Difference between Inside Sales vs. Outside Sales
A company may have an inside sales model if its sales reps work from the office or home without meeting customers in person. It may have an outside sales model if it employs field reps who visit clients at business premises or homes to make sales. The reps may also attend conventions and trade shows to connect with customers.
A business may utilize both models, resulting in a hybrid system.
Let's examine the fine distinctions of inside sales vs outside. We’ll share strategy recommendations and touch on the possible use of AI conversational tech in sales development.
Let’s get started:
So, what are inside sales? It's the use of digital channels by sales representatives to sell products and services to new customers.
Sales processes such as prospecting, closing, and follow-up take place digitally, without the need for either party to meet in person.
The inside sales model is supported by various technologies and tools, including:
Electronic signatures and online contracts;
Social prospecting (use of social media platforms);
Quotes and proposals;
Phone and voice;
Lead and account scoring;
Which goods or industries rely on the inside sales model? It's the dominant sales model for SaaS, tech products, and B2B. For instance, a SaaS product rep can explain product features via a video call to the customer. Web conferencing tools such as Zoom allow users to remotely share their screens, making it easy for the rep to demonstrate product features. Clients can take the SaaS program for a test drive by signing up for a trial. They can also watch tutorials.
More companies are being drawn to the inside sales model because it's cheaper. For instance, businesses don't have to incur costs such as travel expenses. PointClear also discovered that an outside sales call cost was $308 compared to $50 for inside sales.
While the model has the advantage of costing less and being more scalable, it's not quite yet 50/50 with the outside sales model. Figures from the 2017 State of Sales Report revealed that 47.2% of the 5.7 million sales professionals in the US sold remotely. In Europe, the study established that 31.7% of sales reps from surveyed companies identified as inside sellers.
Many business transactions still demand a high-level trust. Clients need to know who they are dealing with. In real estate, agents can showcase homes with virtual tours or professional snaps. But the industry remains heavily reliant on outside sales and is not likely to change any soon.
Outside sales involve sales representatives traveling outside the office and meeting customers face-to-face. They seek out decision-makers at targeted organizations to make their pitch. The sales agents may bring real products to perform product demonstrations or use digital presentations. With some services, reps have to inspect the client’s facilities or assess their problems. For instance, a home restoration sales rep may first need to check for any signs of water damage.
So, what are inside sales vs outside sales? Inside sales entail making deals without face-to-face interactions, while outside sales involve closing deals in person. Outside sales reps are not out and about every day. They also participate in outbound efforts by calling, texting, or emailing prospects.
The outside sales model has slower sales cycles that may exceed 90 days because of the added steps. Businesses also incur higher expenses to acquire customers. For instance, the company may need to provide a car for business and personal use. The business may pay for trade shows or cater to the costs of holding conferences.
The model is commonly associated with a 100% no-caps commission-based structure. Some companies also provide a base salary with benefits.
As of the moment, the outside sales industry is in a period of uncertainty due to the global pandemic. Shutdowns and lockdowns are a persistent possibility, with the emergence of new COVID-19 variants. COVID-19 has similarly affected buyer preferences. Where they were offices to meet customers, some teams have not yet fully gone back to work.
To survive, outside sales agents have had to embrace digital selling, further blurring the lines between outside sales and inside sales. But this trend was not solely triggered by the pandemic. As early as 2017, the State of the Sales Report revealed that outside sales reps were spending up to 45.4% of their time selling remotely, which had represented an increase of 89.2% from 2013.
The future of outside sales will be more of a hybrid system. In late March 2020, Gartner Inc. polled sales leaders to determine if they would consider shifting field reps to virtual sellers. At the time, only 5% would agree to the move. But as the pandemic unfolded, the percentage sharply increased to 27% by mid-April.
You can distinguish between inside and outside sales models, despite the changing landscape and blurring of lines. There are fundamental differences when examining required skills, sales cycles, and sales activity metrics. So, how do outside vs inside sales compare? Let’s find out:
Sales agents are becoming more dependent on tools and technologies to assist them with various sales activities. In the 2021 State of Sales Report, all respondents reported using CRM, surpassing the earlier prediction that CRM use would increase among sales reps by 38%.
Now, there are still distinct differences in the tools used by inside and outside agents. For instance, field reps use physical samples, brochures, bio-sheets, or needs surveys. Inside sales agents mostly use digital tools.
While reps share many technologies such as email or CRMs, there are dedicated SaaS products targeting each sales model. For instance, field reps are now using door-to-door sales apps that place a bigger emphasis on pitching and in-person presentation features.
Now, the following list reveals the hottest sales technologies (source State of Sales 2021):
Data and list services
Phone and dialing
Inside and outside sales teams don't necessarily have different KPIs. Businesses still use traditional sales metrics such as quota attainment, total revenue, and opportunity-win rate to get a high-level picture of the sales team's performance. The difference between inside vs outside sales manifests in the tracked sales activity metrics.
Managers track sales activity metrics to identify the activities and efforts reps make to attain larger goals. So, the way you assess what an inside sales rep is doing versus a field agent may be different. The following table showcases unique sales activity metrics for each model.
Inside sales agents have more predictable schedules, making it easier to track their sales activity metrics and assign daily goals such as how many calls to make.
Field agents follow a less-structured model with longer sales cycles. Sales managers may review their activity metrics monthly, quarterly, or annually. Rather than daily targets, they may assign weekly targets.
All sales reps must have some common skills and traits to do their job effectively. Some of the basic skills include:
Verbal communication skills;
Now, if you take a look at in-demand skills on inside sales vs outside sales job descriptions, you may find stark differences. When hiring field reps, employees emphasize skills such as:
Interpersonal and presentational skills;
Business relationship building abilities;
Sound mechanical amplitude (for industrial & technical sales);
Excellent organizational and time management skills;
Strong networking abilities;
High levels of personal accountability;
Strong negotiation skills;
Some outside jobs may have other unique requirements. For instance, roof repair salespersons must have the ability to scale ladders.
You'll not find physical requirements for inside sales agents as they rely on digital channels to sell services and products. Still, employees seek candidates with above-average computer skills to work with sophisticated CRMs or cloud computing tools. Decent phone conversation skills are a must as inside reps may need to cold call clients. As inside roles become remote, employers are looking for self-motivated and dependable agents.
The sales cycle comprises all the steps to acquire customers, from initial contact to closing and follow-up.
When pitting inside versus outside sales, it emerges that inside teams have shorter sales cycles. That’s because the sales process is less complicated as reps mostly sell to individual customers versus large buying committees. Projects also have lower annual contract values (ACV) than outside sales contracts.
Outside sales teams face extended and costly sales cycles. Reps may go through more steps, such as holding several in-person meetings with key decision-makers. They may follow customs such as attending formal banquets when doing business abroad.
Businesses still offset the costs associated with long cycles because contracts have higher ACVs. While field reps handle fewer sales, they can rake in more on-target earnings because of higher quotas. According to the Harvard Business Review, the average outside sales rep quota is $2.7 million compared to $985,000 for inside sales professionals.
The building blocks of a sales team are the sales development representatives (SDRs) responsible for qualifying leads and account executives (AEs) who closed the deals. The ideal ratio of AEs to SDRs has been an ongoing debate.
In 2017, the ratio of reps to SDRs was 3.0, according to the State of Sales Development study. The ratio has since decreased to 2.0, meaning that each SDR now supports two AEs. Now, the higher ratio may increase the efficiency of a close-knit team. SDRs can work with a few AEs to generate more quality leads with better win rates. But, a higher ratio may increase the size of teams and customer acquisition costs. So, the first thing to check when sizing a team is the LTV: CAC (lifetime-value to Customer Acquisition Cost). A ratio of 3: 1 is quite ideal. Anything less may mean that you’re spending too much on acquiring customers, creating unsustainability.
You can still leverage the benefits of having a higher ratio and cut back on costs of developing sales-qualified leads by effectively using AI automation technology in sales.
Voice and messaging conversational AI technologies are making it possible for inside sales teams to automate tasks such as qualifying leads. The tech has come a long way, and conversations are now life-like and can be highly personalized using customer data.
Here is an example of a conversational assistant built on the Dasha.AI platform:
As a potential use case application, an automated voice assistant may call and qualify up to hundreds of leads in a day. It can similarly offer self-service options 24/7 by answering user support requests.
If you're looking for further ways to reduce SDR costs, you can also consider outsourcing. For instance, an outside team can qualify leads, and the internal team can focus on closing deals.
You can use other methods to determine the team structure, such as determining the number of opportunities required and the complexity of generating each opportunity. |
Outside and inside sales have long been held to be at odds. Businesses have been keen to choose the best strategy for long-term success. But the present business climate and blurring of lines make this choice less obvious.
Now, various factors can determine the strategy to choose. You can consider critical metrics such as ACV or sales cycles. The nature of the industry, the complexity of deals, and involved decision-makers should be weighed in selecting a strategy. For instance, if sales cycles are longer and ACVs are higher, you can choose an outside sales model. If you're expanding to new markets, you can select an inside sales model that is easily scalable.
Inside sales teams should strive to load more quality leads in the pipeline. To do this, they can start focusing on customer needs and create customized strategies based on the user's preferences. For instance, one customer may prefer in-person meetings or live product demonstrations. So, it's vital to build a flexible team to address this need. Pitches must undergo continuous refinement to showcase product benefits. It can mean improving landing pages or focusing on an inbound approach to gathering leads.
Outbound sales teams should still strive to increase engagements with potential buyers. They must send more emails and make more calls. While that is true, doing more is simply not enough.
Cold calls and emails have meager success rates. A strategy to use with outbound sales is making more warm connections. Teams should find similarities with the leads they are pursuing. It may be where they work, where they live, or what interests them. Social media platforms like LinkedIn are a gold mine of information.
Outside sales remain the leading way businesses sell, but there is an uptake of more sales agents selling remotely. Now, no strategy is necessarily better than the other. Companies need to assess their needs to determine which approach to take.
Innovation can give your sales team a competitive advantage. As a business, you can consider developing a custom conversation AI assistant to use in the sales development process and experience benefits such as reduced CACs.