Retention for Sales Teams: How Attrition is Hurting Your Bottom Line

While the Great Resignation has been largely attributed to problems with Human Resources teams, the retention crisis goes beyond the HR department. Although every department plays a part in retaining their employees, there’s one team that stands out when it comes to high rates of turnover: the sales team.

According to findings from The Harvard Business Review, the rate of turnover on sales teams is 27% higher than the overall labor force.

Not only that, but firms in the United States spend more than $15-billion annually training new salespeople in order to replace those who have left companies. When you add in the loss of revenue these salespeople would have been bringing in, it’s clear that high sales team attrition has a significant impact on an organization’s bottom line.

In this post, we’ll explore some of the top reasons for turnover on sales teams, the impact of sales team churn, and provide tips and guidance for retaining your top sales talent.

Reasons for sales attrition

In order to understand how to retain your top talent, it's important to understand why individuals are leaving the business — whether voluntarily or through dismissal. Although there are countless reasons for an employer and employee to part ways, these are some of the most common reasons for the high rates of attrition amongst sales teams.

Poor Management

Managers and those in leadership roles have a huge impact on their employees and direct reports. As a Gallup study on U.S workplace engagement found, one in every two American adults have left their job to get away from a bad manager.

Sales reps are often quite driven, outgoing, and goal-driven people — and they need managers who are on the same page. Sales team managers are there to coach, mentor, and inspire their team, while providing a clear direction and setting out achievable goals. Without a manager they trust and believe in, many sales reps will lose momentum, stop hitting their targets, and move on to an organization where they fully believe in the manager’s purpose.

Issues with onboarding

Tenure is one of the key indicators of a sales rep’s likelihood of exiting an organization. According to a report from the Work Institute, 38 percent of employees leave within the first year, with 43 percent leaving within the first 90 days.

While your recruitment team might be high-fiving over hiring top-tier talent, it’s important that your organization’s efforts don’t stop there. Employees are 60 percent more likely to remain with an organization for three years or longer if they’ve had a structured and comprehensive onboarding experience. Without a proper onboarding process, new sales team hires will feel lost when it comes to your business’ mission and purpose, may disconnect from their team and other colleagues, and lack the confidence they need to succeed in their role — all factors that contribute to a premature exit from the organization.

Low engagement

While Gallup’s 50-year employment research continues to find that less engaged employees are less productive than their highly engaged peers, only 15 percent of employees worldwide fit into the “engaged” category. Sales teams are no exception.

Since the beginning of the global COVID-19 pandemic, sales teams have had to significantly pivot the way they approach business. While traditionally they would meet in-person with potential and existing clients, they’re now forced to build relationships and trust with their clients through purely remote channels such as video calls, phone calls, or email.

These changes resulted in more time being spent on duties such as data entry and paperwork, which resulted in the average rep only spending about one-third of their time actually selling. As a study from Sales Research & Insights found, however, sales professionals who spend at least four hours on selling activities are happier in their role. It’s clear that spending less time doing the work they want to be doing can have a detrimental impact on engagement levels for any sales team.

Compensation and benefits

It should be no surprise that compensation and benefits have an impact on sales team turnover. Benchmark data from Sirius Decisions found that a whopping 89 percent of salespeople leave their organizations due to insufficient compensation.

When a sales rep doesn’t feel confident in an organization’s compensation and benefits package, it’s natural that they’ll feel as if they aren’t valued by their manager and leadership team. In a certified employee’s market, with candidates in record demand and the Great Resignation in full swing, it makes sense that sales reps are leaving their current positions for more lucrative opportunities.

The impact of sales team churn

The higher-than-average turnover rates on sales teams have significant impacts on many areas of an organization. From declining morale to financial pitfalls, let’s explore some of the most notable consequences of sales rep attrition.

Recruiting and training costs

Increased turnover means more work for a number of departments across the business. For example, the HR department will dedicate much of their time to creating and posting ads, discussing salaries and expectations with hiring managers and company decision-makers, sorting through applications and resumés, screening candidates, facilitating negotiations, and preparing contracts.

Once the candidate is hired, they undergo onboarding (usually led by HR teams in conjunction with the individual’s manager), training and coaching sessions, business information meetings, one-on-one meetings with countless individuals across the organization, and more.

With this in mind, Hire Velocity estimates that the cost to replace a sales rep is 1.5 to 2 times as much as the employee’s annual salary. Not only that, but it takes an average of 3.2 months for new sales team members to reach full productivity.

Decreased customer satisfaction

If you find yourself loyal to any business, chances are that the people who work there have a huge impact on your choice to go back time and time again. The same rings true in sales.

Sales reps work hard to build and nurture mutually-beneficial relationships with their clients. It takes time to establish trust and develop the connections with their clients that drive them to purchase a product or become a loyal, long-time customer.

However, when a client suddenly can’t reach their designated sales representative of more than a year — the person who understands their specific pain points and needs — and now has to start all over again with a new salesperson, chances are their perception of the business will suffer. If a client goes through this multiple times with the same company, this negative sentiment may materialize into frustration, disappointment, and the decision to no longer do business with the organization (or even follow that sales person to a competing solution).

Lost revenue

When a salesperson leaves your organization, you don’t just lose their skills, you lose their connections and the revenue they generate for the business. As author Anthony Chaile explains, “It would take five years for a company to recover from the loss of a 25-year veteran that has unique knowledge and connections selling in [their specific industry].”

Not only do you lose the direct revenue this individual was bringing in annually, there are financial costs associated with lost opportunities. If someone has mentally checked out and has made the decision to leave, they’re not going to be going the extra mile to hit quotas or pursue new sales opportunities for the business. Plus, if the remaining sales reps are required to fill in the gaps and take responsibility for the exiting sales rep’s leads, this happens at the expense of them seeking out new accounts of their own.

When you take the loss of direct revenue and add it to the costs associated with recruiting and training a replacement, losses in productivity, and losses in opportunities, it’s clear that the financial impact of sales team churn is monumental.

Lower morale

High salesperson turnover has an undeniable impact on team morale. In addition to potentially feeling sad about a well-liked team member’s departure, remaining employees may feel frustrated if they’re required to pick up the slack left by their teammate.

Plus, if their teammate has left for a job with higher compensation and more career opportunities, chances are that will inspire other employees to reflect on whether they can do the same — which can then result in even greater turnover rates.

How to retain sales talent

Now that you understand the potential impact of turnover on your sales team, it’s time to focus on how you can actually retain your top talent. Here are some proven methods of reducing sales rep attrition.

Set clear goals and expectations

Sales team members are incredibly goal-driven professionals. However, a lack of clear goals and expectations can be alienating, demotivating, and lead to increases in turnover rates. Boost the chances of your team members sticking around for the long run by clearly defining the overall team’s goals, the expectations of their own role, and their quotas and benchmarks.

69 percent of employees consider themselves “engaged” at work when their managers help them set performance goals.

Source: Gallup

Once you have outlined goals and expectations, ensure there is an understood measurement strategy in place. Managers and leaders need to work and communicate with their team members regularly to make sure they’re on the right track, hitting their quotas, and understanding what is expected of them. This type of defined structure removes any ambiguity around their role, helping every team member feel secure and confident in their overall performance and contributions to the business.

Provide continuous feedback

Related to setting clear goals and expectations, receiving constructive feedback from management helps sales reps stay on track and feel more engaged. According to Gallup, employees who receive “meaningful feedback” are almost four times as likely to feel engaged than those who don’t. And, as we know, employee engagement is a huge factor in sales rep retention.

One way to ensure consistent and effective feedback is through what Forbes expert Stephen Diorio calls a “closed loop feedback system”. This type of process “tracks the adoption of training by reps, the effectiveness of that training in practice, and the specific areas reps need more coaching and reinforcement.” Through a defined feedback system, managers can help their sales reps feel supported and motivated as they grow in their careers.

Show appreciation

While bonuses, raises, and public shoutouts alone might not be enough to keep your top performing team members around, regular employee appreciation can definitely contribute to overall job satisfaction.

According to The Society for Human Resource Management, more than 68 percent of survey respondents agreed that employee recognition helps create a positive workplace culture and positively impacts retention and recruitment. Additionally, research from Quantum Workplace found that workplaces with formal recognition programs have 31 percent less voluntary turnover than those without — and they’re 12 times more likely to have stronger business outcomes.

In order to experience these benefits, take the time to implement an employee recognition system at every level across your organization. In addition to classic manager-to-employee appreciation, ensure there’s a way to facilitate peer-to-peer recognition and recognition from other teams and individuals within the business. While the praise can be both private and public, it’s important that recognition is always genuine.

Some examples of employee recognition include:

Weekly awards (with small prizes such as $25 gift certificates) that are given from employee to employee based on a job well done
Performance bonuses awarded based on achieving stretch goals and quotas
A consistent compensation adjustment and promotion program
A team Slack channel specifically dedicated to shoutouts and notes of appreciation
Rewards for the entire team based on achieving a collective goal
Whatever else you can think of that will show your team you appreciate and recognize their hard work

Provide coaching and training opportunities

Coaching your sales team is one of the most effective things any manager can do to improve retention rates. Companies that provide formal coaching to their sales teams see their annual revenue grow 16.7 percent more than those without any kind of sales coaching or training framework.

However, not all coaching programs are created equally. A CSO Insights study found that 75 percent of organizations waste money on inefficient and ineffective coaching efforts.

In order to maximize the impact of your sales team coaching efforts, it’s important to:

Use collective intelligence to inform areas of opportunity and to measure effectiveness of your coaching
Employ a mix of formal (expert-led programs, etc.) and informal (one-on-ones, peer-to-peer learning, etc.) coaching methods
Coach according to a defined, standardized structure but leave room to customize your approach for each sales rep’s unique strengths and weaknesses
Use a results-based approach and ensure you understand each team member’s specific and measurable goals
Collaborate with your team throughout the entire coaching experience

With the right coaching program businesses can prove to their sales teams that they care about their career paths, goals, and futures within the organization.

Need some tips for how to collaborate with your team and achieve alignment?

Check out this article:

5 Ways to Achieve Team Alignment in Your Organization.

Listen to your sales team

Ignoring the concerns of your sales team members is a surefire way to push them out the door. While it’s important to provide each of your sales reps with regular feedback, it could be even more crucial to allow (and encourage) them to give you, their manager, constructive feedback as well.

By creating safe spaces where sales reps can share their feedback and opinions, managers let their team members know that their voices are heard and valued — something that contributes to a greater sense of engagement and involvement with the organization.

Use a collective intelligence tool like ThoughtExchange to create a culture of open communication and trust within the sales team. With ThoughtExchange, a manager can pose a question to their team, such as “What is the biggest obstacle to your day-to-day job?” Sales representatives can then anonymously answer, and in doing so help their manager uncover issues and pain points they may not have even known were there. This also helps the manager notice any patterns in responses so that they can prioritize the biggest roadblocks their team is currently facing.

ThoughtExchange can also be used by managers as a way to seek out solutions to problems from their team. While a manager has their own area of expertise, they aren’t in the everyday work as much as their team members. Their team members probably have innovative ways of solving problems, or suggestions for organizational improvements, that haven’t been considered yet. This makes their reports’ ideas and input extremely valuable when it comes to improving different aspects of the business.

“How to Gather Effective Field Intelligence in the Digital World”

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for tips and tools to gather insights from your sales team.

While a modest amount of employee turnover is natural, the high turnover rates seen with sales teams should be a concern for any business. Although there are numerous reasons for this — from poor management to greater compensation — the impact of sales team attrition can’t be ignored. By focusing on the development and growth of the sales team, creating a culture of trust and open communication, and setting realistic goals and expectations, managers and business leaders can improve rates of retention — and their bottom line.