Five Vital Sales Performance Metrics

Spotlight on:

“The Truth About the Field Sales to Inside Sales Migration Trend” Full Report

Researched by Steve W. Martin Sponsored by: Copyright Steve W. Martin 2014. All rights reserved.

As featured in Harvard Business Review

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Sales leaders often wonder how they compare to their peers and competitors. Thanks to an in-depth sales study recently conducted by

sales author and USC professor Steve W. Martin, it is now possible to benchmark some of the most important sales metrics today. In the study,

Martin surveyed and interviewed top senior-level sales leaders from over one-hundred leading high technology and business services companies.

This whitepaper focuses on five vital metrics (and a couple of other key findings), drawn from the larger study, which can help businesses

with planning and assessment of their own efforts.

The study revealed that the vast majority of companies participating were growing despite what could be perceived as a relatively low

percentage of their salespeople meeting quota. The results of the study also served to highlight and quantify a few of the many important

differences that exist between inside and outside salespeople in terms of quota targets, on-target earnings, and average deal size. What’s more,

when results are looked at collectively, one can see how they help explain the migration taking place from field sales models to inside sales

models, which the full study aimed to better understand.

Executive Summary

Declined significantly (more than 20%)

About the same

Increased slightly

Declined slightly

Increased significantly (more than 20%)

2%

11%

12%

38%

37%

Exactly three-quarters of the companies participating in the study indicated their revenues have grown over the past two years. Surprisingly,

about half of those with growing revenues reported that their revenues have increased at a significant rate, at an average rate of more than

20 percent over the last two years. For readers in growing organizations or companies with intent to grow, the results of this study may

have more significant relevance.

A Study of Growth Organizations

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Although most companies in the study reported having grown over the last two years, companies also reported that, on average, only

60 percent of their salespeople achieved 100 percent of quota last year. However, the number of salespeople who achieved 100 percent

of quota varied greatly by sales organization: 26 percent of sales leaders reported that 70 percent or more of their salespeople made quota,

54 percent reported that between 50 to 69 percent of their salespeople made quota, and 20 percent reported that less than half of their

salespeople made quota.

1. Percentage Achieving Quota

The average percentage of salespeople that achieved 100 percent of quota last year also varied by type of industry. These results

underline the importance of accurate projections and forecasting. Sales leaders should set sales targets and quotas with full awareness

that many of their salespeople are likely to fall short of their sales goals and should therefore set quotas that exceed their overall sales

targets by an appropriate amount, while still setting achievable targets.

2. Quota Attainment Average

Over 70% of salespeople made quota

0% 10% 20% 30% 40% 50% 60%

Between 50% to 69% made quota

Under 50% of salespeople made quota

26%

54%

20%

Sales leaders reporting what percentage of their salespeople achieved 100% of annual quota last year

Computer Software 52%

Cloud-based and SaaS 61%

Computer Hardware 60%

Telecommunications 66%

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The overall average annual quota for an outside field salesperson was $2.7 million and $985,000 for an inside salesperson.

Industry averages are shown below.

3. Average Annual Quota

The average annual on target earnings including salary, commission, and bonuses for field and inside salespeople at 100 percent

of quota ranged from $80,000 to $240,000.

4. Average On-Target Earnings

The average new deal size reported for field sales professionals was $166,000 and new deal size for inside sales professionals was $19,000.

5. Average New Deal Size

Outside salesperson annual quota Inside salesperson annual quota

Computer Software $3.2m $1,220,000

Cloud-based and SaaS $1.6m $795,000

Computer Hardware $4.2m $1,350,000

Telecommunications $3.3m $730,000

Outside salesperson on-target earnings Inside salesperson on-target earnings

Computer Software $240,000 $120,000

Cloud-based and SaaS $210,000 $100,000

Computer Hardware $180,000 $80,000

Telecommunications $150,000 $85,000

Inside Sales

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000

Field Sales

$19,000

$166,000

The vast majority of companies who participated in this study reported revenue growth over the last two years even though most of

them also reported that fewer than 70% of their salespeople made quota during this same time period. Quota attainment varied slightly

per industry as did average quotas and on-target earnings, which vary more significantly between outside and inside salespeople.

The migration trend from field sales to inside sales that the full study explored can be better understood in light of the implications of

the last three metrics (and final key finding), which provide further insight into the way sales organizations are utilizing field and inside

sales teams differently. At first glance, the results might suggest that an outside sales model might make more economic sense because,

on average, the annual quotas of outside salespeople are about three times greater than those of inside salespeople while on-target

earnings are only two times higher. However, the advantages to inside sales teams become more noticeable when the third metric,

average deal size, is added to the equation.

By dividing the average annual quota for outside and inside salespeople by the corresponding average new deal size, one can see the

difference in deal volume needed by each group to achieve quota. Outside salespeople only need to close about 16 deals a year in order

to meet quota because of the large size of each deal, while inside salespeople need to close about 52 deals a year in order to meet their

quotas. This telling figure illustrates some of the advantages to inside sales cited by many sales leaders elsewhere in the study- A few

examples include: the ability to scale faster, increased call activity and sales volume, and a better strategy for penetrating small business

and mid-market accounts.

Summary and Conclusions

Easier to track the pipeline and forecast results

0% 20% 40% 60% 80% 100%

Allows sales organization to scale faster

Provides a better strategy to penetrate SMB and mid-market accounts

Enables sales organization to increase call activity and selling volume

Easier to train, develop, and promote for field roles

Easier to onboard new salespeople and share best practices

34%

61%

76%

79%

83%

78%

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To further substantiate the last couple of points, consider the volume of leads needed to generate the number of closed deals required

in order to meet quotas. Even with a 10 percent lead-to-close conversion rate, outside and inside salespeople would need to start with

160 and 520 new leads per year, respectively, to meet their sales goals. With those numbers, one can clearly see that it would be very

difficult, if not impossible, for an outside salesperson to successfully manage the inside volume of sales leads and opportunities, while

inside salespeople generally have no problem managing well over 500 leads per year. Conversely, the smaller number of leads per rep

required for field sales wouldn’t get an inside rep to quota, due to low volume. The five sales performance metrics presented here provide

great benchmarks for sales leaders, but when looked at more closely, these metrics can also provide incredible insights into sales strategies.

Advantages of Inside Sales Teams

Top senior-level sales leaders from over one-hundred leading high technology and business services companies participated in this

study. These senior executive sales leaders manage the sales organizations of computer software, computer hardware, Cloud-based/SaaS,

telecommunications, and business services companies.

The research included in-depth interviews and extensive surveying of the participants. The average interview lasted 42 minutes and

the survey required 82 separate responses. The goal was to gather qualitative information, including trends and future predictions along

with quantifiable sales organization metrics. Participants were also asked to share their top sales challenges and future sales strategies.

They candidly shared their experiences, opinions, and advice. In exchange for their candor, it was agreed that their names and organizations

would remain anonymous. This particular paper only highlights a few of the key metrics and findings of the full report entitled, “The Truth About the Field Sales to Inside Sales Migration Trend: Sales Organization Structure Study Based upon Interviews and Surveys with Vice Presidents of Sales at Top Technology Companies.”

In addition, the interpretation of study results was augmented by Steve W. Martin’s personal experience working with and studying hundreds

of technology sales organizations. The services he has provided these companies include sales force effectiveness consulting, comprehensive

win-loss analysis studies based upon extensive customer interviewing, and advanced sales strategy training.

Steve W. Martin is an expert on the complex human nature of business-to-business sales. Steve is a regular contributor to the Harvard

Business Review and teaches at the University of Southern California Marshall Business School MBA Program. This research project was

sponsored by Velocify, a market-leading provider of cloud-based intelligent sales software, designed for high-velocity sales environments.

Study Methodology

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Steve W. Martin is an expert on the complex human nature of business-to-business sales. His “Heavy Hitter” series of books for

senior salespeople has helped over 100,000 salespeople become top revenue producers. Steve is a regular contributor to the Harvard

Business Review and teaches at the University of Southern California Marshall Business School MBA Program. You can learn more

about Steve at www.stevewmartin.com.

Velocify is a market leading provider of cloud-based intelligent sales automation solutions that drive more effective and efficient sales

processes and increased revenue. With unmatched expertise, drawn from a dedication to helping more than 1,500 clients automate and

improve their lead response and selling processes, Velocify has become the platform of choice for organizations focused on improving

customer acquisition practices and business performance. Velocify is a privately held company, recently recognized as one of the fastest

growing companies in North America on Deloitte’s 2012 Technology Fast 500. Please visit www.velocify.com for more information.

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