Inside Out

Experts say the approach has limits and must be deployed with discipline. But they generally expect outsourcing to increase as Web tools for strengthening the inside sales channel expand in availability and improve in power.   

 

Five years ago, one of the nation’s leading biotech companies was having trouble selling a new pharmaceutical product. There were gaps in sales coverage, and the firm lacked the direct salespeople to reach all of its target hospital market. The firm estimated that 14 percent of the total market was not being contacted with its current sales model. It needed much broader reach but wanted top-notch representation.

 

West Business Services targeted the biotech company with its own value proposition: Complement field reps with highly trained inside reps and technology to cover gaps in the market. The company was receptive. “They wanted to think outside the box on field sales,” remembers West senior vice president Doug DeBolt. “They decided to test us.”

 

The company agreed that West would develop an inside sales program, with experienced healthcare sales associates exclusively representing the company, and West would manage the sales strategy to targeted segments.

 

West sales associates were trained for weeks on the company’s culture, program, and product and took classes in the medical field specific to the product offered. Under this approach, West was responsible for identifying and contacting pharmacy directors, researching the accounts, qualifying prospects, making presentations, closing, and offering postsale support – the entire sales process.

 

Instead of face-to-face sales calls, West’s inside reps used Web conferences to answer pharmacy directors’ questions and give presentations when most convenient for these decision makers. The technology was well received. Nearly 80 percent of scheduled Web conferences led to negotiations or presentations. Web interactions moved prospects along the sales cycle, enabling inside salespeople to close deals.

 

By the end of the first quarter, West had more than doubled the client’s market share and additionally delivered millions in cost savings. The company is now using West to supplement coverage for several other products.

 

A successful sale in this market can lead to roughly tens of thousands of dollars’ worth of business over time. “Our real focus is shifting the paradigm for what can be sold on the phone,” DeBolt explains. “People have focused on lead management over the phone, but we have demonstrated we can sell complex, high-touch products over the phone, with technology supporting multiple calls just like a field force.”

 

West used a combination of experienced pharmaceuticals reps and associates without pharmaceuticals sales experience. “If you hire reps only from the [specialized field], they can bring their predispositions to the sale,” DeBolt says. “We are doing inside sales, so we need a different philosophy.”

 

It took eight weeks to launch the program, including recruiting and training associates. DeBolt acknowledges that it takes time for his associates to become completely effective, but it takes less time than preparing field reps: “Post-training it may take six months to get field reps up to speed. We are quicker because we are making a lot more sales calls.” Presentations, methods, and tools are modified quickly based on early contacts and successes.

 

West used Webinars to make presentations and Webcams when prospects had access to this technology. DeBolt says, “Both tools are widely available today and will be more so in the future.” Moreover, “some doctors prefer this kind of interaction. They want to communicate when and how they want, often before and after the hours they see patients,” DeBolt says. West has just launched a new technology that makes Webcams available to all physicians who have a phone and access to Internet.

 

West normally uses its own CRM system to report all contact with prospects, what was said, and the necessary follow-up actions, but it can also adapt client CRM when needed. “We also report competitive intelligence and reaction to products,” DeBolt says. “Field reps often keep those things to themselves due to the competitive nature of sales.”

 

West begins an outsourced engagement under a fixed-price agreement until enough data on results is collected to include performance in its compensation, usually after six months or one year. It typically fills gaps in sales coverage for major firms, rather than cover whole markets for small companies. West has worked successfully in sales ranging from office products and advertisements with small businesses to healthcare and consumer products.

 

“Outsourcing sales for truly complex products is unusual,” says Steve Grossman, who heads the sales practice at Mercer Human Resources. He attributes this to the intensity of training required and the fact that complex sales often require coordination across many functions and product divisions of the selling company. “But some sales are not really complex anymore,” Grossman acknowledges.

 

Inside sales is becoming common in selling drugs to small community hospitals. “It makes a lot of sense economically. With Internet support you can do it well, rather than provide seven-minute spiels by reps.” Grossman says inside sales has become common in industrial markets and predicts it will continue to increase in medical markets.

 

“Use of Webcams is starting to grow in physician selling,” Grossman notes. “You can do it from anywhere, even India. That is what is changing the pharma sales model. There is a limit to how many reps doctors can listen to or [how many reps] you want to send.”

 

The choice in sales to small organizations is often between using independent distributors, who sell many products, or inside, Web-assisted reps. “This way, you get a dedicated, focused person,” explains Grossman.

 

When outsourcing sales, firms must retain control of operations. “Get real-time data feeds,” Grossman urges. “Monitor call centers, know how many calls were made, their effectiveness, the win rates, costs, and where sales come from.”

 

Grossman thinks the outsourced option should be paid for by fixed cost first, and then firms should transition to performance-based fees: “The early period is a testing for both parties. The outsource provider needs to know it will get support and organizational commitment so it can operate efficiently.” This testing period can be a couple of quarters for products with a short sales cycle, but a year or two may be necessary for long-cycle sales.      

 

The telephone approach has precedents in high-tech markets. Computer pioneer Digital Equipment Corporation, before its acquisition by Compaq, used inside telephone reps to close multimillion-dollar deals. “It has great success when done well,” says David Brock, president of Partners in Excellence, “and it is unsuccessful when done poorly.” This approach could have been successful even in the late 1980s when Web tools were not available.

 

Brock sees more firms using Web conferencing, streaming video, and Webcams, whether contacts are in-house or outsourced. “And West has a reputation for using technology well,” he notes. “I think a lot of companies still underexploit these tools due to habit. We have always gotten in the car, gone to the meeting, taken the client to lunch, then headed back to the office.”

 

Technology for lead generation and qualification is common now, with handoffs to field reps for selling. Technology is also common in commodity sales and cross-selling and up-selling. And many firms do first deals with a field rep, then transition future sales to the inside force.

 

But using technology for the whole sales process depends on how customers prefer to buy. “Some are not comfortable with online meetings,” Brock says. He recommends learning how customers in each segment buy, then shaping contact methods to fit these preferences.

 

The next question is whether or not to sell using in-house resources versus outsourced, which depends on cost and coverage. Outsourcing usually involves fewer fixed costs, which may be the deciding factor.

 

When choosing the outsource option, firms must make sure the provider understands its selling process. Brock has one client now who sells solutions but chose an outsource provider with transactional sales skills. The partnership is not working.

 

“Does [the outsource provider] have experience with your selling process, industry, and market?” Brock emphasizes. “Has the provider executed it well?”

 

Next he urges getting dedicated staff from the outsource firm. “You do not want to rotate people through. Get people who are dedicated, get to know them, love them to death, and train and support them.”

 

The outsource option frequently crops up when firms consider extending their market reach geographically. Channel choices for international markets come down to the three C’s: cost, coverage, and control. Michael Brizz, president of the Center for Professional Achievement, sees companies initially working through independent firms because a new territory does not promise enough revenue to justify company reps. Only as revenue grows can in-house sales be justified.

 

And coverage is a big question with independent reps. Do they only skim easy opportunities while the firm needs deep penetration? Control is the final consideration. Brizz asks, “Are you getting the quality sales process you need to get your share?”

 

Telephone reps have been most effective with established customers, rather than with new relationships. Brizz urges, “Test the telephone model well before you convert, and make sure your selling process works remotely.”

 

Telephone sales work better for straightforward products that are installed in place of others. “If you are selling a solution to a rat’s nest – hard to figure out and requiring fine tuning, many decisions, and adjustments – the prospect will want to see someone he or she can grab if there are screw ups,” Brizz observes. “Prospects are much more reluctant to buy remotely.”

 

Finally, Brizz says credibility is crucial to making inside sales work. “You must be either the industry leader or have educated [customers] who trust you.”

 

If you choose an outsource firm to sell your product, remember, “[The outsource firm] will not change its behavior for you,” Brizz stresses. “So does your product fit with its process and relationships?”

 

Once a provider is chosen, “make it as easy as possible, as pleasant as possible, and as profitable as possible for the firm to sell your products,” says Brizz.

 

Can the outsource option work for not just a segment, but the whole market? “I have seen it give a short-term boost but not be successful in the long term,” says Ken Thoresen of Acumen Management Group. And outsourced sales are usually more effective for mature products that already have significant market share and less successful for early-stage products that need dedicated experts.

 

Using channel partners or manufacturers’ reps is a common way of shedding sales burdens. But it is difficult to get mind share when they sell three or four different lines. Explains Thoresen, “They will gravitate to higher-margin or easier sales.”

 

The West model removes some of these problems, as dedicated reps can handle complexity, but as Thoresen stresses, “You must control the training and the reporting, not just of sales, but of activities, calls, demonstrations, and leads.”

 

A combination of field and telephone reps can tap the whole market. Inside reps can touch 20 or more prospects a day, field reps considerably fewer. Microsoft uses this combination model, with field reps talking to resellers and telephone reps dealing with up to 50 firms.

 

But product maturity and deal value are still major issues. Thoresen says it may be necessary to confine inside reps to prospecting and setting up appointments: “Today is great time to use inside reps to save costs.”

 

Thoresen sees the Web as very powerful, allowing reps to give highly complex demonstrations in three dimensions. He thinks it may be most useful in replacing, not salespeople, but technical experts. They can answer prospects’ technical questions without the burden of two-day business trips. And the Web is obviously powerful in implementation and training support postsale.

 

 The first level of Web contact is Web conferencing, provided by Microsoft Live Meeting and Cisco’s WebEx. Almost all firms now have access to these. Fewer companies routinely use the second level, which requires Web cameras, but more are acquiring Webcams and will be able to.

 

And better Web tools are in view. Cisco has developed TelePresence, which is high-definition video conferencing. “It is just like sitting across the desk from a person,” Thoresen says.

 

And a lot less expensive. •