Most sales organizations are dealing with some hidden constraints that negatively impact revenue and cash. Here’s a list of the three most common, plus solutions to eliminate them.
This silent killer costs organizations cash due to lost revenue during the time when a sales desk is open, plus the time it takes to ramp up and onboard a new seller. Turnover is a costly problem for sales organizations. On average, companies experience a 17.8% turnover each year, and the average cost to replace an employee is 1.5 to 2 times the employee's annual salary. And it's even higher for high-level employees like managers and those with specialized skills.
Do the math:
- A seller earning $100,000 departs. At the conservative level, this represents a loss of $150,000 (1.5 x $100,000) to your sales organization. Image the impact this would have on your cash to bottom line if you included this $150,000 as an expense to your organization! Keep in mind this example is the turnover cost for one seller… this number escalates as the number of people departing increases.
2. Open Positions
Compounding the cost of turnover is the impact of open positions. Part of the negative impact is accounted for in turnover cost, but the silent killer related the open positions comes from other sellers “babysitting accounts” on open account lists.
The negative impact of babysitting accounts is linked to the loss of target account development of the babysitter (person babysitting the open accounts).
Do the math:
- If a seller babysitting open accounts spends 5 hours a week taking care of open accounts, that’s five hours previously allocated for new business development.
- This cash killer is often compounded when multiple babysitters are involved covering a large list of accounts.
- If your key account cutoff level is $25,000 and three sellers are involved babysitting open accounts for a month or two, the lost revenue cost could be as high as $75,000 (zero target to key conversion X three sellers OR $25,000 X 3).
Solutions to problems #1 and #2: Practice proactive recruitment (always looking for and interviewing people) even when the staff is at 100% and build a talent bank of ready, willing, and able candidates. It is important to have a plan to recruit top talent. With a few easy tactics, you can begin to see a difference from the small efforts you make in finding talented people. Having a plan in place is essential so you are prepared and ready to fill available openings on your team. Remember, recruitment is an ongoing tactic, and it shouldn't be a panicked one conducted only when an open position occurs.
Here are some things you can do to always be recruiting:
- Add recruitment information to your email signature.
- Get creative with LinkedIn! Have you set a monthly goal to increase the number of your connections? The more people you are connected with on LinkedIn, the more fish in the pond to catch! A Glassdoor article shows that 79% of people use social media to look for jobs - that’s a lot of potential fish!
- Let them know you are always looking for top talent! Consider adding text beside your name in your LinkedIn profile - like “I’m looking for top talent.”
- Update your company website and social media page. Are you using your website to actively find potential candidates?
- Create a unique business card, one to hand out to people when you spot talent! Having a card ready to hand someone with talent keeps you in the recruiting game all the time! Be sure to include ways a candidate can follow up with you or access information about your company and culture.
3. Culture Fit Hiring Mistakes
Hiring sellers with talent is a proven path to success! Don’t forget about fit. Make sure the people you hire fit your organization and you. Talent is only a strength when fit is right, and you should consider fit as carefully as you do talent. Here are eight important fit factors to consider during the selection process:
- Company Culture
This is really important. Here’s an example of using gamification to recruit people who are the right fit for company culture: Will You Fit into Deloitte?
The manager is the most crucial variable in whether the prospective hire will be a good fit. Managers have unique needs, expectations, strengths, non-strengths, hot buttons, tolerances, and styles of interaction. Each of these can impact the productivity and growth of a new hire.
Does the candidate have the skills necessary to succeed in the job? If not, are you willing to provide the training necessary? Look back at the Job Description, if you have one, or your Specification Sheet for this job.
Do the candidate’s experiences (in life and in their career) suggest that this will be a strong or a weak fit for the open position? It’s often a mistake to hire experience over talent, but when talent is strong, it is important not to overlook experience.
Does this job place the candidate on a track aimed directly at his/her professed career focus? If not, expect less job satisfaction and a shorter tenure.
Is there a good fit between the candidate’s style, talents and experience and the accounts you expect the candidate to develop and grow?
Is there any incompatibility between the candidate’s talents, values, and temperament and the product the candidate will represent? Some enthusiasm and interest in the product will be helpful.
In some sales departments, there is a culture of camaraderie, mutual assistance, and problem solving. In such work groups, social and professional compatibility with other sellers may be a legitimate fit factor. A good way to judge this is to engage a seller in the hiring process to see if the candidate meshes with a leader in the bullpen.
Some managers prefer to hire sellers who have certain strengths that are in limited supply among the other sellers on their staff. It is critical to hire and retain highly talented individual sellers. However, when there is a growing list of accounts that are not a good fit for your current sellers, then hiring a new seller who has a different range of talents, skills, and experience might be a smart move.
A solution: Simply put, overlooking fit during the selection process often leads to turnover (see item #1 on this list). Use these items to conduct a fit interview during your selection process. Follow this link to additional information on Talent Fit Factors.
Attack Constraints One at a Time
If some or all of these constraints are impacting your organization, it is best to attack and resolve one at a time rather than developing a half-ass solution to all. To determine where to start, share this post with your leaders and do the math to determine which problem is costing your organization the most money. Start with that constraint and allocate a full dose of resources to resolve the issue before moving on to the next constraint on your list.
Be sure to set up some mechanisms to track data related to the problem, so you can determine if your solution is eliminating the problem (constraint). For example, related to Open Positions: track the number of open positions and the number of days open from the previous couple of years and compare that to data collected each month moving forward.
If the solution is working, great! If not, revise and tweak until the data reaches a desired level.