This week on the Friday 15, Andy & Brian discuss whether your eCommerce site can replace some of the work being done by the inside sales team…

The biggest takeaway this week is that the inside sales team brings an enormous amount of efficiency and revenue opportunity when paired with outside sales and when paired well with eCommerce.

In this episode they’ll break down what inside sales does for a living, and whether the growth of eCommerce will impact the success of that role.

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Brian Beck: Welcome to Master B2B’s Friday 15. Here we are both for Friday 15 in early September just past the Labor Day. My name is Brian Beck. I’m here with Andy Hoar. My partner in the Master B2B Thought Leadership Series. Welcome everyone. Excited that you’re here today. We have a great set of topics we’re going to be talking about. Today this is a hot one, Andy, talking about inside sales versus e-commerce. We hear a lot about AI and all these things happening in the world. But before we jump in on that, we have some… [Music] Breaking News. Andy, I don’t know if you saw this yesterday. E-Marketer came out with some data that was actually published by Google. It talked about CTOs being now responsible for driving the Gen AI strategy at businesses. They surveyed hundreds of companies and found that it wasn’t the business side which was driving the AI strategy at companies. It’s actually the technical function. CTO, 59% said the CTO, CIO followed that followed by the CEO. So this is really still at the C level and it’s technical. What’s your reaction?

Andy Hoar: Yeah, and that’s surprising. It’s considered a game-changing technology but most importantly, a technology. So companies, this is early in the curve. We saw this thing with e-commerce. I’ll bet if you go way back on the Wayback Machine, you’ll hear the same thing about CRM when it first came out. Despite the fact that CRM is currently owned by the business or marketing side of the house now. But it’s a “technology” (air quotes) and because of that it goes to the CTO. But I assure you within the next five to ten years this is going to be distributed across the organization. CTOs might have sort of an oversight responsibility but this is way too important to be put in the hands of just the technical team.

Brian: Yeah, although what’s interesting Andy is we find a lot of folks – I think about people like, Andy Goodfellow at Zoro, excuse me, owned by Grainger. They are technical leaders but they’re business minded. So in that sense, there’s more of that creeping into the CTO, CIO role – there’s a responsibility for business and awareness of the business needs. But I agree with you. I think ultimately there has to be a real business use case for this stuff and that has to come from the business side. Sotoday I think there’s more concern about the security of AI and how you manage this thing that everyone is sort of afraid of a little bit. And so that’s what’s dominating where it’s being managed. Anyhow we’ll see how this evolves. I just thought it was really really interesting because the CMO is at the bottom of the list – only 18% said that that was the role responsible for driving a Gen.A.I. strategy. So anyhow interesting stuff let’s get into our topic today which is – Is e-commerce replacing inside sales in B2B commerce? Now, we think we’re just talking about AI and we think about AI’s implications for e-commerce for digital for making processes more efficient not only for the commerce side but also for answering questions addressing some of those common use cases that traditionally inside sales has addressed. And when thinking about what are some of those traditional roles of inside sales starting here, Andy. Or thinking about what they are typically doing around things like lead generation or prospecting for new leads for a company, or handling inbound leads – in that case a company calls in and they’re handling leads to either direct that to an outside sales person or perhaps close the sale or handling transactional or one time purchases. Or things like re-orders versus maybe a more complex sale that requires someone who is looking at the configuration or the application of the product in the field. So they’re handling those transactional orders serving smaller or long tail customers. Someone who just wants to buy one thing from the business and they just want to get it done and get out. Inside sales typically handles that. Or even handling simpler questions or problems. We do have technical support with a lot of companies with inside sales sometimes tend to be technical but more routine questions that don’t require you being in the field looking at the application with the customer, for example. These are the traditional roles of inside sales. But you found this article that McKinsey recently did a study that talked about inside sales versus some of the other selling functions. Do you want to speak to this a bit?

Andy: Yes so the headline here is that McKinsey found that inside sales typically cover 50% of the prospects at I’m sorry 4x the number of prospects at 50% of the cost of a traditional field rep. Backing up a second… Inside sales as a function – if we went back and looked at the history of it, it’s something that grew out of a fault in the model around the outside sales rep who is busy and expensive and traditionally well trained. One person couldn’t take every phone call and qualify every prospect and handle especially the long tail customers who are infrequent purchasers with small tickets. So they needed a function that would bridge the gap between that and nothing. So inside sales comes along which are typically I think hstorically people who were going to be outside sales reps and were early in their career. But like everything digital upended this model as well. And what we have seen is that the inside sales rep has become a new sort of monster in the organization. It’s a really powerful function if used properly, and it’s because technology has enabled it. This is what McKinsey found out: 4x the number of prospects at 50% of the cost because the outside sales person maybe has to travel someplace or have longer deeper conversations and sometimes those conversations are wasted when you have somebody who’s very expensive with a six-figure income and who’s well trained who’s taking phone calls about onesies and twosies and answering simple questions. eCommerce solved a lot of that by answering those simple questions and then the inside sales people have access to the same information that the outside sales reps have so basically the bottom line here is that a well armed inside sales rep can now effectively answer the same level of questions that the outside sales rep can. Now, people can disagree with us on that and yes, experience matters etc but technology and information has changed this game and that’s what McKinsey found. These numbers are pretty staggering. They increase revenue. They improved productivity for the field reps because they’re giving the outside sales reps better qualified prospects, but probably fewer of them. So this to me requires a rethink of the model.

Brian: Some of the other data here for those listening on your podcast – inside sales can touch 80% of accounts. What’s fascinating, Andy, is that the buyer has changed. 74% of millennials avoid sales calls and outreach efforts. That’s some data from Activate Marketing Services from two years ago. These millennials, by the way, everyone thinks they’re young kids they’re not. They’re now in their 40s. These are the majority of buyers and even GenZ are entering the workforce. So the buyer is changing out from under us.

Andy: I think it’s important to note is the difference between inbound and outbound. Outbound is reaching out to people and calling them contacting them. I think that’s where this statistic is particularly relevant. People are not taking phone calls. I don’t even take phone calls now. My phone rings and if it’s a number even number i don’t recognize I just read the message later. So we’re not taking phone calls. So let’s say somebody has a question. They contact the company through the portal. Maybe they send an email through the e-commerce site. Who does that go to? Does that go to customer service? Does that go to inside sales? Presumably it’ll go to inside sales or customer service. In many cases a well-informed customer service agent, just like a well-informed inside sales agent, can actually answer the question. And if they have any training they might be able to close the deal. I speculated about this with “Death of the B2B Salesman” 10 years ago. I thought that with information and technology customer service reps and inside sales reps can be a lot more effective. And I think that’s what we’re seeing now to the point where maybe that inside sales rep will get back to you and answer your question. And you say “great let’s close the deal.” Do you then have to pass them to an outside sales rep who that person has no relationship with? Or can the inside person or the customer service person close the deal? That’s an interesting question.

Brian: It is, but it kind of misses the point of the whole broadcast which is – is e-commerce going to take the place of these sales?

Andy: Because we didn’t get to the kicker here. We talked about inside sales. We talked about customer service. We talked about outside sales. But there’s a new kid in town, and it’s called the AI chatbot. And that’s typically run by the e-commerce team. So let’s take the AI chatbot and insert them in the process. If somebody asks a question on the website, the chatbot actually replies and answers the question. And it says, “would you like to book this transaction?” and if the person says “yes” and never touched inside sales and never touched customer service and never got to outside sales – that’s another dimension here where you can argue that as that becomes more prevalent and better – and we’ve seen it ourselves – the sales model is going to be challenged by AI. Now, that said, I don’t think AI can be able to answer everything. And for larger purchases people we want to talk to somebody. But do they need to talk to the expensive outside sales rep? Or can they talk to customer service? Or in this case, inside sales? I would argue, yes.

Brian: You wrote a bit about this following in the great footsteps of this gentleman here. For those of you listening on the podcast, we have a couple of pictures here. Two very handsome men. Mr. Andy Hoar and standing next to someone called Mr. Arthur Miller. And they both wrote all about this thing called the death of a salesman. So Andy, you wrote this when you were at Forrester and you had some theories that it seems to me some of the things you talked about are becoming closer to reality. But let’s talk about – does e-com take over, or does it supercharge inside sales? If we look back and think about those functions that we talked about at the beginning of the session today, can e-com handle these things? The first one on the list was lead generation or outbound prospecting. And if you think about things like digital marketing or the fact that a lot of today’s buyers are going online first to research products. Isn’t that replacing outbound marketing?

Andy: Plus we know that you can actually do personalized messaging using AI to people even on places like LinkedIn where you think they’re actually talking you personally. And so that’s all generated by the e-com in the marketing team, which doesn’t require somebody typing the message. And this does undermine the argument of inside sales.

Brian: How about handling inbound leads?

Andy: You can be rerouted through the chatbot and problem solved.

Brian: Or handling a purchase like a transactional one time purchase such as a reorder. Doesn’t e-com do that? The buyer knows what they want better than anyone else.

Andy: That’s the most important use case right now – the reorders where you just put them on a subscription plan and they just reorder easily.

Brian: They pull up the reorders once they log into their e-commerce account they see what they ordered in the past – I need this widget and boom, order again five seconds later. It’s very Amazon-esque. How about serving smaller or long tail customers – can’t e-commerce take that on from from inside sales?

Andy: It depends on what it is, but this is a perennial problem for every company. How do you handle the low frequency, small ticket long-tail customers who don’t generate enough revenue to justify paying an outside sales person who’s on commission?

Brian: Handling simple questions – can’t e-commerce or a website, now super powered with AI, handle some of these simple problems or questions? What is the role of the inside sales rep if e-com can handle a lot of these things?

Andy: It really depends on what the question is. If it’s a risky purchase where it’s a very customized purchase then you’re going to want to talk to somebody. If it’s an expensive product you probably want to talk to somebody. But this reminds me of e-commerce back in the day people said that nobody is going to buy anything over a hundred dollars online. People are making million dollar purchases online now so I’m not sure that’s an effective argument. I do think though that especially in B2B where there’s such such specificity about what you’re buying -like that part has to work in that machine – people may not trust the AI which might hallucinate. But it’s going to get better and I think the trend is definitely in the direction of e-commerce and AI taking over a lot of these functions.

Brian: I think this is going to be a balance with inside and outside sales empowered with digital – it’s already happening. Here’s a quote I’m going to read from the McKinsey study that we were citing earlier. “B2B sellers have achieved up to 20% revenue gains by redefining go to market through inside and hybrid sales. The successful inside sales model relies on qualified account managers and leverages digital solutions to optimize sales strategy and outreach through a range of channels.” What they’re saying is that as we look at those functions in inside sales they’ve traditionally handled those things, and as they become better and easier we can free up time from the inside sales team and change the focus to higher value tasks where there actually is some consultative selling required, or some technical knowledge, or some application knowledge which can be delivered via phone or web collaboration or Zoom or what have you. And we’ve seen this in our community too. We asked this question and we got some reactions on our LinkedIn poll questions. James Wallen had a really interesting point. James is the vice president of sales at Credit Key, and he said order placement is being pushed to e-commerce, changing the ratio of accounts that can be covered by both inside and outside sales a lot of accounts that would now have a now today have an assigned sales rep field rep are not being covered by inside sales and many accounts that are being directed to inside sales are not being pushed to e-commerce. So it’s kind of a rebalancing, and it’s making it more efficient and putting the buyer at the core – this how the buyer wants to be served – and providing different options.

Andy: What’s interesting about that evolution is that you can also map and it correlates with the least amount of friction. With an outside sales rep you’ve got to wait for them to call you back. An inside sales rep, they’re 24/7 or they’re on the phone you can talk to them in real time.

Brian: Jack Moberger, director of sales engagement at algolia, said this which I think was interesting: “Data proliferation and great analytics widen the funnel for the best offerings and the inside and outside sales teams grow like weeds because they’re able to chase down customers they would never would have thought to target.” It’s not just about the process and efficiency and eliminating friction, it’s also about widening the top of the funnel and getting more leads in so that the business can close more. We also asked our community on a LinkedIn poll about this and this was fastening. We asked them: Are you increasing or decreasing your use of inside sales in the age of digital, and 72% said they were increasing their use of inside sales, which is counter to what you might suspect.

Andy: We didn’t ask the question: are you increasing the use of outside sales in the age of digital? That’s the more pertinent question for death of a b2b salesman. That number is a lot closer to 50%. I think there’s the emergence of this well armed younger digitally savvy sales representative who’s using information and technology to answer questions and close deals. The question is – who’s closing the deal? That used to be something that only outside sales people could do, but I think we’re finding more and more in fact there’s even research we didn’t present today that says that people trust inside sales people more than outside sales.

Brian: Jared Abelson from Simpson Strong Tie, who’s their head of e-commerce, said their industry customers date they’re outside sales rep but marry their inside sales rep.

Andy: The research does show that when they ask them, “Who do you trust” they always say inside sales.