ZS: Large company sales professionals to move inside

22 July 2015 Consultancy.uk 3 min. read
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Sales professionals in large high-tech companies will increasingly move inside, research from ZS Associates finds. The change in sales practice comes with a corresponding challenge to develop comprehensive and effective compensation models to reward, motivate and keep inside sales talent.  

According to research from ZS Associates and Reality Works Group, titled ‘Outside in: the rise of the inside sales team’, there is a move from out- to inside for sales professionals at high-tech companies. This shift will have effects across the sales industry with a new model demanding changes in the way companies motivate and reward sales teams, determine and align sales territories, and even how high-tech companies’ sales operations are configured.

In the sales landscape, inside sales roles are responsible for selling primarily by phone and online, with limited face-to-face contact, while outside sales teams have a degree of independence and roam around to shake down face-to-face deals.

Inside vs. outside field sales

Moving indoors
One finding from the research is that only 22% of sales forces are in office at large companies, however, the research also reveals that this is something that is set to change in the coming years. According to the report, 40% of large companies indicate that they are looking to increase inside sales teams by 2016. Small and medium companies are relatively settled in terms of their plans to move out or stay in.

The consulting firm finds three key reasons for a shift inwards for sales professionals:

  1. There are margin pressures for business-to-business (B2B) organisations with inside sales potentially a more efficient way to sell.
  2. There is a cultural shift within B2B buyers with the web, social media and email now used to inform purchasing decisions.
  3. New technologies, like videoconferencing, allow for more familiar and intimate and collaboration for inside sales teams without field interaction.

“This shift will affect how all high-tech companies approach drivers of sales force effectiveness, including motivating and rewarding these teams,” explains Kyle Heller, a leader in ZS’s High-Tech practice.

Company components by company size

Shifting targets
As a result of the shift to inside sales, the way in which sales people are compensated will become more complex. Most companies “closely link incentive pay to what they sell,” remarks Heller. Small companies sales compensation is 95% commission based, compared to 60% for large companies. Quota based is the most popular system in large companies, at 90%, although 79% of small companies also use this construction besides commission. Management based objectives see a 40% uptake in large companies and are not used in small companies. 

Challenging targets
One aspect that the research highlights is that setting compensation is increasingly difficult for inside sales teams. Setting quota fairness is a problem in 46% of cases, followed by identifying and setting the competitiveness of compensation in relation to the market (44%). Further difficulties involve setting forecasts for sales as well as developing adequate opportunities to motivate top performers noted by 33% of respondents. Identifying performance was only a difficulty for 25% of companies, and the effective communication of the incentive plan an issue in 15% of cases.

Most Cited Compensation Problems for Inside Sales Teams

The report concludes that to set competitive pay for the influx of inside sales staff in large companies, these “companies should benchmark each inside sales role against comparable roles in the market using third-party or custom surveys.”

“Developing a measure of customer-level sales opportunity has been the biggest difference maker I have seen,” comments Heller. “Setting and testing quotas using a sound measure of available sales opportunity completely changes the discussion.”