Telemarketing/Inside Sales Performance Optimization TISPO... · 2010 Telemarketing/Inside Sales Performance Optimization ... Adoption of CRM is at a record high: Telemarketing/inside

2010 Telemarketing/Inside Sales Performance Optimization—Key Trends Analysis

Telemarketing/Inside Sales

Performance Optimization:

2010 Key Trends Analysis

Jim Dickie ♦ Barry Trailer

CSO Insights CSO Insights

Boulder, CO Corte Madera, CA

Compliments of:


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Table of Contents

2010 Telemarketing/Inside Sales Performance Optimization Study Overview........... 1

2010 Telemarketing/Inside Sales Performance Optimization Introduction ................. 2

Percentage of Telemarketing/Inside Sales Reps Achieving Quota ........................... 10

Targeted Compensation for Telemarketing/Inside Sales Reps .................................. 11

Annual Telemarketing/Inside Sales Rep Turnover Rates ........................................... 13

Planned Sales Force Change Over Next 12 Months .................................................... 15

Average Number of Calls to Close a Deal .................................................................... 16

Lead Generation Analysis .............................................................................................. 18

Average Sell Cycle Length ............................................................................................. 20

Percentage of Leads Resulting in an Initial Discussion ............................................. 21

CRM Adoption Rates by Telemarketing/Inside Sales Reps ........................................ 23

Sales Methodology Adoption Rates by Telemarketing/Inside Sales Reps ............... 25

Ways Internet Supports Telemarketing/Inside Sales Efforts...................................... 26

Going Forward Recommendations ............................................................................... 28


© CSO Insights 1 No portion of this report may be reproduced or distributed in any form or by any means without the prior written permission of the authors.

2010 Telemarketing/Inside Sales Performance Optimization Study Overview

This report presents what we view as the top ten Telemarketing/Inside Sales metrics, either because of their change in size over the past two years, the discrepancy between telemarketing/inside sales and field sales, or changes we feel are trending in an important direction. In the following pages you will see that: Quota attainment is down: 53% of telemarketing/inside sales reps met or exceeded their quota

last year; this is up one point from two years ago, but down four full points from one year ago. Target compensation also appears down: In recognition of the challenging economic and

business environment, quotas overall were adjusted down 7%; however, targeted total compensation at plan was down 11.6%.

Turnover is down: Turnover is down one point from a year ago and seven full points from two

years ago. For the first time, involuntary turnover was ahead of voluntary departures. Hiring will be up—way up: Prior years’ downsizings combined with a strengthening business

outlook have firms looking to hire again. One in seven firms plans to increase telemarketing/inside sales reps by more than 20%.

Number of calls to close deals is up: 63% of sales close with 3-9 calls, down from 72% a year

earlier; only 1% went to 1-2 calls to close, the other 8% went to >9 calls to close. Telemarketing/inside sales playing nicer with marketing: Telemarketing/inside sales has a

lower percentage of self-generated leads and is generally happier (than field sales) with the quantity/quality of leads provided by marketing.

Some sales cycles are shorter: Those buyers ready to buy are pulling the trigger faster. Cycles

less than one month are up 6% but those taking longer than ten months are also up 6%. Sales results are lower: Increase in percentage of qualifying leads resulting in an initial

meeting/discussion were up, but all conversion rates following (e.g., first meeting to presentation, presentation to sale) were down.

Adoption of CRM is at a record high: Telemarketing/inside sales is well ahead of field sales in

consistent use (>90%) of CRM. Benefits of implementing CRM are similarly led by improved forecast accuracy.

Process adherence is high: Perhaps because they’re in a more controlled and/or easily monitored setting, telemarketing/inside sales reps score higher in consistent use of/adherence to their company’s adopted sales process.

Inside sales leads Internet usage: Another area where telemarketing/inside sales is leading the charge is leveraging the Internet, particularly in the area of collaboration with prospects and customers.

The following pages describe the overall survey details, present charts, key findings, and observations on these top ten trends, including the Going Forward Recommendations. Survey respondents also received metric charts on all 97 metrics. Non-survey participants interested in these charts should go to: www.csoinsights.com/sales-research-data.

http://www.csoinsights.com/sales-research-data



2010 Telemarketing/Inside Sales Performance Optimization Study Introduction

This report continues to evolve from our first effort in 2007. We introduced a broadened format in our 2009 report, and in this year’s report we present key trends. Given the high level of overlap in questions

with our Sales Performance Optimization (SPO) study, we provided an early question in that survey that

enabled respondents to select Telemarketing/Inside Sales, Field Sales, or Overall Sales Organization as their perspective in answering the survey. This report is derived from those who identified themselves as responsible for Telemarketing/Inside Sales. To solicit sales executive participation for this study, in addition to our own invitations of past survey takers and others, we again partnered with Trish Bertuzzi of The Bridge Group in the eastern U.S., and Anneke Seley of PhoneWorks in the west. The survey was also promoted by CustomerThink, Selling Power magazine and others. In all, we invited professionals directly involved in the management of their organizations’ inside sales teams to give us feedback on 100+ unique sales performance metrics. Looking at the profiles of the firms taking part in this study, we attracted broad participation from manufacturing firms (including software and hardware). Figure 1, which profiles industry sector segmentation at the highest level, shows that we also have reasonable representation of services and some participation by other (including retail, government, non-profits, education, distribution, etc.).

Figure 1

As software firms increasingly shift to the Software as a Service (SaaS) model, it may be argued that they are more service than manufacturing concerns, but we still view their deliverables as products rather than personnel. Since software companies are well represented in our survey population—a reflection of them being early proponents of telemarketing/inside sales—re-categorizing them would essentially flip manufacturing and services in Figure 1. Size of responding firms can be broken down by two metrics: company revenues and the number of telemarketing/inside salespeople employed. In Figure 2, you see the breakdown of participants by

Manufacturing50.4%

Services38.7%

Other10.9%

Vertical Industry Make-up of Participants

http://www.csoinsights.com/Publications/Shop/Sales-Performance-Optimization



revenues into what we consider small businesses (under $50M), medium-sized firms ($50M to $1B), and large enterprises (>$1B). The percentage of large enterprise firms responding this year was up five full points.

In Figure 3, we see the breakdown of study participation based on the second size metric: number of telemarketing/inside sales reps currently employed. The number of firms with more than 250 inside sales reps doubled in the past two years from 6% in 2008 to 12% this year.

Figure 3

<10M39.6%

$10M - $50M20.9%

$51M - $250M12.9%

$251M - $1B9.3%

>$1B17.3%

Revenue Breakdown of Participants

<25 Reps57.3%

25 - 50 Reps12.9%

51 - 250 Reps16.0%

251 - 500 Reps4.4%

501 - 1,500 Reps3.6%

>1,500 Reps5.8%

Sales Rep Breakdown of Participants

Figure 2



As in the past, we used a web-based survey approach for this research project to collect the data from participating firms. Prior participants and other candidates invited to take part in this study were initially pre-screened based on their job function. These executives were then e-mailed an invitation to take part in the study. Those who accepted were directed to a website where they could take the on-line survey. We also provided a direct link to the survey from our website, www.csoinsights.com. The survey instrument was designed to take up to 30 minutes to complete. Participants had the option of signing off from the site, returning, and continuing where they left off if they needed to get more information or had a time constraint. Survey questions focused on sales performance metrics relative to ten key areas: Sales Force Demographics: Metrics on sales force make-up, quotas, compensation, ramp-up

times, time allocation, etc.

Sell Cycle Analysis: Metrics on sales effectiveness at various stages in the sales process and forecasting.

Sales Force Hiring and Retention Analysis: Metrics on how companies are interviewing, hiring, and retaining salespeople.

Sales Performance Assessment: Metrics on the performance of specific sales and service tasks, as well as communication between teams and across the enterprise.

Change in the Marketplace Assessment: Metrics on the types of changes salespeople are being asked to cope with and the ability of their companies to support them in doing so.

Sales Methodology Assessment: Metrics on the role sales process is playing in helping to improve sales rep effectiveness.

CRM Assessment: Metrics on the role CRM technology is playing in helping to improve sales rep effectiveness including new CRM 2.0 applications.

Sales Knowledge Management: Metrics on the types of information sales reps need to sell effectively, and if/how that knowledge is being shared across the sales force.

Sales and Marketing Alignment: Metrics on how effectively sales and marketing are seeing

their organizations working together.

Sales Uses of the Internet: Snapshot of which on-line uses of the Internet are in most common usage by today’s sales organizations.

In the summary section of our 2007 Sales Performance Optimization (SPO) report, we introduced the concept of the Sales Relationship/Process (SRP) Matrix, seen in Figure 4. After several years of writing about levels of relationship and levels of process implementation, we postulated that cross-indexing these two scales might offer interesting insights. In our 2008 SPO report, we observed that firms that adopted more process rigor and increased their level of relationships with customers achieved better performance results than their lower level counterparts. In this report we make repeated references to this matrix, represented in Figure 4, and its levels: Vendor through Partner on the relationship axis and Levels 1-4 on the process axis. Given the liberal use of these terms throughout the report, it is worth a moment of your time to familiarize yourself with them.



Sales Relationship/Process (SRP) Matrix™

Figure 4

Five Levels of Sales Relationships Level 1—Approved Vendor: You are seen by the majority of your customers as a legitimate

provider of the products or services you offer, but are not recognized for having any significant sustainable competitive edge over alternative offerings.

Level 2—Preferred Supplier: Based on your marketplace reputation and past dealings with your

customers, while competitors may offer alternatives, you are normally seen as the preferred vendor with whom to do business.

Level 3—Solutions Consultant: Based on a specific set of product-related, value-added

knowledge or services you offer, your customers see you as not only a vendor, but also a consulting resource on how to best use your products or services.

Level 4—Strategic Contributor: Above and beyond the products and services you offer, your

customers view you as a source of strategic planning assistance for dealing with broader-based challenges they are currently facing.

Level 5—Trusted Partner: At this highest level, you are seen as a long-term partner whose

contributions—products, insights, processes, etc.,—are viewed as key to your client’s long-term success.

Four Levels of Sales Process Level 1—Random Process: Your company may be perceived as being anti-process, though

what you really lack is a single standard process. Essentially every sales rep does their own thing their own way.

Level 2—Informal Process: Your company exposes salespeople to a sales process and

indicates that they are expected to use it, but that use is neither monitored nor measured.

Trusted Partner

Strategic Contributor

Solutions Consultant

Preferred Supplier

Approved Vendor

Random Process

Tribal Wisdom Process

Formal Process

Dynamic Process



Level 3—Formal Process: Your company regularly enforces the use of a defined sales process

(sometimes religiously), and you conduct periodic reviews of the process to see how effective it is, and then make changes based on that analysis.

Level 4—Dynamic Process: Your company dynamically monitors and provides continuous

feedback on sales reps’ use of your formal sales process. You also proactively modify the process when you detect key changes in market conditions.

With these definitions in mind, consider the chart represented in Figure 4 and what companies in each of the various boxes might look like. A lower left company would be an Approved Vendor/Random Process (R1/P1); how would such a company’s sales force operate? How would it manage its telemarketing/inside sales reps, and what competencies and/or personality profiles would it hire? Self-starter, aggressive, maverick, quick learners, trained professionals, and individuals looking for a ―sales-driven culture‖ might come to mind. At the opposite upper right hand corner would be a Trusted Partner/Dynamic Process (R5/P4) company. What terms would these companies use to describe the telemarketing/inside sales reps they’re looking for and what characteristics would be typical? Process-oriented, team player, strong communicator, and able to establish rapport quickly might be part of the mix. This is not entirely different from the R1/P1 description and, no doubt, many terms would overlap. After all, win/win and strong communication skills would likely be espoused as useful at any location on the matrix. We’ve hinted that R5/P4 companies generally report better performance figures than their R1/P1 counterparts but does this mean R1/P1 companies are not or cannot be successful? No. There are examples of companies in all of the matrix areas that have been successful. From our research and the data we’ve collected, we are prepared to say that the key distinguishing feature as companies move from lower left to upper right in the SRP Matrix is that they become more predictable. Looking at the 2010 survey data, we found that telesales organization performance fell into three main categories as seen in Figure 5.




Figure 5

As you look at the distribution of survey respondents in Figure 5, the question you have to ask yourself is whether increased predictability (good to have) accompanies increased sales performance (must have)? After all, with 77% of firms in Performance Levels 1 and 2, the odds are you’re among them. Is there payback to moving up—or staying at—a higher performance level? Table 6 helps answer this question.


Performance

Level 1

Performance

Level 2

Performance

Level 3

% Reps making quota 40% 58% 63%

% Forecast - wins 43% 50% 53%

% Forecast - losses 32% 28% 27%

% Forecast - no decisions 27% 24% 21%

% Sales force turnover 31% 40% 29%

Figure 6

It’s clear that as you move up and over in the SRP matrix that all of the needles begin to swing to more favorable readings. Short version: It’s definitely worth the effort.

Trusted Partner

Strategic Contributor

Solutions Consultant

Preferred Supplier

Approved Vendor

Random Process

Informal Process

Formal Process

Dynamic Process

Performance

Level 1

35% of Firms

Performance

Level 2

42% of Firms

Performance

Level 3

23% of Firms



Next question: How to get there? Figure 7 shows the ongoing imperative to bring in new accounts and increase revenue. Sound familiar? This is probably not new in the least but, no doubt, you will find new urgency in defining programs and executing against these in the weeks and months ahead. The place to look for these improvements is item number three on the list: Increase Sales Effectiveness.

Figure 7

If you don’t know where to start, you should consider our benchmark assessment. When you complete our on-line assessment instrument, we will provide you a full chart set comparing your responses with those of your peer group. For more details, visit www.csoinsights.com/sales-research-data. Finally, in this study we also refer to other analyses we have completed on topics such as lead generation, sales process, sales management, CRM, sales effectiveness, best practices, etc. If an area covered in the report is of particular interest to you, you can access the related documents via the CSO Forum (members only) or our website: www.csoinsights.com. As you review our report findings, you will be able to compare your company’s performance to other sales forces and determine where your team excels, equals, or lags behind others. In doing so, you can identify the specific areas for improvement. Research clients who then want a more targeted look into their performance based on industry, company size, geography, etc. should contact their CSO Insights partner.

We hope the information in this report will help you more effectively chart the course for your own telemarketing/inside sales effectiveness efforts for 2010. While we believe the issues raised have broad applicability, we encourage you to use this information simply as the basis for brainstorming and goal planning, and to identify and prioritize your telemarketing/inside sales organization’s operational challenges. Everyone can benefit from understanding the strategies and tactics of other companies, but in the end, you have to implement solutions that fit your specific business needs, not those of other firms.

Other

Reduce Sales Administration

Increase Reorder/Renewal Rates

Improve Margins/Reduce Discounting

Reduce Sell Cycle Time

Reduce Cost of Sales

Improve Team Selling

Improve Customer Loyalty/Satisfaction

Improve Up-selling/Cross-selling

Optimize Lead Generation

Increase Sales Effectiveness

Capture New Accounts

Increase Revenues

1.3%

7.1%

8.0%

8.9%

10.2%

13.3%

14.7%

23.6%

27.6%

32.0%

45.3%

52.0%

53.8%

Top Three Objectives for Next 12 Months

http://www.csoinsights.com/sales-research-data

http://www.csoinsights.com/CSO-Forum/Memberships

http://www.csoinsights.com/CSO-Forum/Memberships

http://www.csoinsights.com/




We hope you find this report a useful guide toward meeting your 2010 goals. We welcome your feedback and if you have any questions or comments please contact: Jim Dickie Barry Trailer Managing Partner Managing Partner CSO Insights CSO Insights (303) 521-4410 (415) 924-3500 [email protected] [email protected]

mailto:[email protected]



Key Findings Just over half of

telemarketing/ inside sales reps made quota.

The percentage of

reps making quota is up one point in two years.

Lower quota attainment tracks with lower ranges of compensation and higher levels of sales process implementation.

Observations

It may come as a surprise that quota attainment over the past two years is up in the face of the global economic slowdown. Don’t get too excited. Quota attainment was up in the middle of this pehariod (end of 2008) and dropped down four points this year to land just one point ahead of the 52.2% figure reported at the end of 2007. In addition, average weighted quotas were also down from $665,000 in our 2008 report to $619,000 this year.

However, compensation also tracks lower this year (see next metric) and there are some interesting correlations between quota attainment and targeted compensation as seen in the table below.

Targeted Compensation Range

<$50K/yr $50K-

$100K/yr >$100K/yr

% Reps Meeting/Beating Quota

49% 59% 52%

% Revenue Plan Attained 67% 75% 81%

Level 3-4 Process Implementation

22% 42% 45%

It is interesting to note that significant increase in quota attainment correlates with lower targeted compensation and with higher sales process implementation. As noted earlier, 40% of Performance Level 1 sales reps met or exceeded quota versus 58% and 63%, respectively, in Performance Level 2 and 3 companies.

Telemarketing/Inside Sales Performance Optimization—2010 Key Trends

What percentage of your telemarketing/inside sales force achieved quota?

Meeting or Exceeding Quota53.2%

Under Quota46.8%

Percentage of Reps Making Quota



Key Findings $50K-$100K is the

most popular pay range this year.

Also seems to be the sweet spot for connecting comp with desired sales behaviors.

No single industry

dominates higher or lower pay ranges.

Observations

Unlike field sales, we saw in the prior metric that average quotas were down in the past year (though you may not have experienced this in your company). Like field sales, targeted compensation for a fully productive telemarketing/inside sales rep was also down slightly from two years ago. In our 2008 Inside/Telesales Performance Optimization survey, average weighted compensation was $72,500; this year the figure is $64,100. Companies seem to be taking advantage of the tight job market to ratchet pay scales down—never an easy task to accomplish—as part of their overall belt tightening. Does this affect performance? The table below suggests the answer is yes, but not by paying more. Rather, the emphasis is on tying compensation more directly to desired behaviors.

Targeted Compensation Range <$50K/yr $50K-

$100K/yr >$100K/yr

Comp Plans Drive Precise Selling

Behavior – Exceeds Expectations

9% 22% 12%

Comp Plans Drive Precise Selling

Behavior –

Needs Improvement

55% 38% 48%

% Reps Meeting/Beating Quota 49% 59% 52%

If compensation is, in effect, renting the behaviors the company desires, it appears there is still plenty of work to do. In our 2009 Sales Compensation & Performance Management study two-thirds of firms (66%) felt their comp plans ―generally‖ drove desired behaviors but only one in nine (11%) felt they did so ―precisely.‖


What is your total targeted compensation for a telemarketing/inside sales rep?

way

<30,00018.6%

$30,000 - $50,00027.9%

$50,001 - $100,00039.2%

$100,001 -$125,000

10.8%

>$125,0003.4%

Targeted Compensation for Sales Reps



Looking at the those companies where 80% of their telemarketing/inside sales reps met or exceeded quota, 18% reported exceeding expectations in implementing comp plans that drove precise behavior. Tied for second in exceeding expectations (16%) were proactively identifying which sales reps need extra coaching and effectively share best practices across the sales force.



Key Findings

Involuntary

turnover is outpacing voluntary turnover for the first time.

Involuntary turnover

is low and likely to increase this year.

Reps stay where

they feel they have the best chance to be successful.

Observations

Turnover was low across the board as reps ―hunkered down‖ during hard economic times. With unemployment in the U.S. in double digits and ―underemployment‖ in the high teens, the feeling was that any job was a good job. As a result, voluntary turnover, where reps left of their own volition, was seven points lower than in 2008 (23%).

There was, however, no such moratorium on involuntary turnover—where reps were let go. Many reps adopted the T-Rex Strategy: If I don’t move, I won’t get eaten. Unfortunately, companies were looking for reps that were agile, adaptable, and aggressive. These companies used the downturn to prune away low performers, including those who were frozen in place.

Regardless of who initiates a rep leaving, it’s fair to say things did not work out—that the rep was not as successful as everyone had hoped. But since, as Rick Paige says, ―Hope is not a strategy,‖ what is the appropriate action to take now?

The 34% total turnover noted above averages things out, but a closer inspection reveals that Performance Level 3 companies are faring much better than their Level 1 and 2 counterparts, as shown in the table below.

Performance Levels and Rep Turnover Rates

Performance Level 1

Performance Level 2

Performance Level 3

Sales Rep Turnover 31% 40% 29%

The eleven point spread between the lowest and highest turnover is truly significant when you consider the cost of recruiting, hiring, training, and ongoing coaching of each rep. 13% of respondents reported total turnover of 50% or


What are your annual telemarketing/inside sales rep turnover rates?

.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

% Voluntary Turnover (rep leaves) % Involuntary Turnover (rep is let go)

16.0%

18.1%

Annual Sales Rep Turnover Rates



more, which means a brand new sales force is needed every two years (or sooner)! A good idea is to start by identifying which cell in the SRP Matrix you feel you are currently located. What level of relationship do most of your customers perceive they have with you? And what level of process have you implemented? Now determine where you would like to move to and how you will begin moving in that direction. [Hint: moving over to the right is easier than moving up.] CSO Insights Forum members can obtain peer industry comparison charts as well as schedule a call with their analyst to discuss potential initiatives and priorities for getting things moving.

http://www.csoinsights.com/CSO-Forum



Key Findings Majority of firms

expect to grow their telemarketing/ inside sales teams in 2010.

One in seven firms plan to increase by more than 20%.

Poaching talent will

occur. Protect your best reps from being lured away.

Observations

Okay, you are not the one in eight firms turning over your entire sales team every two years (see prior metric). Even exemplary companies are seeing turnover in the teens, even if it means they’re losing solid performers to other parts of their own company. Whatever your circumstance, take a look at the chart above and recognize that holding onto and attracting solid telemarketing/inside sales talent is going to be much tougher this year than last.

For starters, if you’re at the low end of the scale with 20% total turnover, you’ll have to replace one in five reps just to stay even. If you’re among the 28% of firms that plan to increase ten percent or more, you need to add another one in five (more or less). The same is true for your toughest competitors. The other key metric you need to be aware or reminded of is that 38% of new hires are sales professionals from within your industry. That means they are looking to your company as fertile hunting ground.

Now, if you’re one of the companies with low turnover and with these hiring realities in mind, ask yourself: are our reps staying with us because of what we do for them or in spite of what we do to them?

Reps will go where they feel they have the best opportunity to succeed, grow, and be recognized. Are you investing in sales rep training? [The percentage of firms spending $0-$499/rep/year on training has grown from 24% two years ago to 34% this year.] Are you providing a steady stream of leads utilizing one of today’s lead management systems? Do you have a core CRM system with high user adoption, and is it now augmented with CRM 2.0 capabilities (e.g., collaboration technologies, sales knowledge management, etc.)?

This year promises to see a lot more movement in top talent; make sure the rainmakers are moving toward you and not running away.


How will your telemarketing/inside sales force change over the next 12 months?

.

Decrease5.8%

Remain the Same38.9%

Increase 1% - 10%27.4%

Increase 11% to 20%13.7%

Increase> 20%14.2%

Planned Sales Force Change Over Next 12 Months



Key Findings

Sixty percent of

deals close in 3-9 calls.

Number of calls to close has increased in the past twelve months.

Sales rep turnover

tracks directly with number of calls to close.

Observations

The good news: deals closing in 1-2 calls are up a point year over year. The bad news: more calls to close have increased more dramatically during this same time period, as shown in the chart below. There is no question that buyers have been slower to pull out their wallets during the past eighteen months. Increases are seen in the number of calls to close and the number of ―No Decision‖ outcomes on forecast opportunities.

Less obvious is the toll this takes on reps; total rep turnover tracks in a nearly linear fashion with increases in calls to close, as shown in the next table.


On average how many calls does it take to close a deal?

1 - 2 Calls9.2%

3 - 5 Calls31.5%

6 - 9 Calls31.5%

10 - 15 Calls14.7%

>15 Calls7.6%

Do Not Know5.4%

Average Number of Calls to Close a Deal



Performance Related to Number of Calls to

Close

Quota Attainment

Revenue Plan

Attainment

Total Rep Turnover

1-2 Calls 60% 85% 28%

3-5 Calls 53% 72% 30%

6-9 Calls 54% 70% 32%

10-15 Calls 53% 65% 46%

>15 Calls 45% 75% 39%

You might be tempted to think 1-2 call closes are restricted to small opportunities. In fact, 80% of deals reported by these companies were in the $30K-$100K range. The data suggest that as your sales cycles tend toward the high end of the mid-range (i.e., 6-9 calls), things will tend to go south pretty quickly. Said another way, unless there is something particular to your industry that causes extra long sales cycles and/or extra numbers of touches, chances are you need to revisit your sales process. Specifically, having an organized win/loss assessment process as well as observing and sharing best practices of those reps able to close deals more quickly both seem in order. You may also think about rewarding these reps for sharing their gold tactics.



Key Findings

Less than one-half

of leads are self-generated by telemarketing /inside sales reps.

Higher percentage of marketing-generated leads does not equal greater success.

Reliance on self-generated leads is not the answer either.

Observations

That telemarketing/inside sales plays nicer with marketing than field sales is a good start. As seen in the graphic above, 34% of leads are generated by marketing versus 27% for field sales. And, in general, telemarketing/inside sales is happier with the quantity and/or quality of these leads, with 40% of respondents saying marketing’s leads Meet Expectations or Exceed Expectations versus 31% of field sales.

So how far can this go? Is the desired outcome to have marketing provide 100% of leads and the sales teams work through these? While this sounds like sales nirvana, the numbers do not support this vision. Call it the wisdom of crowds or natural knowing, the 40-60% range (marketing generated leads) and 40-60% self-generated seems to define the sweetest spot. Tabulated below are the somewhat surprising results reported.

Marketing Generated Leads

Quota Attainment

Revenue Plan Attainment

Total Rep Turnover

<40% Marketing Generated

50% 67% 36%

40-60% Marketing Generated

58% 80% 35%

>60% Marketing Generated

54% 79% 24%

We could look at other performance metrics, but even here, it’s interesting to see maximum quota and revenue attainment are reached in the mid-range. Also, when marketing is providing ample leads, rep turnover falls, even though rep performance/achievement is still fairly average. It appears to be a comfortable place to stick around.


How are your telemarketing/inside sales leads generated?

% Generated by Marketing

34.2%

% Self-Generated by Sales Reps

43.4%

% Other (partners, press, referrals,

etc.)22.4%

Lead Generation Analysis



Similarly, when sales is generating most of the leads themselves, performance is lowest and rep turnover highest.

Self- Generated Leads

Quota Attainment

Revenue Plan Attainment

Total Rep Turnover

<40% Marketing Generated

52% 70% 28%

40-60% Marketing Generated

59% 80% 34%

>60% Marketing Generated

51% 71% 37%

It appears, at least today, that some balance between marketing supplying a reasonable flow of leads and sales generating their own is working. It may be that with increasingly sophisticated marketing automation tools and lead management systems being implemented, the lead generation burden can/will increasingly shift to marketing. When this happens, sales will need to pick up its own performance and show that time saved not generating leads has, indeed, been converted to productive selling time.



Key Findings

Sales cycles have

lengthened for inside sales over the past two years.

Drop in shortest cycles translated into increase in longest cycles.

Percentage of ―No

Decisions‖ still nearly 1 in 4 of forecast deals.

Observations

This year’s data only confirm what you, no doubt, have been experiencing firsthand: sales cycles have slowed down. Two years ago the <1 month segment represented 21% of respondents; today it’s down five points—the single largest change.

At the opposite end of the spectrum—longer than six months—four of those five points have been added on. This segment moved from under 13% to 17% of this year’s responses.

The segments in between remained essentially unchanged, and along with them another metric remained fixed: percentage of forecast deals resulting in No Decision (23%). We mention this here in the sales cycle length discussion because these non-finishers are carried through (i.e., consume sales resources) far enough to be forecast to close, only to result in no business at all. This can be symptomatic of many things, but chief among these is the need to better (and constantly) qualify opportunities throughout the sales process.

If this is occurring in nearly one in four opportunities, it’s a pretty safe bet that all opportunities being tracked would benefit from ongoing qualifying throughout the sales cycle. Might this upset or annoy your buyer? Possibly—especially if the ―opportunity‖ isn’t really that solid with an approved budget and real business issues being solved. If these are in place, the buyer will be as interested as you in moving things along; you’re merely confirming all along the way that you’re identifying all of the players, clarifying their buying process, and being thorough in keeping things moving.

Who would be annoyed by that?


How long is a typical telemarketing/inside sell cycle?

<1 Month15.2%

1 - 3 Months45.7%

4 - 6 Months19.6%

7 - 9 Months7.6%

10 - 12 Months7.1%

>1 Year2.7%

Do Not Know2.2%

Average Sell Cycle Length



Key Findings

This metric held

steady, but others in sales cycle analysis declined.

Biggest change was increase at the highest percentage of calls resulting in first discussion or meeting.

Sales cycle steps downstream of this step all declined significantly.

Observations

This chart would seem to be bringing good news. The percentage of qualified leads resulting in initial discussions/meetings is up year over year and would suggest that more/better opportunities are being identified and moved into the pipeline. The highest percentage (>75%) is up nearly six full points this year and the lowest (<50%) are down by that same amount. But the optimism fades quickly after this step. The following two charts tell a different tale.

We see the reverse situation with the lowest percentages gaining in 2010; that is, fewer initial discussions progressed to presentations. And as seen in the


What percentage of your leads progresses to an initial customer discussion?

0%

5%

10%

15%

20%

25%

30%

35%

<25% 25 - 50% 51 - 75% >75% Do Not Know

23.0%

33.3%

16.1%

18.4%

9.2%

Leads Resulting in an Initial Discussion



next chart, fewer presentations resulted in sales.

All of which brings us back to the metric at hand: qualified leads resulting in initial discussions. If your company’s results mirror these, you will want to revisit (sales and marketing together) what constitutes a qualified lead—when leads are ready to be passed on, and which need to be further qualified and/or incubated. There is a countervailing force at work in slow times: sales wants more leads passed on since more of the opportunities in the pipeline may be stalled. Passing on less than qualified ―opportunities‖ only exacerbates this problem. And in the end, it’s seen the leads were prematurely turned over (either to telemarketing/inside sales or field sales) as sales ready. It is instructive to look at what impact higher level relationships and rigor in implementing sales process can have on these downstream results. Performance Level 1 firms have 17% of their qualified leads resulting in an initial discussion versus 25% for Performance Level 3 firms. Initial discussions resulting in presentations >75% of the time, 2% versus 10%, respectively. And presentations resulting in a sale more than half the time (>50%), 9% versus 15%. If you find your downstream numbers falling off, this may also be a good time to revisit your sales process definitions and execution.

15.0%

35.0%

24.2%

13.3%12.5%

7.9%

34.8% 34.4%

16.7%

6.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

<10% 10 - 25% 26 - 50% >50% Do Not Know

What percentage of the presentations your salespeople make result in a sale?

2010 2009



Key Findings Telemarketing/

inside sales is much more on board with CRM system adoption.

Benefits of CRM usage mirror field and prior years.

Add-on systems also enjoy much broader adoption with telemarketing/ inside sales teams.

Observations

It should come as no surprise that telemarketing/inside sales’ adoption (58% consistent users) of CRM is higher than field sales (37%); after all, they’re inside. That is, for the most part, telemarketing/inside sales reps are seated at—in fact tethered to—their desktops. There is no booting up their computer, accessing via a wireless hub or hotel Internet connection. If they’re at their desks, in all likelihood, they’re on the Internet. And they have tech support keeping things running and gigantic servers (here on the ground or up in the clouds) painting screens quickly as they please.

But is there more to adoption/satisfaction than the fact that, hey, it’s how you do your job? This very distinction seems to contribute to and be a reflection of something very basic. For the most part, inside sales views CRM (and additional applications) as its vehicle for connecting with its prospects and customers. Field sales has, and apparently largely still does, views CRM as inserted between it and its prospects and customers. Does this explain why nearly 4 in 10 field reps (38%) use their CRM inconsistently (≤75% of the time)? No matter.

What does matter is that telemarketing/inside sales is also leading the way in embracing and leveraging point solutions or, as we’ve labeled it, CRM 2.0. The numbers are even more disparate in these new areas: Sales Analytics (using: 64% versus 53%); CRM/Sales Process Integration (using: 58% versus 32%); Lead Generation/Management (using: 64% versus 54%); Sales Force Collaboration (using: 83% versus 80%). Interestingly, the one area where field usage is ahead of telemarketing/inside sales is with Sales Knowledge Management (using: 38% versus 42%).

Both sides agree on the top three benefits of adopting CRM: improved forecast accuracy, improved sales rep/manager communications, and reduced administrative burden on sales.

Look for more gains to be made in this area over the next two years. It is our view that the conversation will be less about telemarketing/inside sales and field


What is the user adoption rate for your CRM system?

< 25 %4.2% 25 - 50%

11.8%

51 - 75%12.6%

76 - 90%13.4%

> 90%58.0%

CRM System End User Adoption Rates



reps and increasingly about virtual reps. For more on this topic CSO Forum members should read the latest whitepaper on virtual selling titled: Why Field Sales and Telesales Are Becoming Virtual Sales. Sales and marketing professionals along with CSO Insights’ clients can contact us via our website at

www.csoinsights.com, or can contact Jim Dickie or Barry Trailer, whose contact

information can be found in the introduction and at the end of this report.

http://www.csoinsights.com/CSO-Forum





Key Findings

Consistent

methodology usage is up year over year.

User adoption rates of methodology trail technology usage.

Introducing a formal sales methodology improves quota attainment.

Observations

One factor that is unique to the telesales environment is the level of structure of day-to-day activities across all groups, i.e., outbound calling, following up on marketing leads, etc. In past surveys almost all firms, regardless of their sales methodology, identified leads/opportunities generated and adherence to sales process as a key measure, meaning these practices and activities were reviewed even if not paid for performing.

So, if everyone is doing fundamentally the same things, why are there such differences in the level of quota attainment between organizations? In the Introduction we presented the Sales Relationship Process (SRP) Matrix and defined the four levels of process implementation.

When we compare quota attainment between companies with no formal sales process (Level 1) and those that have a formal process (Level 3 or 4), the data show higher revenue plan attainment for the latter (65% versus 81%). It is a bright spot in these challenging times that Level 3 or 4 firms outnumber Level 1 firms nearly 2:1. Companies with no formal sales methodology had a dismal 40% quota attainment, compared with those companies which have implemented a formal process at 60%.

As impressive as these numbers are, the rate of user adoption, of users consistently applying the company’s sales methodology, is far lower than the embrace of technology. We define consistent usage as >90% and the numbers for telemarketing/inside sales’ technology adoption versus sales methodology adoption are 58% versus 13%, respectively. It may be harder to inspect, but application of the adopted sales process/methodology is as important as the adopted CRM system; after all, both are how you do your job (see prior metric).


What percentages of your telemarketing/inside sales reps use your sales process?

Don't Know6.2% <25%

12.4%

25 - 50%18.6%

51 - 75%35.4%

76 - 90%13.3%

90+%14.2%

Sales Methodology Adoption Rates



Key Findings

Account research

continues to lead all other Internet uses.

On-line collaboration is taking on new meaning and new importance for telemarketing/ inside sales.

Customer self-service moves up again this year.

Observations

As noted earlier, telemarketing/inside sales enjoy certain advantages when it comes to technology adoption—and it has been leading the charge in leveraging the Internet. The chart above contrasts 2009 with 2010’s high impact Internet uses. Account research continues as the primary benefit/use of the Internet. But other uses are coming on strong and have been closing the gap on this front-runner for some time. Customer self-service, web meetings, webinars, on-line demos, and seminar registration (another form of customer self-service) all fall under the opening umbrella of collaboration. You didn’t hear it here first, but you will be hearing it a lot more in the coming months. This term will apply equally to internal and external collaborative efforts. Companies are working hard to harness the potential of social media to access internal resources/knowledge and external networks. Salesforce.com is talking about its ―Chatter‖ application as a game-changer (no surprise here) and hardware manufacturers such as Cisco are also touting on-line collaboration as the ―next big thing.‖ Sure, these and firms like them each have a stake in this approach, but if you’re reading this report, very likely so do you. High-speed Internet access, web cams, mobile connectivity, sales knowledge management, and more are largely in place even in small firms—or at least are readily available and affordable. The cost of implementing these tools versus putting reps in company cars or on airplanes pencil out pretty quickly. And the fact that customer self-service continues to increase (up ten full points this year) is an indicator that buyers are ready to do business this way, as well. It’s not just your company that has to do more with less to increase effectiveness


Ways the Internet supports your telemarketing/inside sales efforts.

.

Chat Sessions

Prospect Sales Portals

Customer Training

Customer Self-Service

Webinars

Seminar Registration

On-Line Demos

Web Meetings

Account Research

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

41.8%

42.6%

56.8%

65.8%

66.7%

67.5%

68.1%

68.7%

84.0%

37.6%

45.5%

54.2%

55.7%

59.8%

56.9%

61.0%

56.8%

72.3%

High Impact Internet Applications

2009 2010



and productivity. The same is true in every business today, and the ability to transact business quickly, efficiently, and economically is a benefit for all involved. Look for ways to increase your own leverage of these high-impact uses.



Going Forward Recommendations

For those who did not participate in this year’s survey and as a reminder to those who did, the following description was offered on the survey’s opening page:

There are many differences in roles, responsibilities, and assignments between Inside Sales, Telesales, Lead Development, and more. At the same time, there are no standard titles or generally agreed upon definitions. In this report, we are interested in gauging the activities and effectiveness of individuals who do any of the following from their desk:

a) developing leads for themselves or others to pursue; b) qualifying leads into opportunities for themselves or others to pursue; c) pursuing opportunities to a sale or eventual ending; d) turning over opportunities for others to complete the sale.

We are calling any/all of these activities ―Telemarketing/Inside Sales.‖

Telemarketing/inside sales no longer equates to phone selling so much as streamlined selling. Telemarketing/inside sales reps still rely heavily upon the phone, but 40% of the time that ―phone‖ is really just a convenient/familiar interface to a computer network leveraging many new Internet tools. Sure, you still can talk to prospects on the phone, but you can also see them via web cam (just like in the early sci-fi movies), share your computer screen to run through PowerPoint slides, view a video, give or be given control of each other’s computer (to allow prospects to ―drive‖ an application themselves or to do remote support on a customer’s system). In the streamlined model, reps can make dozens of well researched, properly planned, efficiently/effectively conducted sales calls—from their desks. It is not news that a sales rep sitting at a desk can dial more calls (old school) than a field-based rep can contact in person in a day. What is news is the ever expanding, more powerful, and seamless integration of a broad array of innovative sales resources that enable telemarketing/inside sales reps to investigate, establish, and elevate relationships (new school) on-line.

This last criterion dovetails nicely with the realities of today’s marketplace, where everyone is being required to do more, with less, and faster. This not only applies to those who are selling but to buyers, as well. This productivity imperative means that buyers, too, want to limit the time they spend investigating, comparing, selecting, and installing the products and services they need. If these steps can be completed thoroughly and quickly, so much the better! This means that telemarketing/inside sales reps will continue to appeal to buyers and increase both average deal size and overall contribution to your company’s revenues, currently at 38.5%. In our opinion, these converging patterns will accelerate a change that has been building over time. For years, telemarketing/inside sales has often been an entry level sales position, a feeder of opportunities to field sales and/or partners, and has been filled with titles that—to an even greater extent than the rest of sales—lack standard definitions, roles, and/or responsibilities. The net effect has been a collective impression that telemarketing/inside sales means ―junior sales‖ or ―beginner sales.‖ Nothing could be further from the truth as seasoned veterans elect to operate from their desks (wherever they are located) with more resources available at their fingertips and with less travel. Many ―Road Warriors‖ are happy to trade their coach airline seats and hotel rooms along with trips to the airport at ―O-dark:30‖ followed by long lines at airport security and cancelled/delayed flights. The new telemarketing/inside sales rep is increasingly experienced, professional, and productive, and companies are innovating in new ways to measure, compensate, motivate, and retain these valued assets, as shown in various metrics in this report. Our analysis reflects this changing paradigm. It has been exciting and rewarding to upgrade this report to the same comprehensive level as our Sales Performance Optimization report. Although we do not have the same level of historic data to reflect upon and contrast against, the insights provided by this year’s participants give us a current snapshot and will



contribute to the perspective of next year’s report and beyond. Still, with the expanded look provided in just this year’s data, there is plenty to think about, especially in the context of current headlines. As this report is released, the global financial crisis has paralyzed some industries and the much discussed ―credit crunch‖ has frozen others. Paralyzed, frozen, what’s the difference as companies wait to hear and/or figure out what to do next? But sales can’t wait. There are calls to make, accounts to manage or pursue, and revenue targets to hit still this year, that will likely go up next year. The charts contained in this report give you glimpses of where your team is leading and lagging in

specific performance measures. Chances are there are more than a few areas that provide opportunity.

Those areas where your team’s performance is part of a small percentage that exceeds expectations, you may be able to double down and further distance your firm from its competitors and create a more durable differentiation. In areas where your team lags and is part of those that need improvement, you will want to consider which one or two areas have highest priority. You cannot do everything at once, but you definitely need to do something, and here is why: For one of our final survey questions, we asked the study participants to share how their individual sales reps’ quotas were changing in 2010 compared to a year ago. Figure 8 shows a summary of the responses.

Figure 8

Even though we know we are in an uncertain economic environment, nearly 80% of the firms surveyed raised quotas for this year. How confident are they that these numbers will be achieved? In Figure 9 we present their responses to that very question.

Less than or same as 2009

20.1%

1 - 5% More14.8%

6 - 10% More21.5%

11 - 15% More14.8%

16 - 25% More8.1%

>25% More20.8%

2010 Revenue Targets Compared to 2009



Figure 9

Quotas are higher, selling is tougher, and you have production to deliver (this year and next). But the ―you‖ in that statement is not singular, it’s the plural form. You have a team of talented and, increasingly, tenured reps who want to grow personally, professionally, and financially. They are the horses that will get you and your company where you are supposed to go. If you are going to provide the management that ―enables ordinary people to achieve extraordinary results,‖ then you need a clear vision of that goal and a playbook for that achievement. When asked what the top three initiatives for addressing the coming year’s challenges would be, this year’s participants responded as shown in Figure 10. First priority: More leads! Sure, we need to provide reps easier access to key information and yes, we’re going to get serious about process around here once and for all. But first things first, and the first thing is getting more leads. In the Introduction to this report, we introduced the SRP Matrix and throughout this report have referenced that moving up (in relationship) and higher (in process implementation) yields better results. So, enhancing lead generation programs is great if it includes introducing more process into the programs, easing access to sales knowledge, and other vital information, while improving the quality of leads generated. This may be blindingly obvious, but without obtaining agreement between sales and marketing about what constitutes a qualified lead and defining what your Perfect Prospect Profile is, then simply generating more leads means working harder/faster/longer within the same SRP Matrix position. We mention the importance of this because aligning sales and marketing is in sixth place but, in our view, it really needs to be an adjunct of first place—enhancing the lead generation programs. Without this alignment/agreement you end up with a major problem, and in a recent whitepaper we detailed more extensively the issues when there continues to be a lack of alignment. And today, telemarketing/inside sales is four times more critical of the quality and/or quantity of leads provided by marketing than marketing is. So simply cranking up the lead generation effort without dialing in the

Easily meet/exceed revenue goal

10.1%

With effort, should meet revenue goal

47.7%

Concerns about meeting revenue goal

33.6%

Will not meet revenue goal8.7%

Perspectives on Meeting 2010 Revenue Targets



desired outcome more precisely will only result in having to plow through that many more leads to find the real opportunities (i.e., real buyers).

Figure 10

The majority of reporting firms have lead generation (58%) and/or prospect qualification (65%) as primary functions of their telemarketing/inside sales team (only outbound sales score higher at 66%). While we do not mean to belabor this point, it would be difficult to overstate how important it is to get this right. We will watch this and other top initiatives throughout the coming year and continue to report to our research clients on successes and failures. The oft-repeated Chinese curse is, ―May you live in interesting times.‖ The times could hardly be more ―interesting‖ than they are right now, and how telemarketing/inside sales managers and their teams respond and redirect their efforts will keep us all busy in the months ahead. We are excited about the challenges and opportunities that 2010/2011 present. We are confident that a great many telemarketing/inside sales leaders will step up to the next level of achievement, and in doing so, will power their organizations to do the same. Over the course of time, we look forward to mapping the progress on their journey to optimizing telemarketing/inside sales performance. Again, we wish to thank all the executives who shared their time and experiences and contributed to this extensive look into the continuing Telemarketing/Inside Sales effectiveness challenge. In return, we hope to have contributed to your own insights and to have the opportunity of connecting with each of you personally, so that we may delve even deeper into the issues raised. Sell well, Jim Dickie Barry Trailer Managing Partner Managing Partner CSO Insights CSO Insights (303) 521-4410 (415) 924-3500 [email protected] [email protected]

Revise Channel Strategy

Revise Sales Tools

Revise Hiring Strategy

Revise Compensation

Evaluate New CRM Tools

Revising Sales Process

Revise Team Structure

Analyze Customer Buy Process

Improve Rep Access to Information

Enhance Team Communications

More Closely Align Sales and Marketing

Revise Lead Generation

17.8%

21.2%

21.9%

28.1%

32.2%

35.6%

35.6%

36.3%

39.0%

39.7%

41.1%

42.5%

Top Sales Effectivess Initiatives for 2010

mailto:[email protected]

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Telemarketing/Inside Sales Performance Optimization TISPO... · 2010 Telemarketing/Inside Sales Performance Optimization ... Adoption of CRM is at a record high: Telemarketing/inside