Looking to grow your company and not sure whether to hire inside or outside sales reps? If that sounds like you, then read on. We’re going to explain what is inside sales versus outside sales (also known as field sales). We’ll show you the benefits of each, how much it will cost to hire a team, and what type of business each team structure is best for. Without wasting any time, let’s jump into the article.
Inside Sales vs. Outside Sales - What’s the Difference?
So, you’re setting up your sales team and aren’t certain which sales team structure to use. There is no single correct answer. It depends on your business, your location, and your unique customer type. Anecdotally, inside sales teams are growing 15x faster than outside sales teams. Companies are betting on in-house teams. This can be attributed to factors such as the growth of software companies, and, that more companies now sell to customers all over the world.
Another factor helping inside sales is the fact that inside sales spend, on average, 71% of their day selling. Outside sales reps only spend around 41%, due to longer travel times, and challenges with organizing face-to-face meetings. With the rise of digital products and services, scheduling product demos over video calls using Zoom, Skype, GoToMeeting or similar tools is viable. Outside sales teams can focus on lower volume, and spend their time on enterprise clients with specific needs and long sales cycles. But, there are still benefits to having outside sales reps in 2019.
Let’s dive deeper into what inside sales and outside sales are, and the unique benefits of each.
What is Inside Sales?
Inside sales is the process of selling to a customer remotely. Inside sales reps use phone calls, and emails, and other digital channels to reach new prospects. They may also receive inbound leads generated by marketing depending on the company structure. If your company sells something that can be sold remotely, such as software, then an inside sales teams will have a range of benefits.
What is Outside Sales?
Outside sales is when sales reps meet with customers in person. Outside sales reps don’t spend much time in the office. They need to travel to meet with clients in person and thus spend most time off-site. The term outside sales is used interchangeably with field sales, so we may refer to it like that from time-to-time in this article.
It’s growing at a slower rate than inside sales, yet, there are still reasons to use an outside sales team. We’ll show you what those are in this article. Now, we’re going to look at the benefits of each type of sales team structure to help you decide on the best one for you.
Benefits of Inside Sales
There are some key benefits to having an inside sales team. Let's take a look at some of the most impactful ones.
1. Faster response time to leads
An inside sales team will be able to respond to queries quickly over email or a phone call. The set expectations from customers won’t be an in-person visit, and phone, video, or email is a viable communication channel. With outside sales teams, your reps would need to make the trip to the customer or lead’s location to answer queries or provide product help.
2. Reduced cost of sales
Your sales reps can send emails or make calls at a faster rate than they could visit leads in person. Each contact with a new lead costs less than it would with an outside sales team. Research done by Mike Moorman of ZS Associates found that inside sales reduced the cost of sales by 40-90% compared to field sales.
3. Spend more time selling
Inside sales reps spend 35% of their week selling, compared to 22% for outside sales representatives.
Inside sales reps don't need to spend time traveling and that time can be put towards prospecting, or following up with leads more often.
4. Easier to scale the team
It’s no secret that scaling an outside sales team is tricky. If you want someone to switch territories or hire new reps it’s very location-specific. Sales reps may be reluctant to change territory, and expansion is slow. Your reps may also need location expertise to succeed. Inside sales teams are far more scalable as they require less location-specific knowledge and rely less on customer relations.
5. Increased teamwork
You can structure your inside sales process to encourage collaboration. For example, one team member can introductory calls to determine customer needs, and after the first call, they can pass them to an account rep. An outside sales process normally relies on one person managing the whole sales process, and it's a more independent role.
Benefits of Outside Sales
If spending time with clients in-person makes sense for your business, then you'll want to invest in an effective outside sales representative. Let’s take a look at some of the main perks of an outside sales model.
1. Develop stronger client relationships
As you may have already experienced, building good relationships with clients over a phone call can be tricky. Outside sales enables your team to build relationships with each customer and tailor the sales process to their exact needs.
2. Higher close ratio
Research done by Salesloft found that outside sales reps convert prospects 40% more than inside sales reps do. This doesn’t mean outside sales is better in every case, but if you’re selling to large clients, then face-to-face meetings can be more influential than an email or a video call. It's also easier to manage complex sales processes that involve many decision-makers.
3. Commission can be motivating
Most outside sales teams operate with a commission-based payment structure. Outside sales is most often used when selling to enterprise clients, so the higher commissions make sense. This can be motivating for your team and it ensures that the true focus of the sales team is on closing deals with qualified leads.
How to Structure Your Inside or Outside Sales Team
You need an efficient structure to create a high-performing sales team. 76% of high-performing sales team members rate their organization as having an “excellent” organizational structure.
The best structure depends on the type of product or service you sell, and who you’re selling to. Currently, inside sales reps account for 47.2% of the total salespeople in the US. But, most companies believe that a 50/50 split between inside and outside sales reps is ideal. An even split enables your inside sales reps to focus on leads with shorter sales cycles, and lets outside sales reps spend their time talking to larger leads.
How to Structure Your Quota Attainment Goals
Ensuring your sales team hits their goals is crucial to business growth. We often hear talk about ‘high-performers’. But, sales reps who consistently exceed their quota rarely make up more than 10-20% of sales teams. Gong recommend basing your sales quota goals on data from previous years, or industry benchmarks. There is no point in setting unrealistic goals for your team. These reduce motivation and most reps won’t meet them.
Setting Inside Sales goals
When it comes to inside sales goals, you should base these on overall company sales goals. Every inside sales rep should have an attainable target. You don’t want to encounter a Wells Fargo situation, which involved employees opening fake accounts to meet their quotas and avoid being fired.
Setting Outside Sales goals
Outside sales goals can be a little more complicated. Deal sizes are larger, and goals can, therefore, be higher. Different territories will also have different average deal sizes. For example, if you’re selling to tech companies, then reps working in San Francisco will have higher targets than a rep in Detroit.
Cost of Hiring an Inside vs. Outside Sales Teams
Inside sales vs outside sales: which do you choose? When hiring or expanding your sales team you need to be aware of how much it’s going to cost. This is an area-dependent factor. Salaries will vary based on the location of your business, or the territory that your outside sales reps work in.
Inside Sales Rep Salary
The USA average salary for inside sales representatives is $41,250. But, if you’re based in a city with a high cost of living, you’ll need to up the budget.
Outside Sales Rep Salary
The amount you need to compensate outside will depend on the location and type of solution you’re selling. Currently, the USA average salary for outside sales representatives is $53,128, but this will change based on location. There is no rule set in stone for salary numbers.
The reason outside sales reps are paid more (on average) is due to the extra responsibility required when meeting with clients face-to-face and managing longer complex sales cycles.
Another factor to consider is that outside sales reps will need to file expense reports as they won’t be on-site. You'll need to factor in those extra costs before hiring an outside sales rep.
Sales Cycle Length compared
B2B sales cycles vary greatly in length. If you’re selling a self-service digital product that requires very little interaction with a customer, then your sales cycle won’t take long. But, selling a solution such as a CRM to an established enterprise company will take months, as there will be many decision-makers involved.
Research by Step Change found that smaller deals - usually handled by inside sales reps - generally take around 3 months. For larger deals handled by field reps, the typical sales cycle is likely to be around 6 to 9 months in length. Ultimately, it depends on what you’re selling, and the size of the deal. If you sell mainly to enterprise customers expect a longer, more costly sales cycle.
Scaling an Inside Sales vs. Outside Sales Program
Want to aggressively grow your team over the next several quarters? Then you should consider the structure of your sales team and evaluate how scalable it is. When scaling a sales team you need to capture your best practices and ensure they’re adopted across your company. If you can’t do that, then you need to reconsider if you’re ready to scale the team yet.
Inside Sales Scalability
Implementing best practices within an on-site sales team is like scaling any team in your company. With an on-site team, conducting training sessions or introducing new tools will be simple. Your team can help each other out, and questions about new practices answered quickly. There’s a huge benefit to creating set best practices.
Velocify found that automated and enforced sales processes generate 88% quota attainment, compared to just 78% with “well-documented” processes. Inside sales teams rely less on relationships with customers or leads and are, therefore, more scalable.
Outside Sales Scalability
As we’ve seen, successful outside sales will heavily on your field sales representatives building relationships with leads. Because of this, it's inherently less scalable. Establishing client relations is time-consuming and requires dedication from each outside sales rep. You can’t simply hire a new rep and expect them to have those established relationships immediately. It’s also harder to create SOPs and established processes for sales reps to follow, as each client will need a tailored sales process.
Wrapping Up: Inside vs. Outside Sales
As we’ve seen, most companies strike a balance between inside and outside sales. It costs less to build out an inside sales team, and it’s more scalable. But, if you’re dealing with enterprise clients, with long sales cycles, then an outside sales team may be a better fit for your business.