As a former FinTech senior executive turned operations-outsourcing leader, I am in the slightly rare position of being able to challenge management thinking in my former business with insights from my new one. I am fortunate in that my position in a more collaborative business world - that of start-up tech on Silicon Beach - brings me in touch with visionaries and industry leaders willing to share (and often self-promote) than would be found in New York or London’s FinTech hubs.
It has been a transformative experience for me to meet so many people that are willing share their experiences and beliefs, often without much need for digging or deep questions. The West Coast tech market seems guided by the principle that a rising tide lifts all ships- knowledge sharing is far richer and more widespread than I’ve ever experienced. One visionary I have been lucky to encounter is former Salesforce sales executive turned author, Aaron Ross. He details in his book “Predictable Revenue” how he transformed the fortunes of Salesforce by applying a rigorous and differentiated sales process. It is a process that I had never seen before and it serves up a number of interesting questions and challenges for the FinTech market.
Ross was instrumental in creating a range of distinct roles with differing goals that help move leads into and through the sales funnel. Ross argues that “without specializing your sales team, you will struggle.” By this he means that teams with greater role differentiation and specialization are higher performing than traditional sales structures.
A Different Sales Team Segmentation Approach
The typical FinTech sales team is split by product, by client size, by country and by seniority of the team members. The model Ross talks of that is used so successfully at Salesforce, and mirrored in other B2B Internet companies, is one that makes a distinction between ‘inside’ and ‘outside’ sales.
Inside sales people employ different tactics than traditional sales people. They are far differentiated from telemarketers, a word which strikes dread into the heart of anyone that ever picked up a phone only to be greeted with a crackly pause followed by a canned script. Inside sales people are really sales people who close sales internally, i.e. without needing to meet face to face with clients. They use a different set of processes and value different things than traditional sales. So they demo on WebEx and use sales automation software and measure stages of the sales process with far greater precision.
Inside sales and outside (or consultative) sales do employ many of the same tools and techniques. They generally are looking for B2B or big ticket B2C clients and customers and involve multiple touch points. But only the outside sales team will meet clients face to face. The model in Silicon Valley is one in which outside sales is kept for “enterprise” clients, i.e. those getting a uniquely configured product or a number of licenses, while inside sales in general handles more uniform sales, albeit still with the client at the center of the sales pitch and close.
A further differentiator is that inside sales is often more team driven and focused on metrics. Junior team members will be tasked with having a set number of quality conversations and interactions per day. Roles may often be split between those sourcing and qualifying leads (online and offline) and those making the calls in. This often then ties into a more rigorous sales process than enterprise sales use. This may include tactics such as sending out targeted, semi-customised web and email content to drive engagement between first interaction and calls.
The Critique of Using Solely Outside Sales
I’ve watched outside sales teams for over twenty years. I recall the first time I got insight into what they were costing me (I’d come from a product management and operational background) I got angry. I didn’t have an issue that the great sales guys earned much more and ate far better than I did, but so too did the average and the poor performers. They also seemed to enjoy the shortest hours. For some reason the laws of supply and demand have never applied in selling to the same extent they do elsewhere in an organisation, and many business are massively overpaying for sales.
The problem for many businesses using an outside-only sales model is that there is no way to scale beyond hiring more expensive sales people and hoping they work in your markets as they have elsewhere. They defy measurement and scientific analysis. They expect to be given 6 – 12 months to ramp up, by which time they are already costing you a lot compared to any other type of new hire. Is it worth the risk for the reward?
Ross would be more aggressive in his critique of using outside sales only, arguing that “salespeople shouldn’t prospect” and they are generally not great at it.
The Challenges of Building An Inside Sales Model
Most inside sales teams have a far more segmented and scientific approach to selling than pure client management models. This means you may need to create new roles for sales development reps (those doing lead qualification at higher volume). In so doing, you may also be looking at using outsourcers or offshore locations for these teams for the first time, and you may lack all the skills needed to manage these resources. You also need to find a commission-sharing model that works for all. The new teams also need to feel welcome and an integral part of the firm and not like they are “robo dialers” who can be replaced easily.
In addition, you need to accept that some of the people you are calling are not your purest, highest-caliber leads. If your business is selling a product servicing only a single market need, then the quality of these interactions may not be good enough to get your prospects interested, and may also create some alienation. If your optimal client list is under 500 companies and you already know who they all are, then this is not likely for you.
Lastly you will also need to assess what career paths now look like in your organization. Is the ultimate sales job still selling to enterprise accounts? And if so, how do you plan to reskill successful inside sales to prepare for the switch?
The Benefits of Inside Selling
The key benefits of inside selling are intrinsically linked. By excluding travel, and the need to use (in theory) deeply connected sales people, the cost of each sales outreach drops dramatically. If conversion rates are also good then improving profits will be the outcome. This in turn then brings more marginal clients into the picture. It becomes possible for both the sales person and the company to find profitable new opportunities outside the largest clients.
The virtual circle of a good inside sales model can promise market-leading new-client acquisition rates. This then opens up the opportunity to upset even the most stable of market/vendor relations and drive a lot of value to new market entrants. Disciples of deflationary economics for start-ups take note. This model has been extremely disruptive elsewhere – witness Salesforce and Zenefits.
The Opportunity in FinTech
Already I am pleased to have worked with some new market entrants who have embraced inside sales in their business. In terms of specific niches, products that require end-user buy in and with price tags under $10,000 per desk, per annum are obvious targets. These would include new data products for analysts and fund managers, new workflow management tools for investment bankers and asset managers, and newsletter/text-based information products.
Critically, as this market evolves, we will see new players offering richer, niche products into these segments and at very different price points. This will disrupt the cosy commercial relationships between the incumbent mega players, such as FactSet, Thomson Reuters and Bloomberg and increasingly their clients will feel they have a greater choice.
By Ian Jackson, Managing Partner, Enshored and bobsguide Contributing Editor