When you're employing an all-star salesperson who closes deal after deal, it's disheartening when that rep decides to leave. Not just because the departure impacts your bottom line, but because it contributes to a notorious and ongoing problem in sales departments across the country: a high sales employee turnover rate.
Employee turnover for salespeople remains high for many reasons, both in and out of your control, and it's up to the leaders of your sales department to:
Know your sales department's employee turnover rate.
Understand the reasons why your turnover rate sits where it is.
Take proactive steps to lower your sales employee turnover rate.
What is Sales Employee Turnover Rate?
Sales employee turnover rate measures the percentage of employees who leave a company's sales department in a given period of time. It is calculated by dividing the number of employees who leave the sales organization in a given period of time by the average number of employees in the sales department for that same period of time.
The truth is, there's no one reason. Sales employee turnover rates tend to be higher than other professions due to a competitive landscape for talent and an increasing demand for new sales hires, underperformance, and dissatisfaction with compensation — to name a few. We'll get into more reasons and what you can do to lower your sales turnover rate a little later in the article.
To calculate your sales employee turnover rate, you'll need the following information:
A specific time frame (a year, a quarter, etc.).
The number of employees at the start of that time period.
The number of employees at the end of that time period.
The number of employees lost during that time period.
The image below outlines the two different formulas you can use to calculate sales employee turnover rate:
Let's put this formula into action. Say you want to know your sales employee turnover rate for last year. You had 20 BDRs on January 1, and 28 on December 31. During this period of time, though, 8 BDRs quit or were fired.
Our variables are:
Lost Employees in the Year: 8
Employees at the Start of the Year: 20
Employees at the Start of the Year: 28
Average Number of Employees for the Year: 24
Here's how we'd do the math out.
Sales Employee Turnover Rate = Lost Employees ÷ Average Number of Employees
Sales Employee Turnover Rate = 8 ÷ 24
Sales Employee Turnover Rate = 33.33%
8 ÷ 24 simplifies to ⅓, meaning your sales employee turnover rate for BDRs would be 33.33% for the year.
How to Lower Sales Employee Turnover Rate and Increase Employee Retention
Fortunately, there are concrete steps you can take to reduce the number of salespeople who leave your organization. Here are a few of our favorites.
1. Calculate and track employee turnover numbers
The first step to improving your turnover rate is knowing your turnover rate. Calculating it regularly and documenting rates over time in one central location will show you how your turnover rate is changing and give you insight into whether or not your employee retention efforts are working.
We suggest calculating your sales employee turnover rate every month, quarter, half-year, or year (depending on the size of your sales team) with a sales metrics calculator. This will give you confidence in the turnover rate that's reached and allow you to compare dips and improvements in the number.
Typically, NPS surveys include an optional follow-up question as to why respondents submitted the number they did. Analyze the responses from promoters to understand what you're doing well to retain employees and the responses from dissatisfied or passive employees to learn more about what changes you can make.
The very fact that you run an eNPS survey is a great retention tactic as well. It shows salespeople you're eager for their feedback and want to make changes to keep them happy and employed at your company.
We're not here to tell you the best compensation model for your sales team — that will vary for every business based on product and service pricing models, the age and size of the business, and the differences between salespeoples' performance. All we will say is poorly perceived sales compensation can be directly traced to high sales turnover. Ensure you have a model in place that works for your company and your salespeople.
4. Create a crystal-clear hiring and onboarding process
According to Gallup, the second highest cause of employee turnover is when an employee is a poor fit for the job.
Sometimes, employees are hired even though they're not necessarily the right fit for your sales team. You can ensure you bring more qualified people onto your sales team by asking better sales interview questions to see if someone would thrive in your company.
On top of that, sometimes employees feel like they're not a good fit for the role because expectations were not made clear. Once employees join your sales team, give them a sales onboarding and training plan with clear goals and expectations for their role so they can better understand how to thrive and operate.
I can say this with almost complete certainty: no one wants to cold call for their whole life. Entry-level BDRs typically have their sights set on inside or outside sales, account executive, or even sales manager roles. If these employees don't see a path to one of these roles, there's a good chance they'll look for that upward mobility elsewhere.
Be up front with employees about what opportunities exist beyond their current sales roles, what it will take to advance, and a rough timeline of how long it will take to get there.
Pro Tip: Avoid giving a specific date as to when a promotion may happen, as this can disappoint and frustrate employees if it's not met exactly. Instead, say something along the lines of "If X, Y, and Z are met by the end of this quarter, I'm fairly confident we'll be able to move you officially into your new role within three to six months after that."
6. Be open about your sales plan
Another big reason for sales turnover is a perceived lack of connection with or view of incompetency of leadership. Given how hectic and stressful working in sales can be, it's understandable when the big picture gets lost — but it's not excusable if that's causing a high turnover rate.
One best practice is to document and share your company's sales plan. Offering transparency about your sales team, process, and goals to your salespeople gives them the insight needed to rally behind leadership's aspirations for the company and tactics to realize them.
Unfortunately, you may have to make the decision to raise your turnover rate by letting poor-performing salespeople go. This is never easy or fun, so taking action to reduce these terminations though performance improvement plans can help turn things around.
If employees aren't meeting quota, set up a clear path to what needs to be done to stay employed and what resources are available to them. Hold sales managers accountable for their teams' success and performance, and encourage them to ensure employees operate at peak performance.
Lowering Your Sales Employee Turnover Rate
While sales turnover is almost as inevitable as death or taxes, there are crucial and clear steps you can take to understand the cause of turnover in your business and lower it for a happier, more productive sales team.
One of the best ways to do this is by periodically calculating, monitoring, and comparing your sales turnover rate with a sales turnover rate calculator — which you can download for free here.
Originally published Aug 28, 2019 7:30:00 AM, updated August 28 2019