How to Make Sense of Sales Force Turnover

How to Make Sense of Sales Force Turnover:

from HBR.org by Andris A. Zoltners, PK Sinha, and Sally E. Lorimer



Imagine a sales leader who's looking over data from exit interviews with salespeople who've left his company in the last year. Among the departing reps, 32% left primarily because of their relationship with their first line manager, 27% left primarily because of inadequate pay, and 21% left primarily because of the lack of promotion opportunities
The question: What should the sales leader do to fix this problem?
Is it time to upgrade the first line managers, enhance pay, revisit promotion opportunities--or some combination of the three?
There's more to the story than meets the eye here. Let's dig a bit deeper and try to understand who is leaving for what reason.
Consider the following additional facts:

• 60% of the people who left for reason #1 (relationship with manager) and 73% of the people who left for reason #2 (pay) were in the bottom half of performance rankings.
• 70% of people who left for reason #3 (promotion opportunities) were in the top half of performance rankings.

Most of the salespeople who left because of pay and first line managers were bottom-half performers. Companies often hope that low performers will find better opportunities elsewhere, so this turnover isn't necessarily a problem. Indeed, perhaps the current pay plan and managers are having exactly the desired effect.
Promotion opportunities, on the other hand, may need attention if the company hopes to hold on to more top-half performers.
Turnover statistics only become useful when they are linked to salespeople's current performance and future potential. Current performance is visible in most sales forces using metrics such as territory sales growth and quota attainment. Future potential is more opaque, but is usually assessed by managers through the performance management and review process. Salespeople who depart will fall into one of the following three performance segments. You'll want to implement different solutions, depending on which segments account for high levels of turnover.
1. Low performers with low potential: These are bad hires, plain and simple. If many sales force departures come from this group, you'll want to find ways to upgrade the applicant pool, and enhance your candidate selection and attraction process.
2. Low performers with significant future potential: The solution for reducing turnover among this segment lies in helping salespeople become successful through development and coaching and giving salespeople warm leads so that they can taste sales success, which is the ultimate motivator. We find that there is high turnover among new salespeople across many industries, primarily because they just can't get off the ground. Training and support that enable early success can work wonders.
3. Turnover among high performers: Autonomy, appreciation, recognition, pay, long-term incentives, inclusion on a company task force, and sometimes, even employment contracts with a non-compete clause can play a role in controlling turnover for this group.
First line sales managers are key in diagnosing sales force turnover problems and identifying and implementing solutions for reducing turnover among all three performance segments. Managers are the ones who have to figure out if a low performing salesperson has future potential or not. They are the ones who must coach and develop a salesperson to realize his/her potential. And they are the ones who can find the right motivators for holding on to high-performing salespeople.