Sales Advocate Newsletter

Benchmarking Inside Sales Performance

March 2006

In Q4 2005, we collaborated with our partner, CSO Insights, to craft a thorough survey on Inside Sales effectiveness. Dave Berman of Webex Communications originally envisioned and championed this research. The survey was conducted online and more than 400 companies across industries participated. Over 50 metrics were surveyed, and the report summarizes approximately one-third of these.

Inside Sales and the Field

We found several metrics to be nearly identical to field sales suggesting that even though their operating environments are usually very different, other factors can contribute as importantly as the channel itself. For example:

Rates of quota attainment, forecast accuracy, and primary customer focus were similar to field sales numbers
Average lengths of sales cycle (less than 3 months) were slightly lower for inside sales.
Turnover rates (42%) were also slightly lower in inside groups.

More than ever before, companies are trying to contain and even reduce their cost of sales. A major component in this ongoing effort is to optimize the performance of inside sales. Initially, in some industry segments these teams were seen as an adjunct to field sales, primarily doing lead generation work and other support functions. This is still a major thrust for many inside organizations with 58% reporting lead generation for field/partner sales reps as a primary responsibility. Further, we see that inside sales reps support four or fewer field/channel reps in half of the companies reporting. Only 10% of respondents have inside sales reps supporting nine or more field/channel reps.

However, companies are expanding the role of their inside sales personnel to pursue sales opportunities beyond just the initial qualification phase and, in many cases, to close opportunities. This trend is influenced by a number of elements including industry, buyer preferences, complexity, etc. Another element is average deal size which is lower for inside sales--85% were less than $25,000. Still, a surprising 45% of total revenues are generated by inside sales for those companies reporting.

Performance Measurement, Compensation, and Sales Quota

What performance is measured versus measured and compensated is also of interest. This project looked at inside sales (primarily outbound) rather than call centers (primarily inbound), so we did not ask about average length of call, first call resolution, or other metrics that relate more to service. However, the metrics that are being compensated tie directly to sales; number of leads, appointments, and revenue generated. These three dominate the functions being recognized and rewarded.

Quota assignment and attainment are also explored and reveal some interesting insights. A total of 56% of respondents had quotas in either the lowest range (less than $250,000) or the highest (more than $1Million). These findings may lead you to revisit how your own quotas are set and to review patterns of attainment in comparison.

Accessing the Report

Click here for the full (32-page) report. The report covers:

Number of Inside Sales Reps Employed
Lead Generation Tasks Regularly Performed
Lead Generation Metrics Measured vs. Measured & Compensated
Average Telesales Deal Size
Average Sales Cycle Length
Average Number of Calls to Close a Deal
Size of Average Annual Quota
Target Telesales Rep Compensation at Quota
Telesales Rep Time Allocation
Average Tenure of Sales Force
Average Number of Telesales Reps per Manager
Telesales Rep Quota Attainment
Annual Sales Rep Turnover Rates

How to Use the Report

This information is designed to help you more effectively chart the course for your own sales effectiveness efforts. CSO Insights' plan is to continue to analyze the research data and, as new insights emerge, share them with you.

While we believe the issues raised in the report have broad applicability, we encourage you to only use this information as the basis for brainstorming and goal planning sessions for identifying and prioritizing the operational objectives in your own organization. Everyone can benefit from understanding the strategies and tactics other companies are using, but in the end, you must implement solutions that fit your specific business needs and not those of other firms.

CSO Insights is a research firm that specializes in analyzing how companies are reinventing the way they market, sell to, and service customers. For more information about CSO Insights, see www.csoinsights.com or contact Barry Trailer, Partner, at 415.924.3500 or barry.trailer@CSOinsights.com

This newsletter is provided as a complimentary service from Phone Works, LLC,. Phone Works is the San Francisco Bay Area leader in building high-performance inside sales teams, helping technology firms increase revenue, shorten sales cycles and implement successful, repeatable sales models. Contact Phone Works at 510.749.9073 or info@phoneworks.com.