Sales Advocate Newsletter

How Sales Development (Telemarketing) Keeps the Pipeline Full

December 2001

Most technology companies understand that implementing an inside sales development team is one of the best ways to kick-start sales. However, what many tech firms fail to recognize is how vital this sales unit is to ongoing revenue growth. In this edition of The Sales Advocate, we show what happens to your sales pipeline if you take sales development out of the equation.

To illustrate our point, we’ll use a recent, real-life example. (Please note that we’ve used a fictitious name to protect the company.) Company X, a mid-size provider of enterprise-level software solutions, fits the profile of many Silicon Valley tech firms: newly public company, hot product, talented staff, looking to quickly grow revenue.

Company X began their sales push with a sales development unit that handled cold-calls and lead qualification, and a team of field reps who met with qualified leads and closed deals. The first two years of business were excellent for Company X. Sales development pounded the phones. (In fact, they initiated 75% of all revenue.) Field reps made client calls all day. Sales exceeded its goals and made bonuses. Company X had a great IPO, the stock climbed, and everybody was happy. Until...

A management change at Company X brought in someone who didn’t understand the value of sales development. Half of the firm’s sales development reps were either let go or redeployed. So what happened the first quarter of operation under the new sales model? Well, actually, the sales department still met its numbers. Remember, the typical enterprise sales cycle is three to four months long, so new business was still working its way through the pipeline. The following quarter, however, the bottom dropped out. Sales missed its number for the first time in company history. Within two quarters of the change, Company X generated only a third of its projected revenue.

By reducing and de-emphasizing its sales development operations, Company X created the following situation:

• Field Reps Lost Focus. Field sales reps were made responsible for cold-calling, telemarketing, sales meetings, product demos, account management, and closing deals. That’s the entire sales process, soup-to-nuts. Instead, they should have been focused on what they do best--turning qualified leads into customers.
• Inside Sales Development Became Admins. The few remaining inside sales development reps were not managed properly and quickly fell to the role of overpaid clerks for field sales reps--filing contracts from existing customers rather than aggressively pursuing new ones.
• The Sales Pipeline Went Dry. The primary source of new leads was gone. What’s more, since nobody was qualifying leads, field reps wasted time with client meetings that were much less likely to generate revenue. The entire sales process had become ineffective.
• Field Sales Left for Greener Pastures. One of the fastest ways to dismantle an outside sales team is to make it nearly impossible for them to meet their quotas. No leads, no bonuses, no field sales reps.
• The Stock Price Plummeted. These days, even Internet firms are expected to show rapid, uninterrupted revenue growth. Companies that are now or hope to one day be publicly held must ensure, first and foremost, that their sales pipelines remain full.

The Moral of the Story

Don’t let this happen to you! A well-managed, dedicated sales development team can keep your sales pipeline full of highly qualified leads. To ensure that your sales development efforts are valued, publish metrics to c-level executives, board members and other departments within the company. Highlight the amount of new business that started with a sales development call. Increasing the awareness of sales development’s contribution to revenue goes a long way toward protecting one of your company’s most valuable resources--and can prevent your firm from becoming the next Company X.

This newsletter is provided as a complimentary service from Phone Works, Inc., the San Francisco Bay Area’ leading sales consulting firm. Phone Works helps technology firms increase revenue, shorten sales cycles and implement successful, repeatable sales models. The industry’ largest technology companies and newest start-ups turn to Phone Works for lead-generation, lead-qualification, telesales and sales-productivity programs.

You can reach Phone Works at 510.749.9073.