Sales force turnover is a critical problem for distributors, and should be a priority for these five reasons:
- It is rampant. According to Harvard Business Review, “Estimates of annual turnover among U.S. salespeople run as high as 27%—twice the rate in the overall labor force.”
- It is extremely difficult to predict/control. HBR recently reported on a study that attempted to predict which salespeople would be most likely to quit. Researchers expected that the lowest performers would be the most likely to quit, but salespeople with average quota performance were the ones with highest turnover rates. Because turnover is difficult to predict, it’s also difficult to prevent.
- Sales teams aren’t losing just the laggards. The surprising finding in this research was that the lowest-performing salespeople, who they say have “limited opportunities at other firms,” are not the most likely to quit. Instead, companies’ middle performers are turning over the most often. This is problematic, HBR says, because this middle group “often constitutes a large and profitable part of the sales force.”
- The financial costs of replacing employees are extremely high. Between searching for a new employee, getting them set up with HR and filling them in on what’s going on with their accounts, the overall cost of replacing an employee is at least $4,000, MDM reported. When you multiply that figure by your company’s turnover rate, it adds up quickly, according to 5 Tips to Reduce the Cost of Employment in MDM’s 2016 Distribution Trends Special Issue.
- The impact to your current customers can be severe. Unless your employees are already using a modern CRM system, you face the embarrassing possibility of having to ask a customer to bring a lost salesperson’s replacement up to speed. During the transition, your customers may also experience service interruptions and errors, and you can forget about your new salesperson making much progress on market penetration while they struggle to get up to speed on the status quo.
Because salesperson turnover is rampant, inevitable and costly, distributors must plan for it by putting processes in place that ease the transition between resigned reps and their replacements, facilitating the transfer of customer, opportunity and competitor information. Implementing a CRM as an information hub is the most effective way to do this (as opposed to relying on reps’ siloed and error-prone methods, such as Post-It notes, memories or individual spreadsheets).
Reducing turnover-related costs is one of the most compelling reasons why a well-implemented CRM is a revenue generator, not a cost. In fact, one past client told me that if he lost just one salesperson per year, he felt he could justify his investment in CRM. Learn how to make back your investment in CRM in my book, ROI from CRM: It’s About Sales Process, Not Just Technology, published by MDM.
Brian Gardner is author of ROI from CRM and founder of SalesProcess360, which is focused on helping industrial sales organizations think differently about sales process and get ROI from CRM. Learn more about SalesProcess360 at salesprocess360.com, and contact Gardner at brian.gardner@SalesProcess360.com.
