Inside sales still highly profitable for distributors

Can an inside sales rep be one of your company’s top salespeople? Despite having smaller accounts than outside sales reps, one inside sales rep for a distributor we work with claimed a top 10 spot on the company’s sales team.

While outside sales reps dominated the distribution sales landscape for years, inside sales reps with the right tools can be equally or even more effective. Our customer’s inside sales rep used AI to perform inventory counts remotely, effectively replacing in-person stockroom checks.

Not only can inside salespeople be effective, but the influence of outside sales is slowly fading. An increased customer preference for digital buying combined with the rising cost of travel has led many distributors to shift their focus toward developing proactive inside sales teams.

With advancements in artificial intelligence (AI) and customer relationship management (CRM) solutions, inside sales reps are no longer passive order takers; they can be highly profitable sellers.

These factors signal it’s the perfect time for proactive insides sales.

THE RISE OF DIGITAL BUYING

With decades of outside sales dominance, how have inside sales become indispensable for distributor success? One of the most significant factors is the rise of eCommerce.

The past two years have seen an exponential increase in digital buying due to the pandemic and improvements to the digital buying experience. As B2C eCommerce giants like Amazon dominate digital shopping and deliver a personalized experience, B2B customers expect the same degree of accessibility and care from their industrial suppliers. They want the ability to research solutions online, compare prices and make purchases semi-independently, plus the personalized recommendations and suggestions they’re used to from a sales rep.

As eCommerce platforms improve to give buyers a personalized shopping experience, it’s easier for customers to complete even large purchases online.

According to McKinsey research, “Buyers are more willing than ever to spend big through remote or online sales channels, with 35% willing to spend $500,000 or more in a single transaction. Seventy-seven percent of B2B customers are also willing to spend $50,000 or more.”

Although customers don’t want the same level of in-person buying as before, they often still want to speak with a sales representative before purchasing, especially if they are buying a new product. Inside sales reps are perfect for interacting with these buyers since they merge digital buying with real human interaction. They provide a remote buying experience while still having a hands-on, consultative approach.

AI has leveled the playing field between inside and outside sales reps. Inside sales reps know what their customers need without visiting customers onsite. They don’t need to spend precious time researching, analyzing product specs or trying to make connections for complementary products in a catalog with millions of SKUs.

INSIDE REPS INCUR FEWER COSTS

Outside reps cost a lot of money. Distributors can expect to pay a first-year outside sales rep:

A base of $50-70K based (depending on territory);
Commissions of $20-30K;
Monthly expenses of $500-1,000; and
An annual total of $76-112K.

Outside sales reps generally have higher base salaries than inside reps, expect larger commissions and regularly travel to meet customers in person. In addition, an outside rep may be expected to treat their customer to dinner on the company card. Over time, these expenses add up and reduce profits.

Distributors can expect to pay a first-year inside sales rep:

A base of $45-55K;
Commissions of $15-25K; and
An annual total of $60-80K.

Inside reps are a great alternative since they often have lower salaries, don’t have to travel and can speak to more customers each day. Their ability to have high-quality daily interactions with buyers while staying in one place makes them a valuable and cost-effective asset.

AI-POWERED CUSTOMER INSIGHTS MAKE SALES REPS MORE EFFECTIVE

Before AI technology, inside sales reps didn’t have the same visibility into their customers’ needs as outside sales reps. They relied on research or customer conversations to determine how to best help their customers.

Outside sales reps know what to sell because they visit customers and see what supplies are running low.

AI automatically reviews critical customer information to identify patterns. Once it has enough data, AI will provide reps with relevant product recommendations and sales insights for each account.

You can use AI to:

Predict reorder needs;
Identify customers likely to churn;
Discover wallet share growth opportunities;
Predict creditworthiness; and
Find substitute and related products.

Inside reps see all this information and AI-generated recommendations while speaking to customers, making them more effective and profitable than they’ve ever been before.

AI AUTOMATION ELIMINATES MANUAL RESEARCH, SO YOUR REPS CAN SPEND MORE TIME SELLING

Studies show that sales reps only spend 33% of their time actively selling. Without the right tools, they waste time on non-revenue-producing tasks.

Inside sales reps with access to AI-powered tools like customer insights, product recommendations and research automation to find the right products to sell to each customer are more productive and effective than outside reps. They have the means to manage large accounts and make impactful sales recommendations from the comfort of their home or office.

Inside sales reps can spend more time interacting with customers when they aren’t burdened with the impossible task of researching massive catalogs. More time spent on customer-facing activities means your inside sales reps will be more efficient, productive and profitable.

Distributors that utilize proactive inside sales reps will ultimately win out over those who rely on traditional sales strategies. With AI, inside sales can be the star of your operation.