Apr 3 2014, 3:23pm CDT | by Forbes
This article comes from an interview with and original research led by James W. Phillips, Business Intelligence Analyst for my company, InsideSales.com, about a research study entitled “2014 Sales Acceleration Technology Market Size.”
Sales Acceleration is defined in detail in a prior Forbes article entitled “What Is Sales Acceleration? Start By Picking Up Your Phone.” It outlines categories that include new and emerging software applications and services that fall under this new market category.
The 15 cloud-based categories listed are as they appear in the study:
In summary, sales acceleration means to increase the velocity of the sales process.
James gives some background, “Over the last 10 years, the sales industry has witnessed a disruption. Due to the innovation of Internet cloud-based business transactions and an upsurge in sales technology development, the sales profession is in a state of rapid modernization.”
He continues, “The ‘Sales Acceleration Technology’ industry is the business space between CRM and marketing automation which facilitates, and thereby accelerates, all processes pertinent to the sales pipeline.”
The study addresses the following questions:
James collected information from 439 companies for this study, which was segmented by type of sales function (retail, inside sales, outside sales) as well as size of company and industry.
U.S. Census data presents a total of 13.98 million sales reps in North America. Analyses through this research shows there are 8.357 million in sales people employee retail sales, and 5.622 million inside or outside sales professional sales reps.
Of this 54.4% or 3,064 million are inside sales (professional sales done remotely), and 45.5% or 2,558 million are outside sales or field sales representatives.
By 2020 there will be over 6 million inside and outside salespeople in North America.
In the sample, companies allocate 3.5% of total budget towards sales acceleration technology, with spending ranging from 1% to 24%.
Given considerations of current sales rep adoption rates, North American businesses spend $2,280 per rep, per year, on sales acceleration technologies in the following allocation:
From the same Census and the sample data from this study, estimations are able to be made showing current spending in North America for sales acceleration technology to be $12.8 billion annually in the world of professional sales with the following by inside sales and outside sales:
NOTE: This estimate is conservative by at least two accounts. James omitted “Sales Training Technology” which could be considered a sales acceleration technology, and the entire category of spending for retail sales was not included. The $12.8 billion would increase to roughly $15.8 billion if Sales Training Technology were included.
Spending by industry varies widely, with Software and Education leading, and Finance and Telecom bringing up the rear.
Size of company, in this case by employee size, correlated to a massive difference in spending:
The next interesting item in the research is the assessment of four favorable business outcomes and the associated correlated patterns in sales acceleration technology spending by the following:
The average deal size in the sample was $12,500.
Again, the average spending per sales rep is $2,280 per year, but in companies with the largest 50% of deal sizes, the average spending is 89% larger, or $4,319 per sales rep per year.
NOTE: Greater sales acceleration technology spending does not necessarily cause bigger deal size, there is only a notable correlation from the sample data. The study goes into much greater detail with further regression analysis of this interesting correlation.
The average sales cycle in the sample is about 60 days.
Interestingly, the Communications and Intelligence technology received a greater proportion (28% more) of spending among companies with the fastest sales cycles, compared to the average.
From the companies surveyed, the average close rate is about 20%.
The four notable technologies correlated to higher close rates were Sales Communications, Data Visualization, Business Intelligence, and Voice technology.
Companies with higher than average close rates spent 17% more per sales rep than the average./>
Companies with average revenue over $3,000,000 had a 78% more being spent on sales acceleration technologies than the average with an average of $4,052 per rep versus the previously mentioned $2,280 per sales representative.
NOTE: This correlation is similar to the size of company by employee size section already mentioned, but now illustrated by company revenue.
The ends with the question to respondents about how their sales teams with grow or shrink over the next two years.
Sales acceleration principles and best practices are discussed in another Forbes article entitled, “27 Sales Acceleration Principles And Best Practices” that should give additional insights into this expanding new area of technology.
Thanks again to James W. Phillips, and the Business Intelligence team at InsideSales.com for this research study. There is also more information on this study in an article done by Leo Dirr entitled “ Sales Acceleration Technology Spending: Special Report.”
Author: Ken Krogue
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