Cover Story in TeleProfessional Magazine - February 1991 THE 3RD SALES FORCE by David Hubanks Copyright February 1991 The evolution of field sales and telemarketing into the sales force for the 90s and beyond. There is a growing and, in many companies, an urgent need to find a way to make initial business-to-business sales contacts and on- going account management contacts using a sales process that is more cost-effective, time-efficient and productive than a field sales force. An obvious choice to investigate, for many companies, has been the telephone. Unfortunately, many companies who think the telephone may offer some solutions spend a lot of time and money attempting to fit a square peg (telemarketing) into a round hole. For most business people, if the words telephone and sales come in the same sentence, the term telemarketing usually follows in the next breath. Unfortunately conventional "telemarketing", and all the images that it brings to mind, is not and has not been an appropriate vehicle for high level sales or account management. Traditional B+B telemarketing has grown and is generally used in a sales support role. Its people and their business backgrounds and educational accomplishments, workspace, compensation, career path, and management attitudes toward them are far different than those characteristics and attitudes held by management about field salespeople. In fact, in many companies telemarketing people are still categorized into clerical job functions and wage levels. Some companies have, in an effort to upgrade the image of their telephone operations, changed the training and the name to "TeleSales". Unfortunately, without fundamental changes in senior management attitudes, and some of the basics (workspace, compensation, career path, etc.), this name change only pays lip- service to the perception of a higher level operation. What's needed is a basic shift in corporate management's attitude and understanding of the sales, business development and relationship building power of the telephone, an understanding that in the hands of the right kind of people - motivated and trained properly - the telephone can become the ultimate sales tool to open a new marketing channel that until now has laid dormant. This marketing channel can be used to build much stronger, long- term, less price sensitive relationships with your customers, relationships that will successfully fend off competitive attacks on your bread and butter accounts. These relationships will be based on and built through a peer level bonding process that can ONLY be cost-effectively carried out by telephone. But it is a process that, as the name implies, needs someone on the telephone that a customer will perceive as a peer, not a subordinate. So what does all this mean? We want an approach that presents a salesperson in a more cost-effective and productive way than is possible with field sales. We want a person who is perceived as a peer, rather than a subordinate. We want a professional person who is capable, knowledgeable and empowered to make decisions for the customer. What we're looking for is to combine the best of field sales with the best of telemarketing to produce a third, person-to-person marketing channel, and this is the 3rd Sales Force. This new 3rd Sales Group will soon become the equal of field sales in some companies and will become or has already become the first or primary sales force in others. Are You Having Second Thoughts About Telemarketing and Field Sales? The performance of this new telephone marketing group will cause you to compare it to the high cost, lower productivity and lower profitability of your field sales, and the high turnover and low morale of your telemarketing operations. And yet, the make-up of this 3rd Sales Group incorporates many of the best characteristics of both, while avoiding many of the problems inherent in both. Exactly Who Are and What Is The 3rd Sales Group? This new marketing group is an evolutionary blending of some of the best characteristics of professional field sales and telemarketing. From field sales we take self-motivation, self- monitoring, creativity, a no top, performance-based compensation program and an entrepreneurial attitude and combine it with the time and money efficiencies offered by telemarketing. We leave out most of the problems traditionally found in both groups. These new Business Development Specialists or Inside Account Executives form a very proactive, database-targeted "NON- telemarketing" group that initiate, carry out and complete high end product and service sales and business development activities solely by telephone. This higher level approach to telephone-based marketing and sales is particularly applicable in the outbound sale of sophisticated, higher-priced products and services, especially when the decision-maker is a senior executive. Generally, when dealing with these decision-makers, the sales process is best served through multiple contacts and a good working rapport - a peer level relationship. By The Year 2000, Will Your Top Producing Sales Force Be In The Field Or On The Telephone? By the turn of the century this new sales force with its Inside Account Executives will be the front-line sales force of choice for companies that want customers and prospects to perceive their organization as having the highest level of service excellence. The hallmark of this customer perception will be rooted in the frequency of the Inside AE's account contact and account visibility while keeping competitors at bay and holding your cost of sales at levels that will enhance rather than threaten profitability. To compete and remain profitable in the '90s global marketplace, this level of professional quality telephone sales group will be essential. An Inside AE's major responsibilities are focused on reaching, working with and developing long term, stable, peer-level relationships with senior and middle management decision-makers and decision-maker designates. The people in the new Business Development Department have skill levels with experience, business knowledge and capabilities that are characteristic of the best career oriented field sales people. They are not, an any manner, kin to conventional telemarketers. They will attend to your company's high level, demanding customers and prospective customers. A major benefit is that your Inside AE's operation will substantially reduce most of your sales expenses and eliminate many others. Which Of Your Products, Currently Sold Only By Field Sales, Could Be Sold By This New 3rd Sales Group? When you put the right people on the telephone, you can sell almost anything, as well as dramatically upgrade your marketplace image. Your customers' perceptions of contact with an Inside AE will be that they are dealing with a professional peer instead of the traditional telemarketing subordinate. This Inside AE can readily establish a crucial bond with your customers and prospects. Because of their business savvy and sense, they won't waste the customers' time. They will set telephone meetings by appointment, get agreed times for follow up calls and always have valid reasons for each call they make to customers and prospects that are important to the customer or prospect. The Inside AEs will consistently be more effective in handling aggressive competitors trying to steal your customers, and can easily (unlike field sales) keep customers that want or need more frequent attention happy. How Can This New 3rd Sales Group Improve Traditional Telemarketing Operations? There are a number of symptomatic problems that continue to plague conventional telemarketing. A few of these are high turnover, low morale, and burnout. The root causes of these chronic problems are the industry's inability to attract and hold a higher level of talented people because of low compensation and a lack of professional career path. Other than becoming a telemarketing supervisor or a room manager, the growth opportunities for telemarketers are currently very limited. And compensation, even for an outbound, business-to- business sales position is usually maxxed out at about $30,000. When good telemarketers want advancement and performance-based compensation but see no light at the end of the tunnel for earnings or growth in responsibilities, they get discouraged and quickly leave to pursue better opportunities elsewhere. What Effect does Compensation Have On Productivity & Turnover? The January, 1990, issue of Sales & Marketing Management magazine published results of a productivity survey. Only field sales forces were surveyed, but common sense tells us that the results readily translate to all sales people, whether face-to-face or telephone-based. As in the past, the survey confirmed a strong relationship between pay levels and sales force turnover. The higher a company's cash compensation, the lower its turnover. Additionally, the more a company paid a sales rep or manager, the more he or she produced. The 3rd Sales Force concept will stop the revolving door on your telemarketing staffing, turnover, training and morale problems. It can offer the especially skilled telemarketer, who wants to learn and grow, new opportunities for a desirable career with good growth possibilities, unlimited compensation and the status of a high level sales career instead of ONLY a job with an hourly wage and uncertain professional career future. Using the 3rd Sales Force Group as a goal, all telemarketers can see a bright light at the end of the tunnel that will change attitudes, and reduce high turnover and morale problems. The 3rd Sales Force are peers to field sales with a comparable performance-based compensation, with no earnings ceilings. By their expertise and performance, they merit the same level of praise and perks given to other top sales superstars. Because the 3rd Sales Force's earnings are performance-based, their inside sales expenses are very low compared to field sales. So the more they earn, the more the company profits. How Can One Person Generate The New Sales of Seven? Inherent to your 3rd Sales Group is the capacity to increase productivity to a level where one person can produce the work and make the sales of from three to as many as seven traditional field sales people. These Inside AEs, using PCs and contact management software with customer and prospect information on board, consultative sales and relationship marketing skills, and a good working knowledge of database marketing, plus the right marketing and support materials, can sell most of the products or services now being sold exclusively by field sales. These professional level people on the telephone can reverse the declining effectiveness of your direct mail marketing. Additionally, the consultative, relationship-building nature of the contacts made by the Inside AEs will significantly reduce the need for high cost, sophisticated telephone, predictive dialing and ACD systems. In fact, in most cases your Inside AEs can use a 1- or 2-line standard telephone with autodialer for maximum productivity. Gaining Control of Sales People's Numbers This 3rd Sales Group can give your company new margins and avenues of profitability never available with conventional telemarketing or field sales. This new approach can supply your managers with true, quantifiable control of your marketing and sales people, processes and sales projections. Customers and clients will feel a greater loyalty to your company when using the 3rd Sales Force. Their loyalty is in response to the special way they are treated by top quality people and with top quality service each time Inside AEs interface with them. They're buying your way of doing business. And finally, this new approach enables you to better regulate and control the flow and pace of your customers' purchase volume and purchase timing, than ever before. You will be in touch with them more frequently, enabling you to know their operations more intimately. As dramatic as the change wrought by this new group will be, most business people in direct mail marketing, telemarketing and field sales are still oblivious to, or are intentionally turning a blind eye to the growing need for such a sales force. Why Is Now The Right Time For This 3rd Sales Group? In 1970, Arthur Anderson conducted a survey to determine business executives' priorities when selecting a vendor. The number one priority was an "outside" salesperson to call on them. Dealing with a capable "inside" salesperson ranked fifth out of five choices. An identical 1985 survey proved that dealing with a capable "inside" salesperson ranked second in what business executives wanted most from vendors, while contact with an "outside" salesperson ranked fifth out of five choices. Based on this trend and momentum of the results, Arthur Anderson anticipates that by the early 1990s, contact with an "inside" salesperson will be the number one priority. What Does That Mean To You? Because of the tremendous pace of business today, most executives want to get questions answered, gather information and make and carry out decisions by the most expeditious means possible. This desire is reflected in the increasing use of not only the telephone but also fax, modem, e-mail and overnight express services. Executives are becoming more comfortable and trusting when making decisions about major transactions based on telephone conversations complemented with other methods of communication - with no personal, face-to-face contact. In fact, many executives prefer doing business over the telephone because it's far more time efficient than a face-to-face meeting. On the vendors' side, because there is no sight, touch or smell involved in telephone contact with customers and prospects, only hearing and speech, executives tend to get down to business quicker over the telephone than in a face-to-face meeting. This reduces the sales cycle and motivates the customer to stay focused on the purpose of your call. One excellent example of executives' comfort with the telephone is the conference call. It has become a staple for meetings, debates and the decision-making processes in many companies. As business use of the telephone increases, executives' comfort level with electronic communications escalates and so will the volume of important decisions they'll make by telephone. What Do You Need To Know To Build This 3rd Sales Group? What's involved in putting your 3rd Sales Force together? What kind of people do you need? Where do you find them? What title should you give them? How do you train them? What kind of compensation, career path and benefit plan should you provide? How will they interact with current field sales and telemarketing? What political problems will you have based on fears and resentment from field sales, and others? How do you handle them? How do they fit in the company hierarchy? What kind of workspace, equipment and facilities will they need? What about computerization, software, database targeting? What about supervision or management? What kind of attitude and commitment is needed from senior management to introduce, support and grow this kind of high level inside sales force? Third Sales Force Inside AEs are generally college educated and experienced business people with proven consultative sales skills. Inside AEs are professional sales people who, through selective recruiting, training and orientation, prefer to do their selling by telephone, instead of face-to-face. There are companies today selling 4, 5, 6, and even 7-figure products and services completely over the telephone. These sales are accomplished by using a relationship building, multi-contact process designed to create loyal, long-term and competition-proof customers - NOT JUST MAKE A SALE. Inside AEs are offered a base of $25,000 to $35,000 and earn $50,000 to $100,000 in a performance-based compensation packages. They need your corporate demonstration of opportunity for long- term career growth. Keep in mind that career pathing for these people is rooted in the size and quality of accounts they handle, and their opportunity to increase earnings through performance, not in your giving them a range of high sounding titles. Most importantly, you cannot think of these people, or in any way treat them, as "telemarketers". You'll lose them fast if you do. How Do You Attract And Recruit The "Right People"? You have several options about the kind of people to recruit. We've recruited the same level of entrepreneurial-minded professionals who have historically been the top achievers in outside sales forces. The attraction of these people to an inside telephone-based position is in the hours, lack of travel, more time for a personal life, no upper limit to compensation opportunity, and the sense of continuing in a high level career position, etc. Our best placements in these positions are younger (25 to 35) or older (over 50). The under 30 group look at the potential for large compensation for the hours worked and the free time available. The over 50 group like being off the road and at home nights, good compensation opportunity, and using the skills they have developed throughout their careers. What Are The Important Advantages Of Putting "Older" People On The Telephone? The over age 50 Inside AE group readily convey their long experience in a highly acceptable manner over the telephone, using authority of voice and insight into the customer's need or business situation. Their wisdom and career maturity is a great asset when trying to quickly get the ear of a decision-maker, to effectively persuade a prospect or to read between the lines in dealing with a decision-maker. Other backgrounds that have been successful among the 3rd Sales Force Group are as diverse as actor, teacher, engineer and lawyer. They all have high skill levels, are easily trainable, goal-oriented and driven to learn. To attract these people, you need the same perks and benefits necessary to attract outside sales superstars; i.e., image, prestige and money. Attracting entrepreneurial people also reduces your operations costs. Unlike traditional telemarketers, people with an entrepreneurial attitude will not need as much of the expensive, structured supervision that is critically required for a conventional telemarketing operation. The 3rd Sales Force needs a workspace ranging from comfortable workgroup office stations to private offices. No little booths in a big room - it would communicate the wrong impression and many would leave because of the inconsistent image it conveyed. What Can Be Sold By Telephone? What Are The Possibilities? There is the belief among many senior managers, sales managers and even some traditional telemarketing management, that some products or services cannot be sold over the phone. Generally, the thinking is that customers need to see it, sales needs to demo it, the buyer should sign a contract for it, or the product is too complicated and the price too high to complete the sale over the telephone. While that may be true in a few cases, we generally find that almost any product or service can be sold by telephone by adjusting marketing strategy or market position, sales support materials, or the approach. Most products and services can become highly salable by telephone. Whatever product/service you sell, there's probably a company somewhere selling it TOTALLY on the telephone...right now! From original oil paintings, bulldozers, mainframes and corporate jets to industrial parts, vertical market software, insurance and vacation junkets, real estate, you name it. These are companies that understand that if a process can be found to sell their product or move more of their products by telephone while maintaining their marketplace image, it would open many new opportunities to expand markets, increase profits and reduce sales costs. How are they doing it? First, they didn't say "It can't be done." They said, "What do we have to do, change, or add to complete this sale over the telephone?" They had an open mind and looked for ways to increase profits by cutting sales expenses. They looked for ways to consistently increase the number of sales presentations their sales people could make in a day. They looked for ways to decrease their sales follow-up and administrative paperwork. They looked at the BIG picture. Your whole picture may include new marketing strategies and support materials in addition to the right people with the correct approach on the telephone. Companies with this progressive approach assume the attitude that they will initiate, follow through and complete sales exclusively over the telephone. And, with a company-wide commitment made, they have been finding ways to successfully pull it off. What Marketing Strategies And Support Materials Are Unique To Telephone Sales? Product videos or audio tape and demo disks and kits are strong 3rd Sales Force sales support tools. They help prospects feel confident about making a purchase decision by telephone. Printed product descriptions and service specifications that review or reinforce the Telephone Exec's conversation can also greatly help lock in the sale. Printouts of reports or samples resulting from the use of your product or service can be very effective. You simply must be imaginative! Put yourself in the shoes of the prospect and ask yourself, "What kind of information or materials would I need from this company to motivate me to buy from therm?" For example, if yours is a software product, you might consider setting up a long distance, real time demo of your package for your out-of-town prospect. With a modem and communications software you could take control of the prospect's computer anywhere in the world and give a winning, exciting demonstration of your program as well as provide instant answers to your prospect's questions over the phone. How about prearranging and managing a conference call with your prospect and several of your happy customers to share their experiences and answer questions about your product or service for your prospect. There are many ways to solve whatever problems are preventing your company from taking advantage of the major benefits the phone offers as a sales tool. Conceptual Training Conceptual selling skills blended with relationship building and peer level bonding is at the heart of the Inside AE's method of selling sophisticated, high ticket products and services over the telephone. The consultative style will provide all the helpful facts and figures, features and benefits. The key to the sale is to use words to paint a picture so vivid that your prospect can already see himself or herself using your product. Training for Inside AEs should focus on using their executive level demeanor with a consultative approach to build loyal, long- term customer relationships rather than only making sales. They should be trained to quickly build rapport and establish a friendly, concise approach while being direct. David Hubanks is President of the David James Companies, a consulting firm specializing in executive level telephone sales and Sales Software Source, a division specializing in sales automation software. He may be reached at 566 W. Adams St., Suite 506, Chicago, IL, 60661, (312) 258-1414 or (312) 258-9700.