Sales rep turnover poses a huge risk to businesses. Organizations need to attract and retain top talent if they want to succeed. Attrition is a costly affair—especially when, on average, it costs three times a rep's salary to replace them. Not to mention, new sales hires must be fully on-boarded before they can be expected to perform at the same or higher levels as the rep they replaced.
According to the 2018 Sales Compensation Administration Best Practices Survey, 87% of companies aim for an attrition rate of less than 15%—anything higher than that is considered high attrition. However, only 69% of those companies are able to achieve less than 15% turnover.
Sales turnover can result for a number of different reasons, but it usually boils down to pay and career development. In fact 70% of sales reps leave their workplace voluntarily in a given year—that's a lot of turnover.
So what can companies do to attract top talent, keep them motivated, and increase sales rep retention? The following are three ways sales managers and leadership can increase sales rep retention and boost performance in their organization.
1. Provide Career Development Opportunities
The number one reason sales reps leave an organization is because of inadequate training, coaching, and professional development. Sales teams are the heart of organizations—without them, businesses wouldn't survive. Yet only 42% of companies say they are effective in training and coaching their sales teams. Businesses can't expect increase sales rep retention if they don't give employees the necessary tools to succeed and a clear track for growth.
First and foremost, sales reps must be on-boarded properly. When a rep is considered ramped, they should be fully prepared to go out and confidently sell. On average, this takes about 12 months. As sales reps ramp, managers should sit down with them, discuss their goals, and start to develop a career path for them in the organization.
For more tenured and experienced reps, companies must also consider how they give individuals the opportunity to grow in their roles. Typically, sales rep performance peaks between two and three years. After this point, managers should work with reps to transition them to the next stage in their career to maintain high performance.
2. Benchmark For Competitive Pay
The second most popular reason sales reps leave is for a better-paying opportunity. Compensation is extremely important to attract and retain top sales talent. Poor pay doesn't help increase sales rep retention. In fact, it does the opposite—it only demotivates and lowers team morale, but it will also not help increase sales rep retention.
How does compensation impact retention? Organizations that pay sales reps at or above the 75th percentile see 50% less turnover. To attract and retain top talent, sales compensation must be competitive. The best way to do this is to design incentives that are benchmarked against industry pay and performance data. That way, companies can ensure their compensation is fair and entices reps to join the team and stick around for the long haul.
Like career paths, pay should also adjust as sales reps earn experience, and compensation plans should be tailored to different roles and responsibilities. You might consider a draw against commission for newly ramped reps or see how a bonus vs. commission might impact performance in different roles as well.
3. Get Deeper Insight into Sales Performance
Hindsight is always 20/20 when it comes to sales rep turnover. If only management and leadership could have intervened earlier or seen the attrition coming. Deeper insight into sales performance not only helps sales leaders identify dips in performance—it also provides analysis to better understand territory and incentive effectiveness.
At Xactly, our sales team has grown in recent years, but we've also lost some tenured reps. To give our sales leadership team the visibility they need to increase sales rep retention, we drank a little of our own champagne. Using the Xactly Insights database, Xactly leadership was able to pinpoint performance changes and flag reps at risk for turnover.
With the ability to spot performance trends that coincide with potential turnover, Xactly Insights helps companies can take action sooner and ultimately increase sales rep retention. Sales leaders can also dive deep in to performance data and analyze by team, individual rep, or the organization as a whole.
Making Sales Rep Retention a Priority
Sales rep turnover can have a huge impact on hitting organizational goals. Finding out how to recruit, motivate, and retain top performers is vital to business success. Companies must focus on the people in their sales organization first—rather than processes.
When sales reps have competitive compensation and career development opportunities, they are motivated to perform well and likely to stay in one workplace. Ultimately, increasing sales rep retention requires access to more data. Sales organizations need data to design motivating incentives and gain better visibility into performance.
Using that information, they can then help reps move forward on their career paths. And when sales reps have the resources they need, it creates a happy workforce, which means better performance—a win-win for everyone.
Want to learn more about how you can increase sales rep retention in your organization? Download the guide on, "How to Build and Retain Sales Reps to Drive Top Performance."