As is always the case, distribution topics seem to come in waves. It seems like a topic comes into my circle of influence and repeats for about 90 days. Perhaps it just seems that way because I become more aware of a topic and tend to hear it throughout my daily interactions with clients, guests and colleagues. This quarter, I am becoming more aware of the importance of inside sales programs in the distribution space. For those of you who have been around me for a number of years, you will often hear me talk about this role, or team, being equal to field sales programs. Unfortunately, this has not been a popular opinion for much of my distribution career, but a kid can still hope.
Let’s just look at the numbers. From a seated position, inside the office, the average internal salesperson can touch at least 30 customers a day versus the field salesperson averaging about 10 meaningful customer interactions. I may be a little light on the number of customers an internal salesperson can reach with the aid of modern technology. I should also note, that “inside the office” may be an expression of the past. An inside sales team may be partially or fully remote. The environment is rapidly changing.
Once the burden of rudimentary product understanding has been lifted from the supplier’s local salesperson, we are ready to advance to an honest-to-goodness sales meeting.”
This topic came up in a recent interview I was doing with my friend Gui Messina, executive director of HARDI Mexico. Gui and I were talking about the differences in distribution sales between Latin American and North American wholesale distributors. One of the myths that he has been trying to crush in the Latin market is “quoting is selling.” We both agreed that this is still a problem in the North American market, but to a lesser degree. This led us to a discussion about how strong North American wholesalers in the HVACR space have dramatically enhanced their revenue by developing robust inside sales programs. A further benefit of these programs is the ability to be flexible with sales direction. The inside salesperson can be hyper-focused on a product or category, or the strategy might be to become more diverse in the categories offered to the customer base. A well-trained inside person can even move between strategies on a daily basis. Field sales associates often have difficulty switching directions quickly or moving between strategies.
Just so that we are all clear, the mission of this inside sales team is to make outbound contact with customers in order to drive new revenue. I want to make this clarification because inside sales is often thought of as an inbound customer service function with some opportunity for add-on selling. We all know that adding lines to an incoming order can become a struggle in the heat of battle. I am advocating for a more deliberate hunting for sales versus an opportunistic add-on sale.
If I was starting a team in my company, I would begin by identifying an individual with some solid customer service experience, an interest in discovering new revenue opportunities and a comfort level with variable compensation methods. One way to identify a candidate, or candidates, might be to come up with a simple outbound calling program with your existing customer service team. I have often suggested this to clients. Ask the associates to make six to 10 outbound calls a day to dormant accounts. Let’s face it, we all have a ridiculous list of customers who have done business with us in the past but have not placed an order in the past 12 months. Many of them have existing lines of credit with us. For one reason or another, we are not getting their business.
Start by generating a list of dormant accounts and divide the list up among the internal associates. I would help by creating a script and a list of questions to help them get comfortable with the initial contact. In the initial script, do not try to sell anything. Direct the associate to 1) determine if the company is still in business, 2) see if the customer knows he/she has an open line of credit with your company and 3) make sure you have accurate contact information for the accounting and purchasing decision-makers. During this phase, teach your associates how to make outbound contact while cleaning up your customer database. Gather the team each week to let them talk about their interactions. What worked? Where were the challenges? Let them laugh about the particularly difficult individuals they encountered and how to move past those interactions. During these meetings, you will begin to see who is energized by these calls and who is not suited for this role. I should also note that you need to have some place to deposit the information they are gathering. This would be a great time to utilize the customer relationship management (CRM) system built into your existing distribution software, or an external CRM system that your field sales force uses.
After a month or two, introduce a few more questions into the script to find out where they usually buy their products, what they like about those suppliers and if there are any products that they have a difficult time getting. This helps teach them how to gather basic information and to listen to customer pain points. By this time, the candidates may have started developing some simple relationships. If this starts to happen, introduce some specific category campaigns.
Just like you have dormant customers, you also have dormant product categories. Years ago, I helped a concrete supply house develop a campaign to drive ladder sales into the customer base. Clearly, the supply house was not known for stocking and selling ladders, but it doubled its revenue in the category with a focused campaign primarily driven by inside personnel.
When you see certain candidates begin to thrive in this new outbound calling environment, keep feeding them with dormant and house accounts. Remember, most low-performing accounts can improve with a little attention (they simply don’t know what your company can offer). I am always reminded of the simple axiom: you never get the opportunity to showcase your service without securing the first sale. As your new candidates begin to drive revenue, provide them with technological solutions—such as email marketing or outbound text communication. The sky is the limit here.
I also want to share a cautionary tale. At least 25 years ago, my family distributorship embarked on a similar campaign to create a tele-sales program. That’s what we called it back then, but the concept is the same. One sales associate thrived in the position with her fearless smiling and dialing. By directing her customer base to a monthly flyer we mailed out, she developed a nice account base that produced almost $40,000 in gross margin per month. Not bad for an inside program. After a few months of watching her succeed, we gave her a car and an outside sales territory. We failed to recognize the opportunity for her to create a whole new sales team based on the tele-sales model. I share this story with you because I don’t want you to repeat our mistake. If you develop a rockstar in this new program, let him/her create a team of rockstars. Mine your existing customer base and don’t fall into old patterns. If you need help getting started, my door is figuratively open.