Nearly every sales manager has to deal with the problem of sales force turnover, and you’re very lucky if you don’t.
But what’s an “all right” level of turnover, and when — by contrast — should you be concerned?
Let’s look first at what’s actually happening. The Center for Sales Leadership at DePaul University in Chicago conducts a periodic Sales Effectiveness Survey, and according to the most recent one, sales force annual turnover averages 27% for inside sales and 26% for field sales. That, just about anyone would agree, is too much. True, you probably don’t mind losing some of these people — they’re most likely the ones who aren’t very good — but when you’re dropping a quarter of your sales force every year, good people are bound to be in there with the not-so-good.
The turnover problem is made more acute by the fact that it’s not easy to replace a departed rep. Again according to the survey (of a sampling of 127 organizations), it takes almost four months to plug in an new inside salesperson and five-and-a-half to replace a field salesperson.
The main reason for turnover, by the way, isn’t reps who are so bad their managers have to fire them. Just about one third of the turnover in the survey was due to termination, with 50% due to voluntary resignation and the remainder to retirement.
So anyway, back to our question about acceptable levels of turnover. Two sales gurus, Benson Smith and Tony Rutigliano, have opined that ANY turnover among the top 75% of producers in your sales force is too much! They believe that if you want to look at turnover, you need to break it down into quartiles by productivity. You can live with turnover in the bottom quartile, but you should work very hard to minimize it in the top three quartiles.
Making sure opportunity knocks
OK, fine. But what can you do to keep your better and best performers? You probably have some ideas based on your own circumstances, but it might also be useful to look at recommendations from folks who have had a lot of experience with a wide range of sales forces. In this case, I’m talking about Andres Zoltners and Prabha Sinha, professors at Northwestern’s prestigious Kellogg graduate business school who have done sales force consulting with dozens of companies in the U.S. and abroad.
In a paper in the Harvard Business Review, Zoltners/Sinha say that good performers are more likely to leave because they’re seeking opportunities — for growth and promotion — than because they think the money isn’t good enough where they are, or because they can’t get along with their sales manager.
So if that’s true, what you need to do is make darn sure your best reps know they have meaningful opportunities with your organization. Promotion certainly does represent such an opportunity, but even if you can’t guarantee promotion to that high-producing rep, there are a number of things you can arrange for him or her.
Zoltners/Sinha suggest giving such folks more autonomy and appreciation/recognition, creating long-term incentives for them (like cumulative two- or three-year performance bonuses), and including them in company task forces or top-level project teams.
And for reps who aren’t yet high performers but who you think have the potential to be, Zoltners/Sinha suggest increased training and coaching to help them get off the ground. It’s this failure to take off, often due to a lack of knowledge and support, that triggers a lot of the turnover among new and newish reps.
A final word from the DePaul survey: The average turnover cost represented by a single departed rep runs to almost $98,000 — in recruiting costs, lost sales while the position is vacant, etc. So it behooves sales managers to do everything they can to keep turnover down, especially among the better-performing members of the sales force.
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