There was a time not too long ago that most sales were conducted in person.
Salespeople were known to travel extensively, selling their high-end products and services.
With the advent of digital marketing and sales technologies, the need to sell face-to-face diminished.
Software companies led the adoption of an inside sales model since salespeople could demonstrate their products remotely.
Today, a big part of sales is conducted by inside sales teams, and the trend continues to grow.
But which method is better for your company? What’s the answer to the “Inside Sales vs. Outside Sales” dilemma?
This post will take a deep dive into the two sales models and explain the difference.
What is Inside Sales?
Inside sales is a remote function.
Inside originally meant working in an office. Now, most inside salespeople can work remotely from their homes.
Either way, sales teams use telephones, email and social media to connect with prospects and convert them into paying customers.
Those inside teams often sell smaller, more transactional products and services. And Software as a Service companies use inside sales teams to sell their subscriptions.
Since inside sales can demonstrate software on a computer by sharing a screen, sales development representatives qualify prospects and schedule appointments for inside sales executives to conduct the demo and close the deal.
Sales cycles tend to be shorter and the deals are usually smaller than contracts sold by outside sales teams.
Most inside salespeople have dual responsibilities
First, they prospect for new businesses using outbound methods to locate potential buyers.
Then, when identified as possible customers, inside sales representatives conduct discovery calls and determine if the prospect is a good fit for their product or solution.
If there is a match, then the inside sales representative provides a demonstration of the solution.
Trial or demo period
Often, a trial or demo period is included for the customer to get hands-on experience without making a long-term commitment.
The inside sales representative has to convert that trial into a more extended contract.
The purchasing process is often complicated by legal, security and financial requirements.
But the inside sales representative is responsible for ensuring the sale closes despite the possibility of protracted negotiations and contract revisions.
Inside sales reps need these qualities to succeed
They need to be computer literate since they will spend eight-plus hours a day using a computer.
They need to be persistent and not give up on sales opportunities.
They must have a unique intuition to understand their customers and recognize buying signals.
And finally, they need to have strong communication skills to persuade and motivate their customers to purchase their solutions over the competition.
What is Outside Sales?
Outside sales are typically conducted outside the primary office location of the business.
Often, outside salespeople work out of their homes and cover a territory by car or airplane.
Their role is to meet with potential customers at their location and present the product or solution they are selling.
The outside salesperson is an expert at developing relationships with buyers, maintaining rapport and creating a sense of trust.
Being a good outside sales rep
Typically, these professionals have more autonomy and responsibility than inside sales representatives since they are accountable for their own schedule, prospecting and the entire sales process with limited support from the home office.
Outside sales reps are often confident and competitive, always looking to exceed quotas and beat sales goals.
Outside sales characteristics
Outside sales are used in manufacturing, pharmaceutical, healthcare, engineering, financial services and many other B2B environments.
Often, the average deal value is high, and the sales cycle is long, exceeding six or more months.
Outside sales processes also tend to be complex and full of legal landmines.
Inside Sales vs Outside Sales: Which One Is Better?
Both sales models have their pros and cons. Discover a few of them below:
Cost
If cost is essential, then the inside sales model is a better choice.
According to PointClear, the average inside sales call has a cost of just $50, compared to an outside sale cost of $308.
Difficulty to close a deal
Inside sales are often considered easier than outside sales because all of the work is done by phone or email.
Inside reps don’t have to meet buyers in person, and they aren’t grilled by purchasing teams.
As a result, their products are often less complex, and the sales process is faster.
Networking
As you already know, inside sales personnel have to work from home or within an office.
Because of this, they don’t enjoy the networking and social relationships created when meeting with people in person.
Overall satisfaction with work
Outside sales are often more stressful since the sales process is long and there is a lot of travel and time involved.
Attending trade shows and conferences may seem exciting for young outside salespeople, but the long hours and lousy food often take a toll on the health and stress levels of the sales rep.
Can Inside and Outside Sales Work Together?
Of course. It doesn’t need to be an “Inside Sales vs Outside Sales” fight.
Imagine this: when a business is in the early growth stage, the leadership team must decide which sales model will work for their fledgling entity.
They will consider:
- The type of product or service they are selling.
- The size or scope of the market.
- How they will deliver their goods to the end-user.
If the product is digital or involves computers and the internet, then an inside sales model works for that situation.
If the product focus is more complex and higher value, then an outside sales model makes more sense.
Sometimes, companies sell a range of products, and having different sales models based on the other sales processes is great.
After the crisis
Recently, many companies needed to change their sales process due to restrictions imposed due to the COVID-19 pandemic.
One example is the pharmaceutical market.
It was standard practice for companies selling medical devices and drugs to walk into doctor’s offices and meet with doctors or practice managers.
Since access to almost all medical offices became restricted, companies needed to switch to a virtual or hybrid sales model.
Remote technology
Outside sales teams are also taking advantage of remote technology to get in front of their customers.
Some products require in-person demonstrations and meetings, but a virtual meeting fills the gaps between the physical visits when the client can’t travel or meet in person.
Because of that, many companies have adapted to a remote sales model when necessary.
Should Your Business Focus on Inside or Outside Sales?
Several factors go into deciding to build an inside or outside sales team.
1. Consider the type of product or service you are selling
Is the product lower cost and can be purchased through a fast, transactional-style buying process?
Can the product be demonstrated online without the need to see or handle a physical product?
Do you have the technology and facilities available for sales reps to work in a remote or virtual environment?
If you can answer yes to these questions, then an inside sales approach will work for you.
2. Consider your specific context
Let’s think about this for a second: when is an outside sales structure the right approach?
First, your company sells a product that can’t be sold online or over the phone. For example, you work for Caterpillar and sell front-end loaders.
While online sales tools like virtual configurators and video tools are available, it is impossible to purchase a piece of construction equipment without allowing the buyer to go on a test drive.
Suppose your company uses in-person events, like trade shows and conferences, as lead generation activities.
In that case, an outside sales representative often attends the shows, meets the attendees and follows up with the prospect after the show.
Everything just works because of the characteristics of your context.
3. Consider the sales cycle
Enterprise companies often require a longer, technical sale cycle to employ an outside sales structure.
One of the objectives is to develop long-term relationships with potential clients.
Especially when it comes to large infrastructure products and engineering or manufacturing equipment, it’s fundamental to have an outside salesperson who understands the personas’ business in detail.
That’s why the sales process involves developing relationships with the buyers beyond what is possible via a virtual conference call.
4. Consider your budget
Outside sales are much more expensive than inside sales.
Travel, hotels, meals and ground transportation all add to the tab for the outside salesperson.
As mentioned earlier, the cost is six times higher for an outside salesperson versus an inside rep.
How to Structure Your Inside or Outside Sales Team?
Most sales representatives, both inside and outside, work on a base salary plus commission or bonus.
According to Indeed, commissions are paid based on the value of the sale.
An inside sales representative makes an average base salary of $50,000 compared to $69,000 for outside sales representatives.
Commissions can range from 5% to 20%, depending on the size of the deal and base salary.
Territory assignments
This kind of assignment is typical for the outside sales model. Most of them are divided based on geography.
For inside sales teams, territories are less critical. Some teams use a round robing process to distribute leads equitably.
Other companies do not use territories and inside sales reps are free to pursue any lead, regardless of location.
Organization chart – Outside sales
A typical outside sales organization chart will consist of a Chief Revenue Officer (CRO) who heads up sales and marketing functions.
The CRO reports to the owner or CEO of the business.
The next level executive is often a VP of Sales, then Regional Sales Managers and sales representatives.
The sales team is supported by pre and post-sales engineers (if required) and sales development reps who cold call and schedule appointments for the outside sales representatives.
Organization chart – Inside sales
The inside sales team is often a flatter structure with an Inside Sales Director and inside sales representatives.
Some inside teams split the process using sales development reps (SDRs) to prospect for leads and schedule appointments for the inside sales reps.
For more complex products, a sales engineer supports the process by conducting demonstrations and answering technical questions.
Every business has its individual needs and structures.
Wrap Up: The Future of Inside and Outside Sales
While outside and inside sales appear to have many differences, each could be an essential aspect of a business.
Outside sales are necessary for many large, complex sales processes, but the low cost and flexibility provided by inside sales are desirable for technology companies and smaller businesses.
In the end, as remote working becomes more commonplace, the distinction between the two sales structures shrinks.
VOIP telephones, virtual meetings and messaging tools all facilitate the remote sales process.
So consider both strategies and try to take advantage of their specific benefits.
And before you go, make sure to watch our recorded webinar with sales process expert, Aaron Ross.
We explain everything you need to know to build and scale your first sales machine!
