Sales leaders are always asked the same question: Should we shift more of the sales force to inside sales? Recent research, titled “Inside Sales Structures and Firm Performance,” conducted using Xactly’s proprietary sales and revenue data in collaboration with professors from San Diego State University and the University of Houston gives a clear, practitioner-friendly answer: it depends.
The researchers studied about 200 firms over multiple years and found that more inside sales can increase the volume of customer interactions, but it can also reduce the depth and quality of those interactions, so the net impact on firm performance is conditional.
Inside sales scales quantity, but can tax quality
Inside sales tends to improve the exchange quantity. For example, it allows for more interactions with more customers, more coverage, more responsiveness, and higher tempo. However, it strains exchange quality, resulting in shallower insight, less personalization, and weaker relationship in those interactions.
Therefore, sales leaders should look to ask: When does the quantity gain outweigh the quality loss (and when does it not)?
The two levers that decide whether inside-heavy works are:
Exchange demand: How “hard” are your selling interactions?
Exchange demand is the effort required to make customer interactions effective and is mainly driven by product complexity and competitive intensity. The data shows that higher product complexity and higher competitive intensity both make inside-heavy structures less likely to pay off.
Hypothetically, if you sell complex, consultative, multi-stakeholder solutions, the “quality penalty” of inside sales grows fast. If you sell in a highly competitive market where differentiation comes from trust and relationship depth, field presence matters more.
Exchange control: How much can managers shape selling behavior?
The second lever is exchange control, or how well managers can influence customer interactions through coaching, guidance, and oversight. A key operational proxy the paper highlights is span of control, which is how many reps each manager oversees. Wide spans reduce coaching and oversight capacity, which is especially important in inside sales.
If exchange demand is low (simple product, weaker competition), we can assume that inside-heavy can work because quality is less “make-or-break,” and volume wins. Signals for this can include shorter sales cycles and fewer stakeholders, and low need for onsite discovery.
If exchange demand is high (complex product and/or intense competition), then quality is the game. Inside-heavy tends to struggle because you need deep context, nuanced discovery, and relationship strength.
Additionally, if you’re going to go more inside-heavy, you should also increase exchange control, especially by narrowing spans of control and boosting coaching and feedback loops.
A Three-Step Playbook
Step 1: Score your “exchange demand”
You should begin with quick, honest scoring of your product’s complexity and customization needs and the competitive intensity. Competitive intensity is how easily customers can switch to another product or vendor and how much your relationship differentiates.
Step 2: Audit your “exchange control”
Next, take the time to review your organization’s current span of control for inside managers. If it’s high, you can expect quality and activity issues. This is also the time to assess your coaching cadence and rigor, and tooling that creates feedback loops.
Step 3: Choose your structure intentionally.
Lastly, ensure you choose the best sales model for your organization. You should move forward with the inside-heavy approach when demand is low and control is high, and the field-heavy or hybrid approach when demand is high.
If you must have the inside-heavy structure in a demanding context, you need disproportionate investment in control, which consists of coaching, enablement, and analytics.
Taking Action
To explore how leading sales organizations use data, analytics, and incentives to balance inside and field sales performance, please visit https://www.xactlycorp.com/company/contact-us.
Methodology
The researchers use a multimethod design that combines a qualitative study with a quantitative panel analysis. In Study 1, the authors conduct in-depth, semi-structured interviews with senior sales leaders to develop a grounded set of mechanisms and hypotheses. In Study 2, they test these hypotheses using a longitudinal panel dataset (2016–2019) of 194 firms from Xactly Corp., drawing on the proprietary sales dataset and supplementing it with external sources, including product complexity measures from the MIT Observatory of Economic Complexity (PCI) and competitive intensity measures based on COMPUSTAT industry concentration. Firm performance is measured using log revenue (and ROA for public firms when available), and the models are estimated using two-way (firm and year) fixed-effects regressions with relevant controls and firm-clustered standard errors. To address endogeneity concerns, the authors employ an instrumental-variable–style control-function approach using non-competing peers’ inside-sales dependence and conduct robustness checks, including a Gaussian copula method and lag-based tests for reverse causality.