Inside sales and outside sales are two sides of the same coin. The destination is the same for both: generating more revenue — but the route taken is significantly different.
Depending on your industry, product, pricing strategy, target customer, and more, your sales team will look, work, and perform differently. So when someone asks how you define inside sales vs. outside sales, the answer will certainly be subjective.
In this article, we define inside and outside sales as objectively as possible and discuss tactics to thrive in the changing ecosystem that is blurring the line between traditional inside and outside sales strategies.
What is Inside Sales?
Inside sales is the practice of leveraging technology to connect with and acquire new customers without requiring either party to travel. Today, many inside sales teams use a variety of technologies and communication channels including:
- Video conferencing
- CRM tools (Customer Relationship Management)
- Social media
It’s worth reiterating that the product, pricing strategy, and stage of the company will often dictate which channels you use to reach your target customers. Inside sales teams, in the past, focused on a single strategy such as cold calling or email marketing, but today it’s far more common for teams to use a combination of strategies.
Geographic growth can warrant a stronger emphasis on inside sales, since it reduces the overhead of expanding into global markets by eliminating the need to establish a physical presence there.
Your go-to-market strategy will also determine your reliance on an inside sales team, including the number of accounts your reps will be managing, deal size measured in annual contract value (ACV), and sales motion complexity, such as the number of decision-makers involved in the average deal.
Inside sales teams typically deal in products and services with lower ACV and sell to a single small buying committee or individual buyer.
What is Outside Sales?
Outside sales, also called field sales, is the practice of traveling to meet with customers.
Outside sales provides current and prospective customers with a personalized sales experience. Face-to-face interactions allow for detailed product demonstrations, relationship building, and the complexity of a long sales cycle.
The global pandemic has certainly had its impact on outside sales and while the future of the industry is still uncertain, the reps that have been able to effectively transition to a remote sales environment have set precedence for the role’s evolution.
Trade shows, for example, were once an important component of an outside sales strategy; introducing customers to the company, educating about new and existing products, and networking with prospects. It’s still unclear whether trade shows or conferences will fully recover or how soon that will happen. In the meantime, we are witnessing a shift in the outside sales industry, forcing incumbents to adopt digital strategies or risk obsolescence.
Inside vs. Outside Sales
Looking at self-reported data from more than 7,600 salespeople in 2020 and 2021, more than 56% work in outside sales while only 44% work in inside sales.
Although the tools, processes, and styles of selling for inside and outside sales are starting to converge, each still has their differences including the sales cycle, skill sets, and metrics.
The most obvious difference through the eyes of sales managers is the cost structure. Outside sales reps usually require a larger budget, with expenses including travel, accommodations, client dinners, and most importantly, the higher compensation allocated to experienced reps. On the other hand, outside sales usually sell higher ACV which can (and should) offset those higher expenses.
Outside sales teams are scalable to the point that ACV and quotas support the added expense of each additional salesperson, team, or territory. Continue reading for a formula to determine if your business should implement an outside sales strategy.
Inside sales can require office space and equipment that outside sales wouldn’t necessarily require, but many companies find inside sales to be cost-effective when dealing with mid-market priced products. By the nature of this pricing strategy, sales reps must reach higher volumes of prospects by leveraging scalability through technology.
Differences in Sales Cycle
A sales cycle is the process of turning a prospective customer into a paying customer. Sales cycles are usually expressed as the average time it takes from the initial point of contact with a prospect to a closed sale.
Outside sales cycles are typically lengthier due to larger deal-size, requiring buy-in from more decision makers in the prospect’s organization and more back-and-forth negotiation on terms. It’s not irregular for outside sales cycles to be denominated in months, quarters, or even years. An aerospace company that deals in government defense contracts, for example, is not likely to close a deal worth half a billion dollars in a week.
Inside sales teams usually deal with lower ACV and therefore prioritize the quantity of leads over quality. Inside sales reps certainly qualify their leads, but spend more time making calls, sending emails, and otherwise connecting with new prospects, versus spending the majority of time focusing on nurturing a single prospect, as outside sales reps tend to benefit from.
Different Sales Tools
You’ve already heard about some of the various tools being employed by inside and outside sales reps to close their deals and achieve their quotas — but let’s cover them in more detail.
Inside sales reps are usually found at their desks, computers, phones, CRMs, and inboxes, while outside sales reps are picking up their rental cars, collecting frequent flyer miles, and checking their cell phones in waiting rooms trying to get in front of a decision maker.
As mobile devices and cloud computing have evolved, some aspects of inside sales have begun to bleed into the workflows of outside sales teams. They have their mobile phones for connecting with new prospects, sending and receiving emails, and updating CRMs.
Variations in Skill Sets
When hiring for an inside sales versus outside sales role, you will certainly need to assess skill sets and personality traits to find the best fit for each particular role.
Outside sales, for example, typically requires a high level of situational awareness and emotional intelligence (EQ). As your reps will need to be equipped with the ability to think quickly, answer questions, pick up on social cues, and keep the conversation with prospects flowing.
Salespeople in the field must also have a high level of autonomy, since they are usually motivated and compensated by their own actions, and not closely supervised by their sales managers.
Inside sales, on the other hand, requires a high level of focus and ability to follow instructions. Using a more repeatable, process-driven sales strategy, inside sales teams typically have templates and scripts to help guide reps through their workflow as efficiently as possible.
Of course, some abilities will be prerequisites for both inside and outside sales teams including effective communication skills, confidence, and perseverance.
Core Metrics That Matter
Both inside and outside sales teams must measure their performance to determine what is and is not working. Although at a high level, the metrics will measure similar aspects of the sales role, such as revenue, new logos, pipeline management, conversion rates, and quota attainment, the KPIs are different for each type of sales team.
Inside sales teams will typically measure the performance of their call, email, or other touchpoint against successful connections, opportunities, or closed deals. More telling than mere volumes, these ratios measure the actual effectiveness of your inside sales team.
Instead of emails and calls, outside sales teams will likely place more emphasis on tracking the number of meetings, presentations, or demos that resulted in a closed sale. Outside sales teams will also place heavier scrutiny on quarterly and annual revenue goals, compared to inside sales teams who are more likely to measure weekly or monthly.
Sales Team Structure
A natural next question might be, is outside sales better than inside sales? Again, the answer will depend heavily on your particular business goals, KPIs, and ACV.
While it’s important to choose a go-to-market strategy and focus on it, to avoid confusion and cannibalizing your own team’s efforts, you will want to experiment with various strategies to find what works best for your business model.
A combination of inside and outside sales teams can be more common in large organizations deploying different strategies for each team. For example, outside reps may be tasked with closing new logos, while the inside reps are there to upsell and grow current accounts.
According to Spotio, 37% of high-growth companies rely on an inside sales strategy primarily while 27% utilize outside sales more predominantly.
With many of the tools inside sales teams use to be successful, paired with the emergence of powerful AI at the fingertips of field sales reps today, a hybrid approach will likely be a trending strategy in sales moving forward.
Sales Strategies for Inside and Outside Teams
With major shifts in many business models — like the move from on-premise enterprise to cloud SaaS — sales teams have had to adjust their strategies and learn what works best for their business.
Product-Led Sales Strategy
Some products, such as general-purpose SaaS, can rely on their product marketing alone to drive growth in sales through a self-serve customer acquisition process, reducing the need for a sales force.
Although this seems great, it’s important to know when your product might require a sales person to demo the product, an onboarding specialist to get a new customer off the ground, or a retention specialist to expand current customer lifetime value (LTV).
Outbound Sales Strategy
If you have exhausted your product-led growth opportunities or serve a market that requires a more active outbound sales process, you’ll want to evaluate building an inside and/or outside sales team.
One important consideration when structuring a sales team is measuring your ACV or customer lifetime value (LTV) to your customer acquisition cost (CAC). If the ratio is less than 1, your sales model will be unsustainable and likely to fail.
DocSend, a secure file sharing service, realized their ACV simply wasn’t high enough to justify their outbound sales strategy and decided to pivot, now relying entirely on inbound strategies.
If your ACV/CAC ratio is less than two, but the lifetime value of your customer is significant, it can still make sense to invest in your outbound sales strategy.
As you can see in the example, if hiring a sales team will drive your customer acquisition cost up to $20,000 and your ACV is only $25,000, your ACV/CAC ratio is 0.8 and will be wholly unprofitable. If your LTV is $50,000, on the other hand, the LTV/CAC is 2.0 and is a far more favorable ratio.
Which Sales Strategy is Right For Your Business?
Now that you’ve explored whether a sales-led organization is a sustainable growth strategy, you’re probably wondering what your specific strategy should be. Unfortunately, we won’t be able to provide such specificity in an objective article – we told you our objective was to be, well, objective.
Whether you build out a self-service portal, inside sales team, outside sales team, or a combination of inbound and outbound, the important thing is to test different strategies, measure performance, and learn from what works and what doesn’t.
Most companies have the data but lack the capabilities to extract the lessons. Leverage technology to learn from your data and train your sales team on the tactics that are disproportionately effective for closing or losing deals. Analyze your team’s workflow to identify inefficiencies and determine what can be abstracted or automated from the process, increasing productivity.
Sales teams have traditionally analyzed their sales data against their end goal to determine progress and quota attainment, but by the time they realize they are not on track, it’s too late to make corrective maneuvers. You must instead track leading indicators (as opposed to lagging indicators) in your sales analytics strategy if you truly want to impact performance.
Leading indicators are the predictive insights that can act as early detection for when things are going right and when things aren’t. If you focus on the carrot, you will constantly be one step behind, but if you instead focus on the stick, you can see where the carrot is going. People.ai’s sales intelligence platform helps identify your stick, evaluating the inputs from your sales data to predict the output of your team.
Modern companies must implement this cycle of testing, assessing, and investing (or divesting). It is essential we learn from our experiences, compile a playbook, and coach our team towards this winning strategy. People.ai is a platform built with patented AI technology for sales, marketing, and revops teams to transform their business activity into insights, ROI, and growth.