I have been discussing this phenomenon for more than three years, so what is taking place now is not a surprise.
So, having posed the question, let me provide some answers – why is selling really going inside?
The most obvious reason is pure economics: After the recent financial meltdown, companies have been forced to examine the true cost of sales – something they do not usually have time to focus on when business is buoyant – and what they will have discovered may have startled them, because sales costs have been spiralling out of control for a number of years: Fuel costs, labor costs, the cost of raw materials, for example, have all soared, and put simply, because of intense competition, the price of our products and solutions have remained largely unchanged.
The net effect of all of this has put thousands, if not millions of companies – globally, not just in North America or Europe – out of business.
You see, it is very easy to calculate gross margin/gross profit – which is what most compensation plans are still based on, amazingly – you simply deduct your buy-in cost from your sell-on price. However, your actual net profit is vastly different. Let me give you an example:
Let’s take a typical sale in a consultative/collaborative environment: After some pretty rigorous qualification at the front-end, we decide that we have uncovered an opportunity that is worth pursuing. We arrange an initial exploratory meeting, face-face, because face-face selling is still a dominant feature of selling at that level. If the meeting goes well, and the full traditional sales/buying cycle is followed, there may be another five, six, seven meetings, not just involving the lead salesperson, but his/her line manager; some technical resource on very “big-ticket” deals, even some finance input – team selling.
You do not need a degree in higher math to calculate the total cost of all this effort: I read somewhere the other day that it now costs $1500 to put one salesperson in front of one customer for one meeting. I actually think that this number is very conservative. But you get my point?
Whilst this level of investment may be justified for extremely high-value business, and may be possible to control, we are talking about less than 0.5% of all business transacted, and this means that for everything else, we should be considering our options.
The reality is that the traditional customer call once seemed indispensable to the selling process – the time and expense involved were just a basic cost of doing business. But today, the business community has to regard the sales call as an expenditure for which there are substitutes. For many companies, telemarketing, video conferencing and direct email, have made the sales call a choice, not an inevitability – which takes us back to understanding why so many companies are moving their salesforces inside. I repeat, it is pure economics.
Advances in technology mean that we can now effectively conduct face-face meetings online – and you know what, we can manage five, six, seven meetings in one day, rather than the one or two we are managing at the moment.
I do not believe that we will ever see the day when face-face selling disappears completely – certainly it is not going to happen in my lifetime. But equally, we cannot cling on to out-dated and unprofitable practices.
Change is the one constant that we can rely on in life, and that is certainly true for those of us who are populating the sales-space right now – but isn’t it exciting?