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Inside : Outside Salesperson Ratio

We are an allied lines material handling distributor. Over the years, we have considered adding an inside salesperson to try to keep our salespeople in the field as much as possible. Is there any rule of thumb on how many outside salespeople it takes to support an inside salesperson? Should the inside salesperson support the outside people with quoting, order entry, order follow-up, etc? Or are these activities better handled by the outside people?
         
                                                            — Greg Wait, president, Fredon Handling (Jackson, MI)

Duncan Murphy: The correct answer is, “It depends.” As you stated, it depends on the tasks assigned, the product mix, marketing plans, company size and structure. Here are some standards we have found valuable at Riekes:

  • Keep your outside salespeople generating revenue. Any non-value added tasks should be performed by support staff.
  • Even support staff need to generate revenue, so give them responsibility for catalog or consumable items and share some of the commissions.
  • As expertise develops, encourage the support staff to handle walk-in, repeat business and phone call inquiries as far as they are able. This will free up the outside people to generate new business and close on leads.
  • Imbue the support position with recognition, responsibility and authority so it stands tall by itself and is not viewed as a training ground for outside sales. Stability in this position will pay dividends. Different talents are required.

Depending on your company’s profile, one inside person should be able to support three outside people. The more you expand the responsibility of the inside staff, the lower the ratio becomes.

Jack Phelan: It sounds like you have the same concerns that we had when we added an inside salesperson. Our justification for doing so was that there were too many smaller orders that couldn’t justify a person with the talent set of an outside salesperson. When we started, we used a $5,000 threshold as a guideline. We pushed the salespeople to turn over any potential order with a perceived sale value of $5,000 or less to the inside salesperson. When they did, they split the commission with the inside salesperson. Initially, there was pushback from the sales force with the mindset that they were losing money on the deal. Now they realize they have a lot more time to pursue greater opportunities. Our current threshold is $10,000, and most of the time, projects of greater value are gladly turned over by the outside sales force to the inside salesperson. The person who takes the order does all the related paper work.

Bob Weeks: The normal rule of thumb is one inside support person for two outside salespeople. However, depending on the strength and volume produced by the outside salespeople, this figure can be increased to one inside person supporting three or possibly four outside salespeople. The strategy is to keep the outside salespeople in front of customers and potential customers. Therefore, the inside support person should do everything he or she can to accomplish this strategy. The work would include quoting, order entry, order follow-up, and whatever else it takes like making appointments and maybe even some telemarketing. The outside salesperson needs to be involved in the quoting and must provide the support person the information or knowledge the support person may be lacking.

Material Handling Equipment Distributors Association

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