For sales organizations, high sales rep turnover isn’t just disruptive—it can be financially devastating.
According to a DePaul University study, the average turnover cost per sales rep is $97,690 when you add up recruiting costs, training costs, and lost sales. [Tweet this] In other words, if you have a large sales team that churns through five sales reps in a year, congrats, you’ve just poured nearly half a million dollars down the drain.
Scary fact: The average time to replace a sales hire ranges between 3.69 months (for inside sales reps) and 5.42 months (for field sales).
This is especially alarming when you consider that most sales reps—no matter how happy or successful they are—typically have one foot out the door at all times. A Glassdoor survey found that only 19% of sales reps have no immediate plans to leave their companies. Meanwhile, 68% plan to look for a new job within the next year, and 45% of sales reps plan to look for a new job within the next three months. Outside of goat-herding, there are few professions more transient than sales.
So why do salespeople change jobs so often? And what can your sales organization do to stop your top sellers from leaving as soon as their bonus check clears?
PART 1: Why Good Sales Reps Leave
Jump to PART 2: Eight Sales Rep Retention Strategies That Work
With tremendous pressure on sales reps to perform, high expectations on new talent, and the constant lure of a better situation down the road, there are plenty of reasons why salespeople find it hard to stay in one place—but those reasons may not be the biggest factors driving sales rep turnover, particularly for high performers. Limited career growth opportunities and job boredom are the leading causes of employee turnover for top performers across a range of industries, and these factors are even more pronounced in the world of sales.
Scary fact: 70% of sales reps who left their organizations due to lack of promotion opportunities were top performers.
“The extreme focus on performance and production leaves no time for development of next-level skills or leadership abilities,” People First Productivity Solutions President Deb Calvert told Nutshell. “We see an epidemic of incoming sales managers who are unprepared for the role because, as sellers, they were singularly dedicated to making the numbers.”
The problem isn't merely that sellers leave their companies,” Calvert continued. “Many talented people also leave the sales profession because they see no opportunity for growth and become bored in a sales role that offers no new challenges.
According to Ken Thoreson, President of Acumen Management Group, Ltd, poor sales culture drives top talent away more than anything else. “High performers tend to leave companies because they lose ‘belief’ in the company’s ability to deliver positive results to their clients or execute effectively,” Thoreson told Nutshell. “It’s management’s failure to focus on the emotional connection with the individual, or their failure to focus on improving sales culture.”
Scary fact: For SaaS companies and other recurring revenue businesses, it takes an average of 11 months to break even on a new sales hire.
As any sales veteran could tell you, a rotten sales culture can take many forms. In her Training magazine article “Hunting the Hunters,” Kristin Thomas argues that the more distractions sales reps are forced to endure, the harder it becomes to keep them.
“Few things turn a salesperson off more than bureaucracy,” Thomas writes. “They detest internal meetings and administrative tasks that take time away from selling. Want to see steam come out of a salesperson’s ears? Have them spend an hour submitting an expense report (then take two months to reimburse them).”
Finally, sales managers too often make the mistake of over-relying on compensation as a means to keep their best sellers on board.
“Money is a poor substitute for leadership, development, engagement, and inspiration,” Deb Calvert told Nutshell. [Tweet this] “Sales managers may temporarily appease top performers by finding ways to boost their pay, but that doesn't address their deeper-level needs. I find it ironic that this is what we teach first and foremost in selling—it's about the value, not the price! The same is true in hiring and retaining talent."
PART 2: Eight Sales Rep Retention Strategies That Work
Now that we know what drives sales reps away, what should sales organizations be doing instead to stop the bleeding? Here are eight tactics that will dramatically reduce your churn rate.
1) Provide new challenges and opportunities
To prevent top talent from getting antsy, sales organizations should provide challenges beyond simply assigning them increasingly larger sales territories. “High-performing salespeople need fresh challenges,” Ken Thoreson told Nutshell. “Give them an opportunity to launch new product and service offerings, allow them to lead training sessions, or ask them to provide advisory roles on sales strategy.”
2) Increase employee engagement
According to a Corporate Executive Board study, employees with lower engagement are four times more likely to leave their jobs than those who are highly engaged.
“Understanding employee engagement and the domino effect that comes from it is critically important,” says Deb Calvert. “Employee engagement means ‘a heightened emotional connection that the employee feels for his/her organization, that, in turn, influences him/her to apply additional discretionary effort to his/her work.’
“The first part—a heightened emotional connection—is what leads to improved retention rates. The second part of that definition—additional discretionary effort—yields higher rates of productivity, improved customer satisfaction, and increases in both top-line revenue and profitability.
“So, for sales managers, it's more than just ‘engagement and retention are important’,” Calvert explains. “It's that those two things lead to goal attainment. There is a direct cause-and-effect, backed by reams of research.”
To learn how to boost engagement within your own sales team, download People First Productivity Solutions’ Employee Engagement & Productivity Checklist for Sales Managers.
3) Be smarter about bonuses
If your sales team’s compensation is largely tied to quarterly or annual bonuses, don’t be surprised if your reps stay with you just long enough to collect them. According to Richard Harris, Founder of The Harris Consulting Group, “the goal is to keep the carrot within reach” at all times, through a more frequent mix of monetary and non-monetary incentives. Harris suggests offering the following to retain high-performing reps:
- Larger retention bonuses that pay out at 1, 2, 4, and 5 years
- Shares in the company that can be vested within 6-12 months
- Extra vacation time at 2- and 4-year cliffs (“At two years, all sales reps should get two consecutive weeks of vacation to come back fully charged,” Harris told Nutshell.)
- Offering to pay off the sales rep’s student loans at certain intervals
- Continued sales training and professional development training on a yearly basis (“The organization should invest in management training for each team member as much as they do for any other kind of training,” Harris says.)
Previously: Richard Harris on “the dumbest question to ask” during your sales presentation
4) Stop making 1:1 meetings only about pipeline
You can’t expect sales reps to develop team loyalty and personal engagement when their managers only care about their numbers. Harris insists that managers and reps hold one-on-one meetings that are completely separate from pipeline review. “A pipeline meeting is just that—a meeting to discuss your deals,” Harris says. “A 1:1 meeting should be about career development. The best managers know how to invest in their people by understanding them beyond the pipeline. Taking time to work with people to get better at their craft will make it harder for reps to leave.”
5) Get serious about your onboarding process
So far, we’ve focused on top performers who leave their companies voluntarily, but the financial impact of having to fire underperforming hires shouldn’t be ignored. According to the aforementioned DePaul University study, involuntary dismissals make up 33% of sales rep turnover. When sales managers simply write off those reps as “bad hires”—then continue to hire and train talent the same way—they’re doomed to repeat their mistakes over and over again.
Many salespeople leave companies because they fail,” Ken Thoreson told Nutshell. “Either they were mis-hired, or they experienced what many new salespeople experience—limited or no formal onboarding process.
A sales team’s onboarding process should consist of a lot more than running through a phone script and showing new hires where the bathrooms are. “There needs to be a specific process to ensure new salespeople understand the job and the product/services they will represent, and that they can ‘sell’ the company before they enter the territory,” Thoreson says.
To learn about the three-week onboarding process that Ken Thoreson recommends for new sales hires, read his book Recruiting High Performance Sales Teams.
6) Build camaraderie among your reps
Encouraging friendships among team members can be a very effective strategy for reducing churn. According to OfficeVibe, 70% of employees say that having friends at work is the most crucial element to a happy working life, and most workers (58% of men and 74% of women) would refuse a higher-paying job if it meant not getting along with their co-workers.
“Sales can be a solitary job much of the time, but most salespeople enjoy getting together to cut loose and share war stories,” Kristin Thomas explains. “To attract and retain good candidates, you need to offer an equivalent environment that has a strong sense of community among the sales team.
“If your team is dispersed, find ways for them to get together on a regular basis. It helps them learn from one another—which has a value for them and your organization—and it helps build a closer affinity to your company’s brand, which easily can fade if people don’t feel connected.”
7) Celebrate the small victories
As Zig Ziglar famously put it: “People often say that motivation doesn't last. Well, neither does bathing—that's why we recommend it daily.”
If sales managers are only giving their reps recognition and encouragement when they close big sales, those reps can lose motivation and jump ship for a more supportive environment.
"Sales reps get a big rush when they see the fruits of their labor pay off,” says Shawn Karol Sandy, Founder & Chief Revenue Officer of The Selling Agency and host of The SellOut Show. “However, what I've found is that keeping reps has less to do with big bonus checks than it does with everyday victories.” [Tweet this]
“Keeping reps engaged with success every day means they're not just banking on a ‘Hail Mary’ or ‘Big Elephant’ deal to give them that high,” Sandy told Nutshell. “High performers need systems, coaching, tools, and support to sustain their performance. Double down your efforts on the forward progress of accounts and nurturing business to produce fewer peaks and valleys for your salespeople and more consistent progress.”
8) Develop from the inside instead of hiring from the outside
Though all of the above strategies will help you reduce sales rep turnover, you’ll never be able to eliminate it completely. It’s a fact of life that some of your top performers will leave your company due to personal or professional reasons. The question is, what are you going to do about it? Do you have a backup plan for replacing valuable sellers who churn out?
“Far too often sales leaders respond to the loss of top sales reps by recruiting new top performers from the outside instead of developing the capabilities of the people already on their team,” says Andy Paul, sales strategy coach and host of the Accelerate! podcast.
Invariably these hired guns have a lengthy resume full of short stays at numerous companies," Paul told Nutshell. "Some might even be good at what they do. But they won’t stick around for long. And they’ll contribute to the constant turnover in sales that will inevitably take its toll on your customers and impede the future growth of your organization.
So while you’re making improvements to your sales culture, bonus structure, and onboarding system to reduce harmful turnover, ask yourself: How deep is your bench of sales talent? And what formal programs do you have in place to develop and groom your newer hires?
“Start today to make sure that you are always prepared for the loss of some heavy hitters,” Paul advises. “Activate your next generation of top performers with increasing amounts of coaching, training, and account responsibility to prepare them to quickly fill the void created by the inevitable departure of some of your top sellers.”