This post is to help discover the root cause of Sales Rep turnover. It is for HR Business Partners working with Sales Leaders. Included is a tool that helps pinpoint your root cause of turnover.
$25 Million a year!
Is this a problem to resolve? Think about boosting your company’s bottom line by $10M a year. Here’s a sales rep turnover example.
*Per 100 Reps* Your Company Your Industry Turnover Rate: 30% 20% Cost per Mishire: $850K $750K Annual Loss: $25.5M $15M Annual Revenue Increase by improving to industry tunrover rate: $10.5M – See this post for determining your mishire cost.
So what’s the problem?
According to Gallup research, the top five predictors of turnover (in general) are:
1. The immediate manager
2. Poor fit to the job
3. Coworkers not committed to quality
4. Pay and benefits
5. Connection to the organization or to senior management
These also relate to Sales Rep turnover. Below, I describe 3 areas commonly causing high turnover. This available download lists another 7 potential root causes including the “Bad Boss”. It has symptoms and questions to ask to determine which one is “it”.
Sales success is 50% talent and 50% performance conditions. Hiring someone with the wrong talent will quickly remove 50% of the equation. Poor hiring could be caused by a bad process or a bad profile (or both). If this cause is suspected, it is often resolved by outsourcing recruiting. That may not be the best option. Dig in to these questions to be sure:
- Do recruiter incentives include speed to fill or low vacancy metrics?
- Do you have a commitment to respond to all candidates within a certain time period?
- Are more than 3 people required to screen candidates?
- Does your hiring process include job try outs or probationary periods?
- Does the profile for this Rep position include expected accountabilities AND required competencies?
- Has the profile been reviewed by Sales personnel (both Rep and Management) before use?
- Does the profile specifically weed out unqualified candidates?
- Is the profile attractive to ‘A’ player reps?
When a candidate is hired, they need to be onboarded to your company. The usual goal is to get a Sales Rep to full productivity fast. But using a trial by fire approach will not develop loyalty. Instead, the new hire may be thinking this new company is not as good as thought. A solid onboarding program can be used during hiring as a way to attract. What happens here is that new hires hear promises during hiring. The first couple months do not live up to those promises. The onboarding program is deficient.
- Are candidates made aware of an onboarding program during the recruiting phase?
- Is Rep ramp time to productivity more than 6 months?
- Do new hires have a structured schedule for their first 3 months of employment?
- Are Sales Managers held accountable for the use of the onboarding program?
Insufficient Marketing-Provided Leads
Sales Reps depend on a continual flow of quality leads to work as opportunities. They find leads themselves through prospecting. The Marketing department is also supposed to provide leads. Unfortunately, many marketing organizations confuse demand generation with providing leads. They lack a lead nurturing program. The leads they do provide are not quality. Over time, Sales Reps ignore leads from Marketing because quantity and quality is low. Sales Reps leave when no support for leads comes from Marketing. This is usually coupled with increased quotas year after year. Some questions to determine if this is a root cause:
- Do the Sales Reps complain of too much time spent prospecting for leads?
- Does Marketing have a defined Lead Management process including lead nurturing?
- Is Marketing goaled on delivering leads to Sales?
- Is the Sales Opportunity close rate very low (less than 20%)?
Call to Action
Click here for a tool that lists 10 potential root causes of high Sales Rep turnover. In reality, it is usually a combination of causes that contribute. But, you need to start somewhere. Get the tool and start looking for the symptoms/asking the questions. Find the cause that is the most likely and start resolving that one first. Then work on the other causes in priority order – the tool helps prioritize them. And then imagine the kudos being thrown your way for saving millions of dollars!