Sales Rep Turnover: Why It Happens and How to Reduce It

According to an article in the July – August 2017 issue of the Harvard Business Review, How to Predict Turnover on Your Sales Team, “estimates of annual turnover among U.S. salespeople run as high as 27%.”  This is an alarming rate especially given how challenging it is to hire top sales talent in a tight labor market.

To make matters worse, sales rep turnover has significant implications for sales organizations who need to fill these vacant sales positions. These include:

• Recruiting costs: It takes time (typically over 30 days) and resources to source and hire new sales reps.
• Training costs: Onboarding new reps takes about six months, and requires a significant investment in training and coaching.
• Lost revenue: Sales will inevitably go down when you have a vacant position. The longer the vacancy, the greater the overall revenue loss.
• Customer risk: Customers become irritated when there isn’t a stable sales relationship. In many cases, this creates an opportunity for your competitors.

While there are multiple reasons behind sales rep turnover, one of the biggest is ineffective sales managers who have not earned the trust and respect of their sales team. According to a Gallup study on U.S. workplace engagement, “managers account for up to 70% of the variance in engagement”, and “one in two (U.S. Adults) had left their job to get away from their manager to improve their overall life at some point in their career.”

The effectiveness of the sales manager is particularly important for sales professionals who are typically social by nature and look to their managers as mentors, coaches, and leaders. In other words, sales reps don’t quit jobs, they quit bosses.

In our 2017 Sales Management Research Report: 5 Hallmarks of High-Impact Sales Organizations, we found (based on self-reported answers by 400 respondents in more than 20 industries) that the highest performing organizations (>75% quota attainment) invested more in the training and development of their managers than lower performing sales organizations. We also found that the highest performing sales organizations had sales managers who were more proficient in the following areas:

Recruiting, hiring, and onboarding:

• Develop job profiles that include the desired skills and personal qualities
• Use objective criteria to make hiring decisions
• Managers are actively involved in onboarding and training of new hires

Managing sales performance:

• Clearly define and communicate performance expectations
• Hold people accountable
• Provide actionable, regular feedback to sales team

Providing ongoing sales coaching:

• Make coaching a collaborative process
• Develop personalized coaching plans
• Follow a defined coaching process

Leading and motivating their team:

• Set challenging but realistic goals
• Adapt leadership style based on the situation
• Identify motivators for individual team members

Keep in mind that in addition to reducing turnover rates, more effective managers will also drive better sales results through more productive, and motivated sales teams.