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A Closer Look at the Impact of Sales Rep Turnover

This post was republished with permission from Sales Pro Insider.

“I’m giving notice today.” What manager longs to hear those words from a sales rep? Those words typically don’t make a sales leader’s day. Yet maybe some rep change isn’t a disaster. Let’s look closer …

Many years ago I was calculating turnover rates for the teams within the company I was working with.  The numbers were about average for the industry,  but higher in our sales area. I knew I was going to have some “explaining to do” to the board. However, the overall numbers didn’t tell the whole story.

Much of the turnover was initiated by us, and some was unavoidable due to relocations (we had a military base in the area and spouses moved often).

That’s when I realized we needed to look differently at turnover so we could make strategic decisions on whether we had a “problem” to fix or not.

Productive turnover: People whose departure is due to performance, attitude, area coverage and related issues.

  • Reps who aren’t performing at the levels you need or reps who sap time, energy and negatively impact others (isn’t their departure cause for celebration, not panic?)
  • Business objectives for territory and account adjustments
  • When you need to upscale to different skill sets, and current reps aren’t able to develop the skills for how you need to reach your buyers today

Unproductive turnover: People whose departure is unplanned, unproductive and really leave us worse off.

  • Costs – use this tool to calculate your own financial cost, or assume rep turnover is 1.5x their salary conservatively
  • Time consuming – replacing reps takes time (if you do it correctly)
  • Lost business – service interruption or a changed relationship for your customers. Most customers don’t like changing reps and are vulnerable to be picked up by your competitors

Ugly turnover (the emotional and little discussed impact):

  • Long days and late nights for leaders and other reps to cover that rep’s work and recruit a new one
  • Damaged company reputation – negative reviews online can damage your reputation and hurt your ability to attract quality reps
  • Internal angst – your remaining reps think there must be something wrong if others are leaving and the newly departed may try to recruit them away

The different types of turnover mean different problems to be solved. The type of turnover needs to be reviewed for causes and potential fixes.

Solving the unproductive and ugly impact of sales rep turnover

  1. First, stop the drain of those you don’t want to lose! Find out why they are leaving so you can make changes to prevent these resignations.
  2. Re-recruit reps you don’t want to lose when there are changes in leadership, policy, compensation, or related changes. Don’t assume “no comment” means buy-in; most people need reassurance or to know they are valued when change occurs.
  3. Hire right the first time.
    1. Start with attracting the right reps. It’s a marketing job to get your opportunity in front of the right candidates.
    2. Asses using an objective assessment tool before wasting your time on interviews with the wrong people.
    3. Vet out and select effectively. When it’s time for interviews, make them count! Here’s some really helpful tips.
  4. Onboard effectively. Your ability to develop the reps ability to succeed in your company is mission critical. You need a plan and time.
  5. Hire slowly and fire quickly. If someone is not making it within six-12 months, help them find success somewhere else. Why don’t most managers do this? They know it’s hard to get someone else; they feel guilty they haven’t provided enough time or training; they take what is available to fill the spot; or don’t make the time. Those are bad practices. Hire the best rep compared to what the job needs, not to the pool of available candidates.
  6. Compensate appropriately. Yes, salaries (and bigger base) are reality. It’s simple supply-and-demand economics. Most every company I know is seeking to hire, and reps know they are worth more. That’s why numbers 1-3 above are so important. It’s worth paying more for the reps who will sell at the level you need as well as fit into your culture.

Solving the productive turnover problem

Productive turnover, while often good, needs to be within reason. Though I’ve met with enough leaders who want to “get rid of them all and start fresh,” that’s typically not possible.

What’s challenging is that often this solution means leadership has to be more effective. And let’s face it; most managers don’t think they are the problem.

Here’s what you can do (for your leaders and/or for yourself):

  1. Equip your managers to hire well (see notes above).
  2. Provide leadership development for your managers so they can effectively coach, train, set performance expectations and accountability measures, and are able to lead their team of individuals to the overall team goal.
  3. Always be recruiting! Don’t get stuck in a bind starting from scratch when the situation is at hand. Always network and keep your eyes and ears open for a bench.

Turnover is inevitable. If you don’t have any, that doesn’t mean all is well. You may have people who have “quit in place” and are complacently biding their time. And that’s a whole other problem to solve.

A rep giving notice shouldn’t be the end of the world or create a panic. With an ongoing focus on recruiting, leading your team effectively, accountability throughout the team, and monitoring and adjustments of your compensation, you can avoid the unproductive and ugly of sales rep turnover.
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