With a whopping 26% turnover, it can be realistically said that most sales organizations hemorrhage sales reps. And that’s the average across industries- the Bridge Group estimates that SaaS Inside Sales turnover borders on 34%. This sort of turnover is so widespread it has come to be expected, and recruiting teams are always working on sales openings. But this is expensive in more ways than one. Here’s why:
- It costs an average of $10-15k to hire a new sales rep.
- It takes an average of 5-10 months for each new hire to reach full productivity (though it is not unheard of for the process to take over a year).
- Altogether, the cost of losing a rep is around 1.5-2x their annual compensation; the average cost per turnover is $100k.
- Overall, sales rep turnover leads to ~16% losses in annual sales.
While steps can be taken to offset these losses, I think we can all agree it would be best if they didn’t happen in the first place.
The problem is that many in the industry assume that this is just the way sales is: competitive and not for the faint of heart. And while this might be true to a certain degree, many sales organizations have left much to be desired in the way of employee support.
While reps might leave for any number of reasons, those under the control of the employer can be filtered down to two:
1. They do not feel welcome in the organization.
The average sales organization spends $15k to hire a rep, but only $2k to train them. Think each new hire doesn’t notice where their new firm’s priorities lie?
This grievance is not unique to sales, and should be handled in a manner similar to other departments. The tried-and-true method of addressing this complaint is gathering feedback, listening to that feedback, and alleviating concerns. Break down the wall between upper management and the boots-on-the-ground sales force.
Of course, this goes the other way as well. Providing salespeople with constructive feedback can not only improve their performance, it lets them know they aren’t being thrown to the wolves. We’ll look at this in more detail below.
2. They do not feel like they are performing successfully.
42% of salespeople did not hit quota last year. If nearly half of the sales force is not hitting their goals, do you think they will feel like they are performing successfully? While there may be outliers, it is a myth that great salespeople are born, not made. So why are almost half not hitting quota?
The answer is simple: they lack the proper support structure. (See point #1).
And while feedback is important, sales coaching is more important. Feedback is valuable because it looks backward and corrects mistakes. Coaching builds skills so those mistakes are never made in the first place.
If a rep goes to handle objections without prior practice and feedback on that practice, do you think they will be successful? Probably not. The same can be said for pricing negotiation, giving demos, and every other sales-related responsibility.
Remember that the average sales organization spends $15k to hire a rep, but only $2k to train him or her. You don’t have to imagine what might happen if these priorities were flipped. Reps who are coached:
- Increase their pipeline by up to 65%.
- Boast a 25% higher win rate.
Coaching Does More than Retain Current Sales Reps
Implementing a system that enables salespeople to succeed does more than mitigate turnover: it also attracts the best reps. Sales coaching is a currency for recruiters.
It used to be thought that, when it came to the best performers, feedback and coaching should be avoided. The worry was that they might take any advice as a personal attack on a faultless performance, become disgruntled, and leave. Nothing could be further from the truth. In fact, the best performers want to get better. They want to succeed even more than they already are. It turns out they are the best because they are receptive to feedback and training, not in spite of it.
But for most sales organizations, coaching remains a white elephant. If it is implemented, it is only implemented sporadically because it is so hard to scale. The best sales candidates are looking to build their skills and seek organizations that enable their personal development. L&D and Talent leaders can bridge the gap by educating sales organizations on the importance of a coaching platform.