Mitigate your risk by knowing your people--who you rely on, what motivates them, why they stay, and why they go.
September 23, 2020
“The greatest risk in sales is a lack of information”—Maestro cites this to trainee salespeople and coaching clients like a mantra. For the most part, it informs a salesperson’s efforts to gather information about a potential sale, such as resource availability or the prospect’s expectations about timeline.
But full information is essential to every part of a business, mitigating risk along the way. This week, we are going to look in particular at internal risk in the sales team and how information can protect against those risks.
Many sales teams over-rely on a small number of high-performing individuals. This scenario carries risk on multiple vectors. Recent Yale research (Kim et al. 2018) revealed that star salespeople often have deeper access to information about key client accounts than is shared with their employer through official channels (CRM, etc.). Meanwhile, poorly-designed compensation schemes can lead to a misalignment between activities that advantage the salespeople and those that bring lasting value to the business. (See sidebar.)
Turnover is the largest risk. When salespeople leave, it interrupts progress on their sales in the funnel. It can deprive your business of information that was not adequately memorialized. In some circumstances, they may take their existing client relationships to a competitor. Or a top salesperson may create a negative work environment for those around them, but be difficult to fire because you rely on their sales.
Finally, turnover simply costs money, since the effort expended in onboarding, training, and ramping the salesperson is lost. Attrition and employee turnover costs businesses an enormous amount, with sales turnover having the biggest impact. Research reported in Harvard Business Review in 2017 revealed that American firms spend $15 billion a year on training new salespeople, but see a turnover rate among salespeople of 27% a year. According to Gartner, 24% of inside sales reps in 2019 were actively looking to switch jobs.
Researchers from the Bucharest University of Economic Studies describe very clearly why it’s worth investing in stopping attrition in sales:
While it is true that the sales department of a company generally faces higher turnover than other departments, these employees are also a client’s first contact with the company. Motivating these employees brings great business value. (Caplescu et al., 2019)
So what approaches have proven effective for reducing turnover and retaining motivated salespeople?
With the rise in easily-available human resources data, HR leaders have begun to try to model the likelihood that salespeople in their organization will leave. Recent research published in organizational psychology journals offers a host of statistical approaches and algorithms that enable data scientists to apply existing research on turnover to their companies’ actual situations.
This approach is very promising for large organizations that want to stem the bleeding from large-scale attrition. Attrition modeling brings with it several challenges, though. First of all, it requires a skilled data scientist, which is not exactly a cheap hire. Second, algorithms can’t successfully answer everything they are asked to answer. For example, companies that try to use likelihood of attrition in hiring have discovered the algorithms are influenced by biased data sets. Underrepresented minorities will continue to encounter roadblocks to hiring when past data shapes future hiring without thoughtful evaluation by HR professionals.
Attrition modeling is the cutting-edge response and is well suited to very large organizations. It’s promising to solve the turnover problems in sales at a Google or GEICO. For smaller firms, though, such an approach is expensive overkill. In essence, attrition modeling is trying to answer two questions:
1. Do you know who is going to quit?
2. Is there an explanation for the turnover that you can solve?
But there are also some unstated concerns in the background of any conversation about attrition:
3. Do you rely on the people who are likely to quit?
4. How resilient is your organization if they leave?
Even without an answer to #1, leaders can make significant improvements that both reduce turnover (solve #2) and cushion its impact (#3 and #4). An audit of your sales team and process can reveal who the top performers are, whether their practices are spread uniformly through the sales team, whether you have access to all of their business-relevant information, and how intense your reliance on them is.
After understanding the situation, you can work to improve it. Establish an expectation of consistent CRM usage, so all information is available across the whole team. Identify an optimal sales process and ensure it is used across the whole team, spreading the stars’ successful habits to all salespeople. Memorialize the process so that new hires can have a confidence-building set of steps to learn during a consistent onboarding.
As it turns out, this solution works out on multiple levels. Auditing sales practices to establish process guidelines and then replicating them across the whole team will improve efficacy for the whole sales organization. If anyone leaves, even your highest performer, the rest of the team will be equipped to fill the gap.
Meanwhile, this process, and improved onboarding, both involve development and training. The Gartner survey mentioned above showed that the top two drivers for attrition are employee dissatisfaction with compensation and with career development opportunities. To target that training in a way that will improve salespeople’s job retention as well as their skills, a recent Harvard Business Review article recommends using open-ended questions (yep, those again!) to discover what employees want to learn and improve at—an approach that simultaneously demonstrates empathetic leadership.
By providing training and skills development to salespeople who aren’t currently top performers, a business can both improve their success rate and their likelihood to remain in their job. Both of these results enhance the value of the company’s investment in the salesperson.
Worried about losing your key players? Reach out to mastery@maestrogroup.co for more information on minimizing employee attrition and lifting up performance across the board.
Get the Maestro Mastery Blog, straight to your inbox.
