3 Ways to Reduce the High Cost of Sales Turnover

Much has been written about today’s technological advances that we now take for granted. Along with this innovation comes greater expectations that decisions will be “data-driven,” resulting in greater information being available to theoretically make a better decision, with more efficiency. Fewer decisions are being made just based on a hunch. Now is the time to apply this methodology to better curtail the high cost of sales turnover.


The Prevalence of Data-driven Decisions

The decisions we make as we live our lives have become increasingly complex. Gone are the days of reading a single paper to stay current on the news or picking a television show by choosing between 5-10 channels.

Access to information and content has exploded. This has simultaneously has put a previously unfathomable amount of options in front of us, while at the same time creating new challenges in deciding what to do and staying current with the best way to manage this information tsunami.

As an example, for those of us living in cities where traffic exists that can vary from day to day or hour to hour, it has become increasingly common to rely on Google or Apple Maps to provide real-time visibility of current traffic conditions. No longer is it necessary to ask for directions or debate with your backseat driver which route is the fastest way to arrive at your destination.

Over time, this behavior led to changes in my decision model. It turns out that some of the routes I had previously thought were the fastest option were not. I have applied this intelligence to what future routs I now choose, resulting in a change in my driving pattern. The same logic can be applied to sales hiring and management practices, which can then result in lower attrition rates.

First, let’s take a closer look at what it costs to hire, train and manage a sales force, to then be in a better position to understand how to reduce the high cost of sales turnover.

data driven decision support can help reduce high cost of sales turnover

What Comprises the High Cost of Sales Turnover?

It turns out that measuring the cost of human capital is easier said than done. We all know a valuable employee, based on their output, new ideas brought to the table and contributions to achieving success within their organization. But, measuring the value of this contribution can be a bit tricky.

For the purpose of this article, I’ll focus on the value of a salesperson. My assumption is that this position is hired to cultivate new business and play an active role in account management, to then drive continued purchases and retain customer loyalty. Each of these attributes results in continued revenue being paid by the customer, which can then translate into a pretty tangible “value” generated by a salesperson’s actions.

On the cost side, in addition to salaries, bonuses and commissions, new salespeople must also be trained on the company’s products, sales philosophy and corporate culture, which will involve a learning curve, and likely a couple of mistakes along the way. Note these costs involve the use of other company assets, namely the other employees involved in the training.

Maia Josebachvili wrote a great article that visually illustrates the cost and value generated by an employee, which fits nicely for a salesperson example I have explained above. In her article, How to understand the ROI of investing in People, she suggests that in order to help assess the business impact of labor resources, we need to consider a new concept: using Employee Lifetime Value (ELTV) to assess the value of a position.

To start, as a new employee is being trained and is getting up to speed, they are creating negative value. The cost exceeds the benefit. At a certain point, as they get up to speed, this net value turns positive and continues to stay positive throughout the lifetime of the employment tenure.

An inflection point occurs at a time when an employee decides that perhaps their current employment is not in their best path forward, and the decision to leave is made. At that point, the positive “net” value created begins to slip, even turning negative as more time is invested in seeking alternative employment, and less time is devoted to driving new sales.

As Maia visualizes, it becomes quickly evident that there are a couple of ways to extract greater value, or what she terms as ELTV, based on this value measurement concept. Or, in other words, to maximize the value invested in your sales team, resulting in lower turnover.


3 Ways to Reduce the High Cost of Sales Turnover

Here are three ways that the Economic Lifetime Value of a sales employee can be maximized, helping to reduce sales turnover:

1. Invest in the best sales training tools, teachers and learning curriculum – by putting time and resources into a structured training program for all new hires, which is approached with the highest discipline and is kept current on a quarterly basis, is a highly effective way to extracting the best value and return on investment of your sales team resources.An employee who first goes through a formal training program will compress their learning cycle to learn the business, which will then have translated into a greater self-esteem to speak with customers sooner, to then be a more effective salesperson. All these activities will translate into a return of more sales.

Further, by applying access to the intelligence of what activities a salesperson then starts to do immediately following this training, it can be possible to continuously improve the effectiveness of your sales training over time. Imagine if you had the ability to see what messaging and positioning was being done to your product and solution portfolio in the weeks that followed training?

This information can now be obtained, which can then be used for continued follow up training and greater effectiveness along the sales process. Greater productivity will soon result, leading to deals closing and higher sales productivity. Each of these factors will then contribute to reduced turnover.

2. Make continuous process improvement a regular part of the sales cycle – no longer is it sufficient to simply train a sales team on how to do their job once, and then assume that the learning is complete.As I suggested earlier in this article, we live in a very complex world. So too are our products and services we task our sales team to articulate value propositions, and to compete in a highly competitive global marketplace. Regular comparisons of each sales team’s performance compared to their team can result in significant, sustained improvements. Tools now exist to simplify this process, collecting data that can then be used as intelligence pointing to productivity improvements that can be shared across a team.

3. Extend the average tenure of your better sales professionals – the last piece to extending the Economic Lifetime Value of a sales employee is to lengthen the tenure.Simply stated, if you can get your most productive sales employees to stay longer, turnover declines. It turns out that there are telltale signs of when an employee is considering alternative employment. These indicators can be identified over time, based on applying variances of artificial intelligence or machine learning to activities that are measured over time. Once variances are detected, sales management can take a more active role in engaging with those employees deemed at risk of departure, to then have an opportunity to discuss new options that might extend their time with the company.

Once again, these technologies are available, that can then contribute to data-driven decision making that can be quite powerful in driving economic value to sales (and other) organizations. Solutions such as those provided by Prodoscore can achieve these results.

How will visibility impact your business?