Ken Krogue

In my last blog post, I discussed the fact that sales and marketing teams largely come from a different set of internal “cultures,” cultures whose viewpoints and and attitudes are often at odds with each other.

In Part 2, I want to take a closer look at this concept, because as sales and marketing teams continue to evolve, and move ever closer in alignment, at some point the “culture war” between the two will spill over into the corporate workroom.

In review: Sales “culture” is business- and results-oriented; marketing “culture” is connection- and human-interest driven.

The question becomes, when push comes to shove, which viewpoint takes precedence?

BNet Business guru Geoffrey James gives us the answer—and it’s based on a belief I’ve long held myself:

“In business-to-business (B2B) firms, the legendary conflict between sales and marketing stems from a difference of opinion about what marketing should be doing. Most marketing professionals believe that they should primarily be concerned with market research, building brand equity and creating marketing materials. Most sales professionals believe that marketing should be generating qualified sales leads.”

Very true. But the next part is where the article gets interesting:

“This is part of the blog where I’m supposed to be diplomatic and politically correct, and write some yada-yada-yada about teamwork and respecting differences, etc., etc.

Forget that. Here’s the honest truth: Marketing is dead wrong; Sales is dead right. In B2B environments, marketing is only useful insofar as it generates qualified sales leads. Period. The glamorous activities near and dear to the hearts of B2B marketers everywhere have almost no impact on selling, other than driving up the cost of sales . . . [Marketing should be compensated] based upon its ability to reduce cost of sales. Period.”

And as much is it will pain my own internal marketing team to hear it, Geoffrey James is right.

I don’t want to devalue the work, effort, and talent of marketers (especially my own), but in the B2B space, the best value a marketing team provides is in the ways it can get my sales team more qualified leads today.

The question for B2B sales and marketing managers then becomes, what does this mean from a corporate development standpoint? How can you align a marketing team to produce leads without hurting, or challenging marketers’ deeply held beliefs about the need to create an emotional connection between a buyer and a product, a person and a brand?

Stay tuned for Sales and Marketing “Cultural Alignment” Part 3

The guys and gals up at SEO.com recently announced that they were partnering with Boostability.com to address a “hole” in their service offerings. Recognizing that up to this point the bulk of their clients had been high-level enterprise, SEO.com felt that they needed to add a service offering for locally focused, small-to-medium-sized businesses to continue growing their market share.

My initial thought was, “Good for them.”

My second thought was, “I hope they know how to successfully target local businesses’ technology needs to get the results they want from the initiative.”

I say this because one of the biggest challenges InsideSales.com has faced has been differentiating our offerings between enterprise and small-to-mid-sized businesses.

In a perfect world, we’d never have to have our sales reps working both enterprise and small business deals. We’d separate the sales team by deal size, and “big account” closers and “small account” closers wouldn’t ever have to cross channels.

The reality, however, is that sales reps often have to work both types of accounts—and in technology sales, one of the biggest mistakes reps make in this situation is that they fail to adapt to the differences in technology readiness of smaller accounts.

The problem typically reveals itself in two related ways:

1. Reps consistently overestimate small business’s ability to provide high-level technical expertise.

Especially in today’s market, where many typical business services can be easily and cheaply outsourced (payroll, legal services, tech support, CRM), many small and mid-sized businesses purposefully go out of their way to avoid potentially costly IT expenses—but the rep still approaches the sale as if the prospect had their own IT department standing by to take care of their every technology whim.

2. As a result of #1, reps fail to do an appropriate needs analysis, because they forget / don’t recognize how many other “touch points” their technology solution requires.

Because reps assume small businesses have access to technical expertise they don’t have, they lose sight of the fact of just how much IT infrastructure will actually be required.

For example, even something as seemingly simple as our PowerDialer system requires a correctly installed and configured phone system (which anyone in telecom will tell you can be a total crapshoot based on the type of equipment used), a PC with the right software and add-ons, a working knowledge of basic Web architecture, and a “scrappy manager” willing to mold the system to produce the best levels of results—and that’s just for a relatively basic technology that increases productivity while making outbound sales and marketing calls.

If the product or service is even more complex than that, it only exacerbates the problem.

It’s one of the sales industry’s oldest maxims, and I told it to my lead gen reps last week:

“Interest is often the counterfeit of need.”

When a B2B purchaser buys it’s because they have recognized the importance and necessity—the need— of solving a particular problem, and doing it now.

Interest can, of course, be a step to producing need—but interest alone doesn’t generate the impetus to make a purchasing decision.

“Need,” as I define it, is “a compelling, actively perceived problem that the prospect believes can be solved with the right product or service.”

Using this definition, I told my sales reps that one way to transform “interested” prospects into “buying” prospects is to use the three elements within the definition itself: compelling reason, active perception, and a belief that the problem can be solved.

One: Accentuate the need by demonstrating the compelling nature of the problem. Even if buyers recognize a potential need, they often don’t clearly see the value of fixing it quickly. The prospect must have a accurate picture of not just the need, but how fixing it, and fixing it now is a far preferable alternative to the status quo.

Two: Active perception. A compelling problem isn’t a problem if no one recognizes that it is. Or as occasionally happens, a need gets identified, but by the wrong decision-maker. Good sales reps understand that knowing where a problem resides on the corporate “food chain” is critical. And sometimes “creating need” requires just that—creation. The “Smoking Gun” approach is a powerful sales tactic; when you can visibly and realistically show a prospect a problem they didn’t know they had, it acts as a motivating force and build trust.

Three: Once recognized, a prospect must believe that their problem has a solution (and that you provide it). Often a prospect has already attempted other solutions to their problem before they spoke to you, and will be skeptical that your solution is better than the ones they’ve already tried. Sometimes this step is about overcoming objections, but not always; in many cases it’s about educating the prospect on how your solution works better. This is when having case studies, research, and customer testimonials can have real impact and value.

Remember:

Interest makes conversations, but need makes sales.

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Sales industry researchers CSOInsights stated recently that after a “flat” budget year in 2009, marketing budgets are increasing in 2010 and beyond, and that the top three items for additional budget allocations were:

1. Web site design/content (65% stated they were increasing budget allocation)
2. Email marketing (54%)
3. Web search optimization (51%)

Great news, right? Good to hear that the economy is picking up, and that smart companies are following current trends in effective Web lead generation.

So why did my “Massive Disconnect” alarm start going off almost immediately?

Here’s why: because indicators show that the majority of companies are terribly, horribly un-optimized to take advantage of the leads their Web marketing activities generate.

Even though the article states that 75% of sales organizations now use a CRM tool of some kind to track and monitor sales activities, MIT research shows that most of them still aren’t following good lead management practices to get the most from their increased marketing spend.

For example, how many of the companies surveyed are currently responding to their incoming, “hot” Web leads in 10 minutes or less? Because if they aren’t, MIT’s research shows they’re potentially losing 20 times the total effectiveness of the leads they generate. Even worse, the research shows that 45% of companies don’t even respond AT ALL to new Web-generated leads—let alone in 10 minutes or less as best practices suggest.

So let me get this straight: the top three increased marketing budget allocations for the next year are all based on Web marketing—yet nearly half of companies don’t respond AT ALL to incoming Web leads.

Hmmmm.

Furthermore, of the companies surveyed, how many call/contact attempts are they making to reach their new Web leads? MIT’s research shows that barely 7 percent of companies make at least 6 total contact attempts by phone and email to incoming Web leads.

Yet according to The Bridge Group, the average number of “touches” needed to convert a new inquiry into a prospect is somewhere between 6 and 7—and dead “touches” like no-answer phone calls don’t even count towards that number.

So tell me again—why are companies increasing Web marketing budgets when statistically only 7 percent of them are even meeting the absolute, barest of bare minimums to get the value they want from their leads?

My “Massive Disconnect” alarm just went into overdrive.

Is it any wonder that in spite of progress, Propelling Brands says that sales and marketing still have a long way to go to align their processes?

The Harvard Business Review says our customers don’t want to talk to us.

While a sobering thought, I’m also wondering if this doesn’t in part explain the move to “cloud computing” and SaaS over the last ten years.

SaaS takes away some of the most frustrating customer “touch points” of software—maintaining hardware compatibility, the frequent need for updates/patches, as well as having to completely relearn a new interface for every application. Web apps use concepts we’re already familiar with—clicks, links, embedded content—and puts it in front of the user.

Though the occasional unreliability of Internet service can be a problem, to me SaaS represents a trend in this idea that “self-service” often trumps “customer interaction.”

Another quick point:

We’ve been saying it for a while now, but it’s nice to see someone else is taking up the mantra:

Selling Power recently posted an outstanding article describing what we’ve known was coming for sales teams—that technology is going to replace some jobs, and only the most qualified sales reps that are willing to adapt are going to survive.

Inside sales is replacing “outside” sales because it’s faster, more cost effective, and provides more opportunities to leverage the power of technology to improve performance.

Inside sales is more scalable, and much easier to implement across locations/divisions.

First of all, let me be up front and say that Trish Bertuzzi is a colleague and a friend of mine, so take that for what it’s worth.

That being said, her company, The Bridge Group, Inc., recently released a fascinating research study on the state of inside sales organizations in 2010.

Even the shortened, “highlight reel” version on Bridge Group’s blog, found here, shows some keen insights into the direction that companies are going with their sales teams.

A couple of highlights:

• Per-rep quotas are up across the board—but the percentage of reps hitting their quotas is low (40 percent or less).
• The average number of calls to marketing-generated lead has dropped 43 percent. Think there’s any correlation to this and the fact that reps aren’t hitting their quotas? (Our ground-breaking MIT research study has some answers to why fewer phone calls = a bad, bad thing for sales teams.)
• Of the 115 companies surveyed, the average organization’s inside sales team had grown 280 percent since 2007, in terms of total people employed.
• 89% of respondents said outbound phone calling was a primary function of their inside sales teams.

What does it all mean?

Mostly what we’ve been saying for for a little while now, that inside sales is quickly going to become Inside Sales—no longer just an “outlier” sales department whose primary function is lead gen and nurturing, but will be the heart of the 21st century sales team.

We had a meeting this morning that may as well have been entitled, “50 Ways For Communication to Break Down When Implementing a New Client.”

At InsideSales.com, we go out of our way to try and have specific, workable processes in place to make sure that we’re not letting stuff fall through the cracks (and you quickly learn that there’s cracks you didn’t even know existed for stuff to fall through). In that regard I think we’re doing pretty well—in fact, in some cases we may try and “over-process” our work flow, but that’s another story.

In any case, as our implementation team walked us through a workshop this morning, they outlined approximately five stages that a closed sale goes through before a client is considered “street ready” with our product. And at each point in the process, the discussion invariably turned to the needs of:

1. What had already been communicated in the previous step,
2. What needed to be communicated at the moment,
3. And what needed to be communicated in the future to complete the next step of the process.

That, in essence, was the crux of the meeting. Getting the right info to the right people.

Here we are, one of the leading sales and marketing software vendors, who specialize in high velocity, deep impact data management—and we still had gaps in our process that our employees had to bridge.

Now that’s not to say that our Lead Response Management tools don’t work, or that every business on the planet can’t make a significant impact on their success with them. Without the tools, we’d be dead; we’d have no hope at all of successfully managing our business and sales. But it reminded me that even with some of the best data management tools on the market, unless our own processes are robust and flexible, and our people are committed to providing a top-tier customer experience, we’re not going to continue to have success.

The people inside our process have to leverage the tools, or else it ends up wasting time.

And if you’re my company, 80+ percent of the issues we face in keeping our clients happy and productive with our products hinges on critical communications.

It’s an interesting challenge to think about.

I just got a tip from John Sutton, a friend of mine at Sendside, who read a survey on a United Airlines flight last week from the United States Travel Association that found business leaders estimate face-to-face selling converts 40% of prospects to customers, while virtual selling (Inside Sales) converts 16%.

That means face-to-face selling closes 2.5 times better than remote selling. We found roughly the same ratio at Inside Sales about four years ago.  Our current ratios place remote closing ratios around 18.5%, so the gap is narrowing.

Inside Sales teams cover way more ground in terms of prospecting than true face-to-face salespeople. In fact, very few face-to-face salespeople actually prospect in a face-to-face mode any more, so the here is where the numbers skew.

Almost all face-to-face (Outside) sales reps have switched to an Inside Sales model for their prospecting, and they pick up the phone to set their appointments.

We have found that lead generation reps (with power dialer technology) make 7 times more prospecting calls than manually dialing.

What does this mean?

It points to a hybrid model where you prospect remotely, and go face-to-face to close the big deals where it is still cost effective, otherwise sell remotely.

Top 20 Articles on www.KenKrogue.com

1. What is Inside Sales? Our Definition of Inside Sales – 15,262 Views
2. Inside Sales Best Practices - 1,445 Views
3. Inside Sales Tips by Ken Krogue - 923 Views
4. KPI – Key Performance Indicators – 822 Views
5. Inside Sales versus Outside Sales – 489 Views
6. Is Leaving a Voicemail Worthwhile? – 408 Views
7. 6 Reasons Salesforce Users Need Hosted Dialer Technology - 370 Views
8. Behind the Cloud – Ken’s Notes – 305 Views
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16. Inside Sales Training – 179 Views
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20. What is Lead Response Management – 127 Views

The Kellogg Survey that was done by Dr. James Oldroyd in 2007 showed a statistically higher close rate for companies that break apart their sales model into specialties.

Internally at Inside Sales.com we have several specialties in our sales and lead generation departments:

1. Lead Research
2. Website Auditor
3. Lead Response (Fronter)
4. Lead Qualification (Appointment Setter)
5. Small Account Closers (Account Executive)
6. Large Account Closers (Senior Account Executive)

A company that leaves their inside sales reps to find and close their own leads follow what Dr. Oldroyd called a Generalist Model. Even in the early survey by Kellogg there was a close rate that was 7% higher for companies with a specialist model over a generalist model.

As we have perfected our own internal processes we have found the difference to be much higher.

You don’t need to start as complex we have done.

We recommend that you start by separating the Appointment Setters from Closers; just two positions. In fact, we have roles, not just positions.  Some positions carry several roles.

Appointment Setters focus on quantity of calls and appointments set. Each of our Appointment Setters averages 350 calls a day and sets 4-5 appointments each day.

Our Closers focus on quality of calls and specifically on accounts closed. We just had a record month with 40 accounts closed and the highest new revenue growth by 26.4%. One Closer closed 15 accounts in February; also a new record. We were excited to add 7 new Salesforce accounts in one month.

This is done by Specialists.

Top 25 Articles on www.KenKrogue.com (with total views)

1. What is Inside Sales? Our Definition of Inside Sales | Ken Krogue – 23,175 Views
2. Inside Sales Best Practices - 2,878 Views
3. Inside Sales Tips by Ken Krogue - 1,798 Views
4. KPI – Key Performance Indicators – 1,141 Views
5. Inside Sales versus Outside Sales – 963 Views
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14. Behind the Cloud – Ken’s Notes – 460 Views
15. Inside Sales is Top Method of Lead Generation – 452 Views
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17. Demand Generation Tactics and Strategy – 370 Views
18. Climb the Trust Ladder to Increase Results in Prospecting – W/ VIDEO! – 354 Views
19. Harvard Business Review says Sales is No Longer About Relationships – NEW! – 347 Views
20. Inside Sales Tips – Specialize – 324 Views
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22. Power Dialers – 286 Views
23. Marketing B2B 4 Quick Email Tips – 273 Views
24. Lead Generation Strategies: When to Call, When Not to Call? – 215 Views
25. What is Lead Response Management – 207 Views

Five years and four months ago on Monday I officially started working at InsideSales.com. Actually it was called Sales Team Automation at the time. We were still a few weeks away from buying the InsideSales.com domain from a guy who needed money just before Christmas in 2004.

We paid three thousand dollars. Now it is arguably our single greatest asset.

We had the website up by the first week of January, and the first day we generated 8 leads, now we get 50 a day. Back then you typed in “Inside Sales” to Google and you found us and 10,000 companies trying to hire inside sales reps.  There may have been a lot more but I stopped scrolling through the pages to see how many.

Now there is more, much more.

I used to be concerned when I noticed that we have several competitors mimicking our every move and driving adword costs up, then I realized that is the best thing that could be happening; Inside Sales is becoming an industry… it is an industry.

American Association of Inside Sales Professionals

We just became a Member and a major sponsor of the American Association of Inside Sales Professionals, AA-ISP. Industries have associations.

Every morning I have an email that comes to my inbox from Monster.com and CareerBuilder.com of new job listings from companies that are trying to hire Inside Sales jobs.  It keeps getting bigger.

We knew that inside sales would become Inside Sales. What had been a 2nd class department that generated leads for Outside Sales and took all the scraps off the table would one day grow up.

For sixteen years I have watched inside sales evolve.  From my years at Franklin Quest when we had to find our own leads and hand off every large corporate sale we caused that turned into something big (and we caused a LOT of sales.) It wasn’t fun being a second class citizen under the thumb of Field Sales and the Great Generation sales leadership and Baby-Boomer sales management who only know one way to sell. We were the fastest growing department at the 2nd fastest growing company in America.

Just recently our joint research with infoUSA, SKKU, and MIT has shown that Inside Sales is growing at a rate that is 15 times higher than Outside Sales, which really isn’t growing at all (7.5% annually versus .5% annual)

It hasn’t been a revolution like I sometimes hoped it would be. It just became the default way to sell for hi-tech companies who did everything over the web.  All of B2B and the big ticket business to consumer companies that live off of web-based leads like mortgage, insurance, online education, debt consolidation, and even automotive before the crash have all gone to outbound call centers with professional sales reps who sell remotely… That’s Inside Sales. In fact, our definition of Inside Sales is simply remote sales (see “What is Inside Sales? Our Definition of Inside Sales“)

I think much of it came about because of technology: The phone, the fax, the internet, email, WebEx and GoToMeeting. Then hosted CRM, dialer tools, voice messaging, presence detection or “Sales 2.0″ as so many call it took it to a new level. The crash and the down economy has actually accelerated the growth of Inside Sales. Travel costs and savvy buyers who would rather meet by web conference have increased the effect. Companies just aren’t replacing the attrition of Outside Sales, while actively staffing up their Inside Sales teams.

Mostly I just think it is the coming of age of every generation after the Baby-Boomers. They are more comfortable interacting, communicating, and selling remotely.

We have stopped hiring old-timers, they can’t seem to keep up. I’m forty-four, two years shy of being in the Baby-Boomer Generation and I’m the oldest person at InsideSales.com. LinkedIn says our median age is 25 years old. My partner, our CEO, just won Forty under 40, top 40 entrepreneurs under the age of 40 in Utah.  He can keep winning it for 3-4 years. I’m a geezer; the only one with grey hair. Even my son Josh and one of my old Boy Scouts Scott Gardner works here.

Inside Sales isn’t just a department anymore… it’s an industry. And it is the fastest growing industry in all of sales and marketing.

Top 20 Articles on www.KenKrogue.com

1. What is Inside Sales? Our Definition of Inside Sales – 15,262 Views
2. Inside Sales Best Practices - 1,445 Views
3. Inside Sales Tips by Ken Krogue - 923 Views
4. KPI – Key Performance Indicators – 822 Views
5. Inside Sales versus Outside Sales – 489 Views
6. Is Leaving a Voicemail Worthwhile? – 408 Views
7. 6 Reasons Salesforce Users Need Hosted Dialer Technology - 370 Views
8. Behind the Cloud – Ken’s Notes – 305 Views
9. Inside Sales Tips – No Vacations Last Week of the Month – 275 Views
10. Funny Inside Sales Videos – 247 Views
11. Demand Generation Tactics and Strategy – 245 Views
12. Inside Sales Tips – Skip to the Beep – 245 Views
13. Inside Sales Tips – Interest is The Counterfeit of Need – 220 Views
14. Inside Sales is Top Method of Lead Generation – 205 Views
15. Inside Sales Tips – How LinkedIn Gives you 3 Free SEO Backlinks - 189 Views
16. Inside Sales Training – 179 Views
17. Marketing B2B 4 Quick Email Tips – 154 Views
18. Inside Sales Tips – Specialize – 140 Views
19. Leadscon East Vendors Need to Drink their Own Medicine - 133 Views
20. What is Lead Response Management – 127 Views