Sales rep turnover can be very costly for organizations, both in terms of hard costs (actual outlay of training and other dollars) and opportunity costs (lost future business). According to Gallup research conducted in 20061, five of the top predictors of turnover are:
1. The immediate manager
2. Poor fit for the job
3. Lack of commitment to quality
4. Pay and benefits
5. Connection to the organization, or to senior management
In addition to those mentioned by Gallup, there are two other causes of significance:
6. Poor hiring
7. Insufficient onboarding
Let’s look at each of these individually.
1. The Immediate Manager
The most common cause of sales rep turnover is a sour relationship with the direct manager. This relationship is critical, and if it doesn’t work well it will lead to a termination or resignation. One CFO commented, “People need to be appreciated for their hard work, and if the employee doesn’t feel this respect then he/she will leave.”
Sales managers’ main role is the development of their sales teams for maximum performance and results. There is a direct correlation between a sales professional’s success and the competence, value and mentoring abilities of his/her sales manager. Top managers make a habit of doing the following:
• Setting high yet achievable standards for their reps
• Helping their sales professionals develop their skills and improve their teams’ results
• Co-authoring short- and long-term sales goals with their employees
• Coaching and mentoring their employees to help them achieve superior results by implementing on-going development plans
• Developing highly productive coaching relationships with their people and understanding each salesperson’s key motivators
• Holding their teams accountable for the activities that will lead to the success and accomplishment of their sales goals
2. Poor Fit for the Job
If a salesperson doesn’t enjoy the type of sale that his/her organization is engaged in, this will lead to turnover. If the salesperson doesn’t enjoy sales at all then he/she will not last in that role. We will cover this in more detail in Section 6, Poor Hiring.
3. Lack of Commitment to Quality
Salespeople will take issue with their company if they don’t feel that the company stands behind its products. That is, when they make a sale the organization can’t support the delivery of quality goods and services. Sometimes the fault for this can rest with the employee if he/she is overpromising what the organization is capable of delivering.
4. Pay and Benefits
Many employees leave their companies because of insufficient pay or benefits. Although Frederick Herzberg’s research on motivating factors2 shows that an increase in pay has less impact than a decrease, it is still an important factor in employee turnover. One thing to note however is during exit interviews people often identify pay as the reason for leaving, as this is an answer that will have little impact on the individual’s reputation when they leave the company.
5. Connection to the Organization, or to Senior Management
Employees like to feel a connection to the overall organization. They like to understand and feel part of the vision, mission, strategy and key priorities. With this in mind, be clear about what you’re trying to accomplish as an organization – not just financial goals, but also purpose. What do you aspire to bring to the world as a company? What kind of a culture do you want to create in order to do that? What will the organization look, feel and sound like if you’re embodying that mission and culture? How will you measure success? Once you’ve clarified your future consistently, focus on keeping that vision top-of-mind and working together to achieve it.
6. Poor Hiring
If sales success is approximately 50% talent, then performance conditions account for the remaining 50%. Hiring someone with the wrong talent will effectively remove half the equation. Poor hiring could be caused by a deficient process, mismatched profile of skills and experience, or both.
Deficient Process: If the sales manager is under a lot of pressure to fill the vacancy quickly, rush decisions could be made. Is the policy of your organization to respond to all candidates within a certain time period? How many candidates do you need to see in order to know you are getting a representative sample? What about job try-outs or probationary periods? These may lessen the risk associated with hiring.
Profile Issues: In hiring the right person the sales manager should consider both expected accountabilities AND required competencies. A thorough review of this profile should be done by both salespeople and managers before it is put in place. It’s helpful to outline unwanted characteristics as well. What allowances have you made to ensure you attract the very best talent?
7. Poor On-Boarding
The goal of an effective on-boarding program is to get the new salesperson up to full productivity as quickly as possible. A strong on-boarding program should be used as a hiring tool during the recruiting phase as a way to attract potential candidates. Consideration should be made to get the new hire up to speed within six months including a structured schedule for their first three months of employment. Sales managers need to be held accountable for the use of the on-boarding program and laying out very clear expectations of both activity and results within these first six months.
First line sales managers are the key to diagnosing sales force turnover problems and identifying and implementing solutions for reducing turnover among all three performance segments. Managers are the ones who have to determine if a low performing salesperson has future potential or not. They are the ones who must coach and develop a salesperson to realize his/her potential. They are also the ones who can find the right motivators for holding on to high-performing salespeople.
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1. Gallup Poll research conducted 2006.
2. Herzberg, F.I. 1987, 'One more time: How do you motivate employees?', Harvard Business Review, Sep/Oct87, Vol. 65 Issue 5, p109-120.
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