Direct sales using a field sales force is one of the most expensive ways to acquire customers and is therefore only appropriate for larger deal sizes.
There are several significant challenges in building a field sales force in the high-tech industry:
Field salespeople are very expensive, typically running australia mobile database around $230k to $250k on target. They often require a sales engineer in the field, which can add significantly to the cost. They also have office expenses and travel costs.
Because they are striving to have face-to-face meetings with customers, the number of connections they make with customers in a day is typically much less than what an inside salesperson could do by staying in the office and using the phone.
Due to the long sales cycle, it usually takes a long ramp time, about 6 to 9 months, for a new salesperson to become productive.
For every 5 salespeople hired, there will typically be 1 or 2 who fail and never get close to quota.
Unfortunately, due to the long startup time, it usually takes six to nine months to detect which ones will fail and terminate them.
Large deals that are usually handled by field salespeople are often only completed in the last week of the quarter, resulting in high order volumes and difficult revenue management.
Given all of the above issues, venture capitalists are somewhat wary of business models based on field sales organizations.
Channel Sales
Channel selling can be used to create extremely successful business models. Channels provide organizations with powerful leverage, adding additional sales resources and leveraging existing customer relationships that channel partners bring.