Sales turnover is a challenge every organization faces—especially as the business landscape continues to grow more competitive at unprecedented speeds. With goals becoming more aggressive, and the average quota attainment being at a disappointing 54%, reducing sales turnover is at the top of every sales leader's priority list.
The Impact of Sales Turnover
Unfortunately, sales turnover impacts more than just sales leaders. In fact, when a sales rep leaves, it affects the entire company.
Human resources and recruiting teams must quickly try to attract top talent in highly-saturated markets and develop career paths and opportunities to ensure high performers stay. Sales operations teams also must adjust sales capacity planning for potential turnover. Otherwise, you might not have the right amount of resources on the sales floor to cover territories and reach goals. And finally, finance leaders need to adjust forecasting based on expected revenue changes resulting from turnover.
All in all, sales turnover is a big problem. To help, here are six stats you need to know about and tips to reduce sales turnover in your organization.
1. The Average Sales Rep Tenure is Decreasing
According to recent research, the biggest threat sales organizations face isn't losing clients, but rather, losing sales reps. In fact, a 2018 report by the Bridge Group discovered that the average sales rep tenure is now 1.5 years, down from 3 years in 2010. This might not sound bad at first glance, but if you consider that the average ramp time for a sales development rep (SDR) is 3.2 months, sales turnover starts to appear like a much bigger problem.
2. It Costs Upwards of $115k to Replace a Sales Rep
When a sales rep leaves, it's a costly affair between recruiting fees, on-boarding costs, and potential lost revenue from missed deals. If you consider the increasing sales turnover rates and account for new hire ramp up time, the cost starts to add up. In addition, the majority of companies fail to adjust forecasting for turnover, which harms performance further.
3. Sales Reps Leave Companies for 3 Main Reasons
According to HubSpot, sales turnover often occurs as the result of three main scenarios:
- A higher Paying Opportunity: Sales is a highly saturated industry, and the battle to recruit top talent is intense. When incentives aren't benchmarked against industry data, you can't guarantee reps are being compensated fairly or competitively. This opens the door for competitors to offer a better deal and increases your risk of sales turnover.
- No Career Pathways: Not all sales reps want to remain in the same role forever. When reps don't have a clear career advancement path, they start to question their place in the company. Sales and HR leaders must work together to develop career development opportunities and provide a transparent view of how reps can advance and build long-lasting careers in your organization.
- Roles That Aren't Clearly Defined: There are different roles and responsibilities on a sales team, and as companies scale and resources grow, there needs to be a clear differentiation between roles. When job descriptions are unclear, you lose productivity to administrative tasks, lower workplace morale, and ultimately, increase the risk of sales turnover.
4. Voluntary Sales Turnover is One of the Highest of any Industry at 16%
Voluntary sales turnover occurs when reps choose leave a position rather than being fired or laid off. More often than not, these departures come as a shock and are the attrition situations companies don't plan ahead for. Some of the most common reasons sales reps leave voluntarily are because of a higher-paying opportunity, lack of career pathways, or they are unhappy with their manager. Regardless of the reason, the impact to performance remains.
5. Only 69% of Companies are able to Achieve the "Ideal" Attrition Rate of 15% or Less
The 2018 Sales Compensation Administration Best Practices Survey found that the average company considers sales turnover rates below 15% to be ideal. However, less than 70% are able to achieve this. The gap between desired attrition and actual attrition is known as undesired attrition, which means top reps are churning at a greater rate than planned.
6. Employee Disengagement is a Big Threat
"85% of employees worldwide are not engaged or are actively disengaged in their job," according to the Gallup State of the Global Workplace. As a result, disengaged employees can have a big negative impact on company performance and employee retention. You've heard the saying—it only takes one bad apple to spoil the rest. This is true for morale and attitude in any workplace, and ultimate sales turnover is the result.
Using Data to Reduce Sales Turnover
Unfortunately, hindsight is 20/20, and companies don't see the signs of potential sales turnover before it's too late and a rep has given their notice. But what most organizations don't know is that your sales data can help you predict turnover and give you more time to intervene.
Xactly Insights is the only dataset of its kind—built on more than 14 years of aggregate sales pay and performance data. Using artificial intelligence, Insights compares your performance data to aggregate industry data to identify performance patterns and identify reps at risk for turnover.
(In fact, Xactly used this intelligence on our own sales team, and it predicted one of our top sales reps leaving just days before giving notice—read the full story here. )
Additional Insights data unveils an interesting relationship between sales performance and turnover that provides insight into reducing sales turnover. Sales reps performance varies in the first couple of years on the job, but they hit their peak performance and quota attainment between 3-5 years in a role. At the five year mark, performance can sometimes decline.
Ultimately, although sales turnover is a risk at any stage in a sales career, there are steps you can take to prevent it. When you provide the right resources and opportunities for each stage of tenure, you can help reduce the risk of sale turnover. Then, by adopting a data-driven sales strategy and using AI technology to predict turnover, you create a smarter sales team and set your team up to retain top performers, hit organizational goals, and drive growth.
Want to learn how you can reduce sales turnover in your organization? Download the guide, "How to Build and Retain Sales Reps to Drive Top Performance."