these are assigned a certain number of calls per day or per week.
Of members responding, 59% plan to increase their emphasis on telephone sales by hiring telemarketers, developing training programs or working with outside telemarketing specialists. Many plan to recruit telesales staff from existing personnel such as inside or counter salespeople.
"When properly defined and supported," Fisher says, "sales volume and profit contributions from outbound telephone sales staff can equal or exceed field sales at less cost to the business."