It was a tough year for most industrial B2B sales. Following a tough year of pandemic-related economic lockdowns, certain industrial markets – such as electrical, HVAC, automation, building products, and powe transmission – have experienced rapid growth. Customers increasingly engage with suppliers through e-commerce, market platforms such as Amazon, Zoro and Alibaba, and virtual meeting platforms. These new, emerging buyer and seller engagement models present compelling value and efficiencies that are certain to endure beyond the pandemic and regardless of economic cycles.
The Historical Role of Outside and Inside Sales Reps
In the traditional sales structure, outside sales reps were generalists who owned a particular geographic area within reasonable traveling distance and served a variety of customer types. In larger metro areas, to a modest degree, application/technical specialists supported the outside sales teams. Inside sales teams primarily answered inbound calls to place orders and source non-stock product requests. This model, predicated on driver sales reps, telephone ordering and local inventories, trundled along successfully for about 75 years.
In addition, each outside or inside seller was responsible for managing each sales opportunity (account or transaction, respectively) end-to-end. This was essentially the pre-Henry Ford world of horseless–carriage production, with each worker producing the entire sales opportunity on their own. Unfortunately, while this structure had a certain economic logic to it (simplicity and geographic efficiency), it largely failed to accomplish several important activities essential to organic revenue growth.
Outside Sales Reps
Outside sales reps toted suitcases full of product binders around their territories: they communicated product knowledge, features and benefits to customers, who lacked direct access to that information. Commissioned on gross profit margins, outside sales reps frequently managed their territories without meaningful management or coaching, indiscriminately selling to any customer who could buy any product they could offer (whether it was part of core sourced product lines or not).
Customers may have appreciated donut service from friendly faces, but they suffered from sellers’ lack of technical specialization to drive innovative value in their businesses.
This approach predictably produced a large swath (40 percent or more, on average) of orders that lost money for their companies, taking into account true cost-to-serve. Pervasive, indiscriminate order-taking reduced net income by 33-66 percent, in thin-margin industries that could not afford the impact. A typical car-bound outside rep averaged only two to four customer calls per day.
In addition, many reps became complacent over time, effectively acting as custodians for their assigned accounts. Prospecting for new business – hunting for new customers or expanded share-of-wallet with existing customers – was a weak muscle for these farmer-generalists.
Call-aversion made existing business the comfortable modus operandi. Sales transaction data frequently show half or more of reps generating less than 5 percent new-customer revenue in any given year. Customers may have appreciated donut service from friendly faces, but they suffered from sellers’ lack of technical specialization to drive innovative value in their businesses.
Inside Sales Reps
Inside sales reps essentially became fulfillment centers. They received inbound calls, placed orders, navigated inventory, coordinated support and sourced the oddball products proposed by outside sellers or by customers. While the outside sellers provided customers with product information, inside sellers provided customers with real-time information and order fulfillment. Aside from technical expertise and price-haggling, inside sales reps were essentially customer service representatives (CSRs).
While the outside sellers provided customers with product information, inside sellers provided customers with real-time information and order fulfillment.
This traditional approach to customer service provided the grease to a high-friction business model that would likely have broken down without it. As noted above, fulfilling unprofitable orders may have pleased customers, but it sacrificed net income. Many inside sellers averaged less than 10 customer touches per hour.
In addition, most inside sales reps were oriented toward inbound calls, not outbound prospecting or selling. Besides the understandable friction of trying to juggle inbound call response and vendor sourcing, call aversion and misaligned talent or skills made outbound calling the weak muscle of inside sales. And, just as with outside sales reps, inside sales reps were usually generalists – again inhibiting the insights that could help customers drive better business outcomes.
The Price of the High-Cost Sales Structure
We can see how this sales structure created significant constraints to customer value, productivity, and organic growth. Operating in the traditional sales structure resulted in relatively low productivity and inefficiencies in serving the customer. This also resulted in underwhelming new-business development and the inability to specialize by sales-process stage, vertical market, application, or product set.
Essentially, the old branch and sales structure consumed almost as much value as it created...
The result was a high-cost sales structure that underserved customers and ultimately put at risk the livelihoods of a generation of sales reps. For many companies, the combined cost of distributed branches, outside reps with cars, and inside reps in offices, exceeded 20 percent of revenues. In an industry where gross margins commonly fluctuate between 25 and 30 percent, companies only received a net income of five percent or less.
Essentially, the old branch and sales structure consumed almost as much value as it created – which suppressed profit and squeezed ability or propensity to invest for the future.
The Generational Shift in Sales and Buyer Behavior
Since 2000, as buyers embraced the internet and e-commerce, branch and sales structures remained stubbornly stuck in the 20th century. The internet effectively replaced the product binders outside sellers once used and e-commerce replaced the fulfillment process inside sellers once served. Buyers still want to talk to sellers, but not about the tactical needs that traditional sellers address. They want to talk about the value products will bring them and their businesses.
Buyers want to discuss with sellers:
- Insights about products or services that are new, complex or risky
- Solving technical or application problems that require specialized expertise
- Connecting products or services to improve process efficiencies or business outcomes
Obviously, there are several implications to these behavioral shifts.
First, what buyers seek has largely transcended what sellers have traditionally provided.
Second, the Sales DNA that worked in the past may not consistently exist in today’s sellers.
Third, buyers require of sales reps new competencies that have not been part of the traditional sales talent selection and development processes.
Finally, the sales structure needs to shift to simultaneously elevate customer value, leverage specialization, and boost productivity. Essentially, the evolved modern buyer needs an evolved seller – which implies an evolved sales structure.
The Modern Distribution Sales Team for the Modern Buyer
To align with the modern buyer, sales structures need to evolve to embrace new sales roles that allow for specialization, productivity, and evolving value-add beyond what’s in the box.
NEW ROLES OF
Outside Sellers:
- Key account relationships
- Expanding share-of-wallet at the category level
- Hybrid remote/field customer engagement
- Project/bid business
NEW ROLES OF
Field Technicians/Engineers:
- On-site technical support
- Configuration and solution design
- Hybrid remote/field customer engagement
NEW ROLES OF
Inside Sellers (BDRs):
- New business development: new accounts and/or expanding share-of-wallet
- Opportunity with customer management
- Outbound-oriented, scale-focused
NEW ROLES OF
Customer Service Reps (CSRs):
- Inbound-call order fulfillment
- Transactional cross-sell
- eCommerce support/quoting
- Order entry
- Remote technical support
With each role specialized and synchronized with the others, customer value rises, productivity improves, and cost of sales declines. The modern buyer connects with the modern seller.
The Transition to Specialized Roles
With the shift in sales roles and structure, sales competencies must evolve as well. Binders and keyboards yield to new types of conversations, which in turn require distinctive Sales DNA and sales competencies that reps must possess to add value beyond what’s in the box. Consider how this plays out by sales role:
COMPETENCIES OF
Outside Sellers:
- Relationship management
- Farming
- Consultative selling
- Business acumen
COMPETENCIES OF
Field Technicians/Engineers:
- Technical knowledge
- Consultative selling
COMPETENCIES OF
Inside Sellers:
- Hunting
- Consultative selling
- Business acumen
COMPETENCIES OF
Customer Service Reps:
- Technical knowledge
- Tech-savvy
- Negotiation
Due to once-in-a-generation health and economic disruptions, the evolving buyer needs that started around 2000 further accelerated during 2020. New modes of buyer-seller engagement have emerged. Many sellers will need to hand in their car keys and office IDs and learn to master virtual meeting formats. Managers will likewise need to revisit their sales management operating system to align with the new paradigm.
Traditional Sales Model:
- Relatively low productivity
- Inefficiencies in serving customer
- No process for consistent new business development
- Inability to specialize
Specialized Sales Model:
- Lower-cost sales force
- Higher-speed and customer responsiveness
- Scalable and adaptive
- Process built for consistent new business development
- Specialization – technical and vertical
The Evolution of Sales Roles is Here to Stay
The go-to-market transformation of industrial B2B will go beyond sales roles. Branches will be consolidated into distribution centers. Outside sellers will work from home. Inside sellers and CSRs will either work from centralized call centers or from home.
The changes will be significant and challenging for many organizations to master. The benefits, however, will manifest as greater sales value to customers, better work-life balance for employees, and new efficiencies that will accrue to everyone in the marketplace.
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