Value of Inside Sales Reps in the Presence of Outside Sales Rep in Business-To-Business Selling

U.S. firms are expanding inside sales (IS) roles 15 times faster than the comparable growth for outside sales (OS) reps. IS reps are now integral to sales forces–constituting 43.5% of the B2B sales force–and large firms often use teams that combine IS and OS reps to serve customers.

IS reps work remotely while identifying and nurturing clients, and rely on phone calls, voicemails, and e-mails to turn leads into new customers. IS reps are expected to ‘cold call’ organizations to seek out clients, as well as assist new customers who wish to learn about the company’s products. An OS, on the other hand, is responsible for meeting customers in person and offering explanations and hands-on demonstrations for the products being sold.

Some B2B firms pair up IS and OS reps so that customers benefit from the selling power of both channels. An IS rep coordinates internal teams to deliver price and product specification information to the customer while an OS rep engages the customer through field visits and negotiations, all the way till the deal is closed.

In cases where both IS and OS reps contribute to customer sales two main challenges arise for Chief Sales Officers:

1. Since IS reps do not independently close deals, sales managers struggle to gauge their input in increasing customer sales. To assess the IS rep’s value, through which companies can evaluate performance and set compensation, sales managers need to quantify their contribution to the financial performance of the IS–OS combination.
2. Sales managers look to understand how well an IS rep coordinates with an OS rep to serve a customer. By examining factors specific to IS–OS teams managers can utilize IS reps for greater financial gain.

A working paper helps Chief Sales Officers develop an approach to reliably quantify the incremental effects of an IS rep for generating customer sales in team selling situations. The methodology utilizes data on customer sales history for each salesperson in a specific division or company. For the purposes of illustration, pick one IS-OS combination and determine how the OS rep is performing relative to other OS reps in the division or company. Then gauge how the IS performs when working with the OS reps. These two findings help in developing a baseline for working out how much an IS rep contributes to the IS-OS combination. This in turn allows for a comparison of performance between the IS reps across the division or company.

As per the results, the company under focus saw a sales increase potential of $102 million when IS and OS reps in the same reference group were optimally assigned. Additionally, IS– OS teams with more common product selling experience or more intensive shared customer selling experience generated more sales from the customer.

This study provided three insights that Chief Officers can put into practice:

1. By quantifying the incremental financial impact generated by an IS rep in an IS–OS– customer interface, CSOs do not have to use subjective judgments and guesses to quantify the impact of IS reps.
2. When IS-OS reps develop a deep relationship, and sell the same product lines together extensively, the IS rep becomes a more financially viable partner for an OS rep and the company.
3. When IS and OS reps depart, sales executives can proactively engineer IS–OS teams based on predicted team performance, and thereby grow sales
   revenues.

For researchers, this is the first study that shows that the heterogeneity in sales and profits accounted for by IS reps may help the firm make better training decisions.

Using this approach researchers who are focused on intrafirm coordination might develop new theories inductively.