New Inside Sales Research: Lead Generation Metrics & Sales Compensation
Research specifically reflecting the behavior and trends within inside sales organizations is a rare commodity. One organization that has been conducting focused research on our industry since 2007 is The Bridge Group, based in Hudson, Mass. This consulting firm has been helping B2B technology companies build, expand and optimize their inside sales strategies since 1988.
I caught up with Matt Bertuzzi, Marketing Manager for The Bridge Group, last month just as he was putting the finishing touches on his 2012 Lead Generation Metrics & Compensation research results, based on 197 respondents. He shared with me his most interesting findings, which were related to these four questions:
- Which team has the longer new-hire ramp time: inbound or outbound – and why?
- How is incentive compensation calculated?
- What functional group – sales or marketing – does inside sales report to?
- What are the top two challenges you face?
Matt shared that this year the study had more lead generation Director level respondents than Managers. I view this as great news, as it indicates to me that our industry is maturing both in terms of available experience among our professionals and increasing recognition among upper management of the value of our functional group.
One of the questions that Matt and team have repeatedly included over the years is “How long does it take for a new rep to become fully productive”. This year, respondents reported just over three months, on average.
“This has been trending downward since 2009,” remarked Matt. “Our profession is getting better at onboarding new hires.”
However, this year they added a new follow up question: “Do inbound-focused groups ramp at the same rate as outbound”. He found that those focused on inbound lead qualification had a slightly longer ramp time than those focused on outbound prospecting. (See page 9 in the study)
“At first blush, this surprised us because street logic suggests that inbound leads are more interested and engaged and therefore should be easier to move through the sales pipeline. Not so,” said Matt. “The findings indicate inbound focus doesn’t equate to easy.”
Why? Because, according to The Bridge Group’s analysis, buyers who self-identify as an inbound lead are often already educated about the problem and have an established mind set . “The inbound rep has to be ready to respond to more detailed product questions and more competitively framed questions,” he stated. “A manager’s expectations should not be that inbound leads are going to require less preparation, training or creativity. Sales teams will often require more stringent qualification criteria for inbound. Taken together, perhaps these factors explain why it takes longer to bring up a new inbound rep.”
Incentive compensation was the next set of findings that Matt found interesting. (See page 12 in the study) “We found that the majority of respondents use multiple factors and that 53% of respondents are tying ‘number of wins’ to the lead generation rep compensation.”
Matt gets that sales managers want the inside sales rep to have some “skin in the game”, but he cautions against putting too much weight on “wins”, which he views as a factor “largely beyond the control” of the lead gen rep. “Any number of factors can be used, such as the number of appointments set, number of appointments accepted and number of accepted that actually become closed business. However, we recommend tying no more than 20% of [a lead generation rep’s] compensation to that far yard stick, the win.”
The third interesting finding from this year’s results had to do with reporting structure: Does lead generation report up to marketing or up to sales?
What is most interesting to Matt is that he has seen reporting structure change from study cycle to study cycle. “In 2007,” he noted, “68% of respondents said the groups reported into sales. By 2010, that number had changed to 50% sales and 50% marketing. In 2012, we found that 70% were again reporting into sales.”
Matt was willing to hazard a guess as to the cause of this wobble. “You can imagine a scenario where marketing has a growing need for more control over response to leads generated through their budget. So marketing owns the group. Then sales have a growing need for more control over the front end of the sales process. So now sales owns the group.
“Generating demand is hard. It’s a special skill,” recognizes Matt. “But managing reps who generate opportunities, that too is a special skill. A sales manager typically has more in common with the lead gen rep than does a marketing manager, who probably lacks firsthand experience on the phone.”
The last question we discussed from this year’s results was: What are the top two challenges you faced?
According to Matt, responses to this question have been surprisingly consistent. In 2010, he said, respondents noted “list quality” and “productivity” as their top challenges. In 2012, they again noted “list and data sourcing” and “productivity/performance.
Related to performance, Matt reflected that what affects performance the most is often how much time a rep spends trying to make contact versus find contacts. “An hour a day figuring out who to call, equates to roughly 7 days a quarter off the phone,” commented Matt. “List sourcing and productivity are linked. It isn’t surprising that they remain top challenges.”
Of course, the good news for XANT clients on Salesforce® is that they already have the tools – data collection, reporting and the ability to build smart, dynamic lists – that drive high productivity among their lead qualification/appointment setting reps.
It works like this: Reviewing historical data, managers can determine who to call (by industry and title) and when to call (highest probability of contact based on time of day and day of week and how many calls have been placed to that record). Using this knowledge, the manager can create a dynamic call list based on those search criteria. These call lists, which auto-refresh every hour, can be assigned to groups or individual reps. When one combines this analysis and dynamic call list capability with the embedded PowerDialer features, rep productivity reaches new levels unachievable in the past. Plus, our clients can set criteria so that new inbound lead activity pops to the top of a dynamic call list, immediately. If you aren’t familiar with our list management capabilities and PowerDialer, click here to request a demo.
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- Xant Team