March 2004              return to the newsletter contents page

The Changing Role of Inside Sales

In the last quarter of the 19^th century, just about the time independent distribution was becoming a major force in the channel, Alexander Graham Bell invented the telephone. It was probably about two days later when distribution invented inside sales, and in much of the industry it hasn’t changed a lot since then.

In a survey done nearly ten years ago by Corporate Strategies, Inc., an Atlanta-based distribution consulting firm, almost 88% of the respondents said that they thought that inside

sales represented either their greatest or second greatest opportunity to increase profitability. 84.7% of them said that the responsibilities of inside sales had increased in their organizations.

Despite those great expectations, most of the respondents said that they still paid inside sales just as they have since the invention of the telephone, and provided training that had changed only to the extent that management recognized inside sales had to know how to use the computer.

To a great degree, this has been the industry attitude toward inside sales: we want more and greater results, but so far as compensation, management, and training are concerned, it was good enough for grandfather and it’s good enough for me.

However, the role of inside sales in distribution is changing, no matter how grudgingly. Customers are demanding more efficient ways to do business, and for many of them inside rather than outside sales represents that way. Distributors, facing increasing competition and price and margin pressures, are looking for ways to increase their sales effectiveness. The result has been that — at least in some companies — the role of inside sales is looking more like the traditional role of outside sales than the traditional role of inside sales.

Distributors who are making these changes are finding that in addition to making changes in inside sales, they are having to make changes in how they manage inside sales. A significant part of that is providing inside sales with the tools to do the new tasks expected of them.

Advanced Inside Sales, a self-study CD-based training program, to be published this spring by SEDA, is one step in providing more sophisticated tools for inside sales. The three courses on the CD — Pricing, The Complex Sale, and Quantifiable Value-Added Selling — deal with subjects more generally associated with outside sales; however, they use tactics that inside sales or a team of inside/outside salespeople can use to increase the company’s selling effectiveness. SEDA will be mailing out order forms for the program with pricing information in the next few weeks.

The content of Pricing course includes:

• The function of pricing management, including: Balancing competitive pricing levels with profitable pricing levels; the effect of raising and lowering prices; what the “plus” in “cost plus” actually is, and how the customer views price.

• Understanding Pricing, including common distribution pricing models and notation, and basic pricing mathematics

• Pricing Application, including pricing for special situations and maximizing order profit

The Complex Sale consists of three sections:

• Understanding the complex sale, including identifying purchasing influences, understanding buying motivations (or hot buttons) and identifying the Win/Win outcome for accounts and transactions

• Making the sale, including the information-gathering model, and looking for changes and identifying them as threats or opportunities.

• Growing Accounts, including setting account goals and recognizing opportunities to sell more

Quantifiable Value-Added Selling is also in three sections:

• An introduction to QVA, including how distributor processes impact customer processes, Examples of how distributors save customers time and money, and creating a basis for QVA selling

• Establishing Value, including dealing with customer cost centers (purchasing, holding, using , and opportunity), gathering information for QVA selling, and translating ideas and actions into dollars.

• Presenting QVA, including presenting the value, and securing customer agreement and documenting the value added

The CD course, along with more basic training such as New Directions in Inside Sales, will provide a start for distributors who want to make their inside sales force a more aggressive part of their selling system. But these courses — as well as the whole attempt at building new skills — is just one of the challenges facing distribution management. Until we also deal with the compensation, measurement, and management issues, we’ll never have inside sales with the emphasis on sales.