The High Cost of Sales Force Attrition: And What to Do About It
Sales force attrition ranks among the top concerns for Chief Sales Officers because of the two-headed monster it quickly becomes, particularly for how attrition insidiously affects annual sales plans and the make-up of your team. Here are some key numbers.
Attrition – Sales force attrition has a near 50/50 split between voluntary departures – those sales reps you don’t want to lose – and involuntary dismissals, typically underperformers who are not working out. According the CSO Insights, the premier sales survey firm that surveys 4,000 CSOs each year, attrition is averaging 25.8% (see Figure1).
Cost per Rep – The cost of sales force attrition may be more than you think. Companies that closely follow their attrition rates determine a cost per departed sales rep to be from $500k to over a $1M. If that sounds high, think about what happens when you lose a star sales rep, particularly to the competition.
- They take the clients with them
- They were trusted yet they left- big morale question for the remaining
- Their departure implies a problem
Recruiting/On-Boarding – On-boarding new reps cost you development time and money. The ramp time for seasoned reps is still at least six months. As a sales leader if you are reacting to the loss, you are in recruiting mode instead of selling and lost revenue potential is assigned to others further burden on their plan.
Less than “Full Employment” – Most sales plans fail to properly account for attrition because they assume “full employment” against their plan (see Figure 2). It’s easy to figure out if you lose your stars to voluntary attrition and you keep your laggards who should be involuntarily let go. This creates a real problem because you are attacking the sales plan with a less than 100% team. You keep your laggards hoping for a miracle to make plan. In essence you are putting the destiny of success in the hands of the “60 percenters” to perform at 135% of plan.
It gets worse at the beginning of the new year when you’ve been talked into a sales plan increase then the departures begin. You never get ahead. In fact, you’re behind before you get started and oftentimes never catch-up.