The upside of inside sales

This metalworking and finishing specialty distributor discovers that properly trained inside salespeople armed with the right technology can be just as effective as having more feet on the street.

by Richard Vurva

Have you ever been forced to listen to a bad local radio station while waiting for a customer service rep to answer your telephone call? Then you’ll appreciate the benefits of new call center technology used by J&L Industrial Supply.

Just a few years ago, suppose a tool crib attendant from a Charlotte, N.C., metal shop called J&L to place an order. A customer service rep (CSR) in J&L’s Charlotte call center took the call. That is, unless all 12 reps were busy. In that case, the caller waited on hold until a rep became available.

It didn’t matter that a rep might have been accessible in one of J&L’s other call centers in Los Angeles, Elk Grove Village, Ill., or at its Livonia, Mich., headquarters. The system routed calls geographically, so the Charlotte customer had to cool his heels.

Today, calls go through one of two sophisticated Siemens phone switches that use integrated voice response (IVR) technology and résumé routing. Callers press one if they want to place an order, two if they’re looking for price and delivery information, three if they need to expedite or change an order and four for other options.

When the caller presses a button, it creates a call type that puts the call into a queue. The system instantaneously scans all four J&L call centers looking for a CSR with a résumé indicating he or she is trained to handle that type of call.

If the caller wants to talk to a specific individual, the CSR can click on a screen that indicates which other CSRs are on the phone and the type of call they’re handling.

The system offers multiple benefits. First, it greatly expands the number of CSRs staffing the phone lines. Instead of waiting for one of the dozen North Carolina reps to become available, the Charlotte caller can talk to any of the 35 or so J&L CSRs on duty.

J&L’s service levels improved dramatically since adopting the new technology. In the past, out of more than 2,000 calls a day, about 200 were abandoned, meaning the customer got tired of waiting and hung up. Today, the abandon rate is between eight-tenths-of-one-percent to 1.5 percent a day. Service levels (how often calls are answered in 20 seconds or less) went from between 85 to 90 percent a day to between 95 and 100 percent.

Making CSRs proactive
By balancing the workload between call centers, the system also frees CSRs for other activities, like placing outbound calls.

“Instead of having people here at 7 a.m. waiting for the phone to ring, we can have them place outbound calls,” says Kimberly Shacklett, call center director.

During non-peak volume periods, the system notifies a CSR trained to place outbound calls that now is a good time to call someone from a list of customers that haven’t made a purchase recently. Known as reactivation calls at J&L, they maintain contact with a customer that otherwise might be forgotten, make sure they have the latest catalog and update contact information.

“Every customer has six or seven catalogs on their shelves that they can reach for in those days they haven’t called us. We want to make sure we touch them more often,” says Shacklett.

Customers who don’t place an order within 30 days after being contacted are assigned to J&L’s New Business Development (NBD) group. Over the next few weeks, the NBD reps place a series of calls to every person at the account to re-introduce them to J&L, explain its value proposition, send a catalog and personalized letters with the rep’s photo.

In a recent month, the top performer converted more than 100 customers from inactive to active status.

After reactivating the account, J&L assigns the customer to the appropriate sales channel. Customers with small sales potential do business by direct mail, the Web and by phone using customer service representatives. Territory sales representatives (TSRs) handle customers with medium sales potential, and larger customers are assigned to field salespeople.

The company, with annual sales of metalworking and finishing products of about $200 million, anticipates great growth potential in phone sales compared to traditional field sales.

“Outbound telemarketing constitutes between 20 and 25 percent of our revenues today. Within in the next 18 months, we expect that to grow dramatically,” says Michael Wessner, chief operating officer.

Lowering the cost of sales
A greater reliance on telephone sales lowers the company’s cost of sales because it’s more cost-effective to do business with mid-level accounts over the phone than to put more feet on the street. Handling accounts over the phone also gives the company greater control over its sales message. The telesales group is generating about 20 percent year-over-year sales growth compared to 10 percent for the field sales force, Wessner says.

“Because our TSRs are in a closely managed environment, we deliver our value proposition very consistently. With a decentralized sales force, it’s much more difficult to get everybody on the same page,” says Chuck Moyer, vice president of marketing and supply chain management.

Many distributors struggle with trying to transition employees who are used to handling inbound calls to perform outbound calls. Shacklett believes J&L succeeds where others fail because the company pays its CSRs higher than the going rate, creates a clear career path that employees can follow and offers training.

Recognizing that many customers perceive catalog companies as order takers and not solution providers, J&L developed a comprehensive training program to upgrade the knowledge level of its inside salespeople. In the last 12 months, more than 140 inside and outside salespeople completed about 4,000 hours of formal product and sales training. The company developed a three-tiered training effort comprised of a classroom session on basic product knowledge, 12 in-depth courses on J&L’s core metalworking commodity products and hands-on practice on machine shop equipment.

Salespeople complete tests two weeks after each course and take a refresher test six months later to demonstrate retention. If they don’t answer 80 percent of the questions correctly, they receive one-on-one tutoring from a J&L Tech Team member.

CSRs and TSRs sit in cubicles with a color-coded graphic image of a virtual machine shop that depicts a typical machining operation and helps inside salespeople visualize the customer’s environment.

The objective is to make customers as comfortable talking to inside salespeople about their metalworking applications as they would be talking to a field salesperson. TSRs complete detailed application optimization process worksheets on select customers to learn as much as they can about their metalworking operations. The TSRs then work with J&L’s Tech Team to problem-solve tooling applications, and drive cost savings and increased productivity to customers.

The approach has paid off.

“We’re solving customer problems over the phone and encouraging customers to seek us to solve their technical requirements,” says Wessner. “We’re getting big wins, meaning a customer was using the wrong coolant or the wrong drill, and when they made a change we delivered to them over the phone, they’re seeing 40 percent savings or 50 percent turnaround time improvements. Once you’ve done that over the phone, you’ve proved that engagement process works very well.”

Smart Spiffs
Every salesperson knows it’s easier to generate additional sales from existing customers than it is to uncover brand new customers. During a hectic day, however, salespeople tend to forget to ask for add-on sales. J&L developed a deceptively simple yet clever program called Smart Spiffs to encourage customer service reps to look for upsell opportunities.

A green dollar sign taped to the F11 key on each CSR’s keyboard is a simple reminder to salespeople. While taking an order, the CSR can hit the F11 key to see a list of five or six other products that people typically buy when they purchase the product the customer just ordered. Armed with such knowledge, salespeople are much more likely to know that users of carbide inserts typically also buy tool holders and shims. The system also reminds CSRs about ongoing sales and promotions, so they can offer products to a customer at a discount.

Each CSR has a goal to generate $500 in upsells per day and earns a commission on the extra sales revenue. The company closely tracks sales results and recently ran a sales campaign that awarded prizes to salespeople for increasing their revenue.

Territory sales reps and field salespeople have access to a software program from Net Perceptions called Playbook. Based on past purchases, Playbook suggests a handful of products a customer might buy that he or she hasn’t purchased in the past.

Blending data supplied by Industrial Market Information in Minneapolis with its own sales records, J&L built a database that shows how much a customer currently buys and that company’s potential for purchases in a given product category.

For example, suppose a customer orders a high-speed steel (HSS) jobber drill. The sales rep can pull up a table that shows the company bought $10,000 in high-speed steel products in the past 12 months, but likely consumes $50,000 worth of HSS products in a year.

“Any salesperson talking to the customer can realize where the potential is and ask for the business,” Moyer says.

This article originally appeared in the July/August 2003 issue of Progressive Distributor. Copyright 2003.