Reduce The Costs Of Sales Person Turnover

Even the best sales forces can’t keep every good sales person. Loss of sales people to competitors occurs frequently in high-growth industries in which the demand for experienced sales people exceeds the supply, such as in fast-evolving technology markets. Poaching of sales people also occurs when sales are driven largely by relationships. For example, wealth

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Even the best sales forces can’t keep every good sales person. Loss of sales people to competitors occurs frequently in high-growth industries in which the demand for experienced sales people exceeds the supply, such as in fast-evolving technology markets.

Poaching of sales people also occurs when sales are driven largely by relationships. For example, wealth management companies frequently recruit advisors who have built a strong book of business at competitive firms.

Formulate 2 key strategies

Companies facing high sales force turnover situations can try to reduce undesirable loss of sales people, but they should also use another strategy, by taking steps to reduce the negative consequences on customers and the company when sales people leave, as some inevitably will.

These strategies focus on minimising sales loss during three critical phases surrounding a sales person’s departure – the withdrawal period, the vacancy period, and the hiring/orientation period.

1. Managing the Withdrawal Period

In the period from when sales people contemplate leaving until they actually depart, sales people often stop putting full effort into the job. Too frequently, departing sales people are distracted by their job search. Or worse, if a departing sales person plans to work for a competitor, the sales person might feel pressure to convince customers to defect. Minimising withdrawal period sales loss requires a proactive approach.

It starts with detecting the possibility that a sales person might leave as early as possible.

First-line sales managers are critical to this effort. By keeping in touch with their people, managers can identify and address emerging issues before they escalate to the point where sales people decide to leave.

One company with a large internal sales force used an early-warning system to track call agent behaviour and predict the likelihood of resignations.

Signals of impending departure included:

  • Fluctuating productivity
  • An increase in the number of off days taken one at a time
  • A drop in call quality
  • Increased off-phone time.

By tracking these signals, the system could direct incoming phone calls from important customers to agents who were not at risk of leaving. In addition, managers could meet with employees at risk of leaving to talk through their situation and try to prevent their departure. Managers could use solutions such as job rotation, job enhancement, relocation, and greater control of their work schedule.

Even when intervention can’t pre-empt an unwanted departure, early detection gives companies more time to prepare for a smooth transition of relationships with customers before a sales person leaves.

2. Managing the Vacancy Period

From the time the sales person departs until a replacement is found, two strategies help minimise sales loss.

The first is to shorten the vacancy period through aggressive and proactive sales force recruiting. One medical equipment company minimised vacancy time by keeping a bench of screened and trained candidates who were ready to jump into sales positions quickly when needed. Bench programmes work best in large sales forces in which the sales job requires significant training time.

If training needs are modest or the cost of maintaining a bench is too high, constant recruiting can create a ‘virtual’ bench. By maintaining a list of viable job candidates before an opening occurs (including employee referrals, candidates who rejected past offers, employees in other functions), companies accelerate hiring and reduce vacancy time.

The other key to minimising the costs of the vacancy period is to avoid lapses in customer coverage. This is especially important for major customers that depend upon and trust a departing sales person who has in-depth knowledge of their business or who has participated throughout a long sales cycle (which means sales are often left half-completed).

Even the most loyal customers may see the sales person’s departure as a reason to consider competitive offerings. Providing temporary coverage of major customers by a sales manager or by another sales person until a permanent replacement is found can avoid sales loss.

3. Managing the Hiring and Orientation Period

Once a replacement is selected, it takes time for that individual to become fully productive. The costs of this period can be reduced by making it a priority to get sales people up to speed quickly. Sales managers play a critical role in onboarding and training new sales people to help them understand the culture, learn the products and customers, and become fully engaged. Hiring experienced sales people also helps accelerate the learning curve.

An Ounce of Prevention

Defensive approaches can protect companies in high sales force turnover environments. Two strategies help minimise sales loss across all three phases surrounding a sales person’s departure.

Build Multiple Connections Between Customers and the Company

The risk of customer loss is especially great when departing sales people hope to bring customers along to a new job with a competitor. Take action well before a departure is imminent.

Get a sales manager or sales specialist involved with customers in deals with long sales cycles. Provide customers with resources they value outside the sales force, such as a customised ordering website or easy access to customer service or technical support personnel. Such resources can encourage customer loyalty that outlives a connection with an individual sales person.

Use CRM Systems to Capture Critical Information

Such systems can document customer needs, track the sales pipeline, and help ensure essential information is not lost in transition.

Turnover of sales people too often results in missed sales opportunities and loss of business. Even the best sales forces experience some disappointing departures. By taking defensive steps now, and working diligently during the three phases that accompany an individual’s departure, those costs can be minimised.

© 2018 Harvard Business School Publishing Corp.

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