The role undergoing the most dramatic change in distribution today is that of inside sales.
In a 2022 report on "The State of Distributor Customer Experience," Distribution Strategy Group found that 22% of end-users never want a distributor sales rep to visit. About 20% say they’d be happy with just once a year.
It goes to show you that customers want far less face-to-face interaction with your team.
According to Forrester, the number of B2B field sales reps declined by 25% between 2014 and 2020. E-commerce and the rise of the inside sales function were considered major drivers of that change.
We expect the typical distributor to employ more inside salespeople than outside by 2025.
Historically, distributors have been reluctant to change their traditional sales models. They believe that removing a field rep leads to a decrease in business in that territory. But according to our research, 80%-98% of customers’ purchases are products they have previously purchased from the distributor. As long as the replacement is not incompetent, that repurchase volume should hold steady.
Many distributors have sales structures – and their related costs – similar to those of 50 years ago. Field sales reps still complete many tasks that could and should be completed by a lower-cost resource, such as delivering product to customers, creating quotes and checking price and availability with vendors.
Not only is the market different today, the data accessible is beyond what we could have imagined even 10 years ago. When you understand customer needs by customer geography, market segment, service output, travel required, how reps spend their time and so on, you can realign your structure to meet them.
In fact, we believe distributors can reach more customers, more effectively, at a lower cost than they do today. We usually find that more than 20% of accounts assigned to an outside sales rep can be moved to another lower-cost function, such as inside sales.
When customer needs are met by an inside sales rep, you can focus field reps’ roles on market-making rather than market-serving.
To clarify: Inside sales is not just another name for Customer Service Reps. Inside sales reps can play a much larger and proactive role in supporting customers and meeting their needs. In doing so, distributors can reach more customers more effectively at a lower cost.
Benefits include:
Cost Savings: PointClear found that an outside sales call costs a company $308, while an inside sales call costs $50. Further, inside sales reps spend 13% more time actively selling than outside sales reps. Inside sales reps are the best bet for distributors looking to grow sales and reduce costs – especially for mid-sized customers.
Customer Satisfaction: If you’re using an inside sales resource to increase your focus on customers who haven’t received a lot of attention in the past, those customers are going to feel more loved. And with a shift in focus for field sales reps to market-making activities, those larger fast-growing customers will also see their needs met in a more meaningful and value-added way.
Greater Sales: Hitting more of your customers with more regular touchpoints opens the gate to uncovering gaps in how you’re serving them. Can you educate them on what else you can sell? Where else can you support them? Keep them coming back for more?
Follow these steps to evaluate your sales structure:
- Step 1: Compare yourself to industry leaders and determine whether you are ahead of or behind the curve. Evaluate other sales models, including hybrid sales models, and the role digital channels play in your business today. Talk to your customers.
- Step 2: Pinpoint where you are trailing and implement minor changes to start. Map out goals and create manageable steps to achieve them.
- Step 3: Implement the change. Find ways to increase engagement. As with every process, it will be met with resistance, but the secret to successful change is getting your team on board early on. Implementing a CRM to capture important customer data is a good start and will enable your team – outside sales, inside sales, CSRs, technical specialists, sales admins and more – to stay on the same page.
This is all part of an effort to narrow the field rep’s role to one that is focused on new business development and demand creation. Key customer-serving responsibilities are unbundled from demand creation with skill sets most appropriate to each allowed to specialize in what they do best.
Mike Marks is the founding partner of the Indian River Consulting Group and a longtime distribution manager.
