Inogen shakes up hiring process for sales reps

Friday, August 9, 2019

GOLETA, Calif. – Inogen may have posted its first $100 million revenue quarter, but it struggled with sales issues.

The company was able to improve the productivity of its sales team in the second quarter of 2019, but sales rep attrition was higher than it expected, with many of the reps hired in 2018 unable to meet targets, said CEO Scott Wilkinson.

“Despite successful early trials where we allocated more leads to top performing representatives, when scaled across a larger group, this initiative did not generate the benefit we anticipated,” said Wilkinson during a conference call to discuss the company’s financial results for the second quarter. “Given the reduced sales rep headcount and less than expected productivity improvements, we expect to realize headwinds to growth and direct-to-consumer sales in the third and fourth quarters of 2019.”

Direct-to-consumer sales increased 14% in the second quarter of 2019 compared to the same period in 2018, primarily due to sales rep productivity, but were partially offset by an about 17% reduction in sales rep headcount.

Inogen’s sales issues are a big reason why the company reduced its guidance for 2019 to $370 million to $375 million in total revenue, down from $405 million to $415 million, representing growth of 3.3% to 4.7% compared to 2018.

“We expect sales rep headcount to be down significantly at year-end 2019 compared to year-end 2018, which is the largest driver of our reduced 2019 revenue expectations,” Wilkinson said.

Going forward, Inogen has changed its hiring criteria, screening mechanisms and training programs to better ensure it hires the right sales reps, Wilkinson said.

“It’s never a guarantee that 100% of everybody you hire is going to work out, but certainly we had a higher percentage that didn’t work out than we’ve had in the past, so that’s hurt us,” he said.

Inogen has applied the changes to the sales reps it started hiring in August at its three locations—a move that’s already paying off, Wilkinson said.

“We have hired a couple of classes and measuring those classes that we hired against the areas where we had issues, we’re seeing success,” he said.

Inogen topped out at 446 inside sales reps for its DTC business at the end of 2018, a nearly 70% increase compared to 2017.

“Going forward we plan to hire at a more controlled pace than we did in 2018,” Wilkinson said.