Sales Management 8 Comments

If You’re Churning More Than 10% of Your Salespeople, They Aren’t the Problem

Aaron Ross

February 24th, 2016

High Church Rate of Salespeople

From Chapter 13 of Aaron Ross and Jason Lemkin’s new book, From Impossible to Inevitable.

Sales culture is different compared to pretty much every other function in that it expects most people to fail or succeed almost totally on their own. Companies assume “We’ll hire 10 salespeople to sink-or-swim and a quarter to half won’t make it.”

CSO Insights’ studies show average sales team’s annual turnover of around 25 percent (it varies by a few points year to year), with half quitting and half fired. That means out of 100 salespeople, 25 are lost every year. So you need to hire (and train, and ramp, and transition pipeline or customer accounts for ) an extra 25 salespeople per year just to tread water.

But—what the hell? Would you hire 10 HR people and then expect to fire three to five? Managers? Supply chain people?

Beating the Odds On Sales Team Churn Rates

Losing a quarter of your engineering team, total employees, or customers would be a board-level catastrophe. But it’s accepted, even expected, in sales. Sales team churn is especially expensive because of the time required, the lost opportunities, and customer frustration. They are your face to customers, people!

At EchoSign, in growing from $1 million to $50 million in revenue, no one quit from VP Sales Brendon Cassidy’s team. They were making a lot of money, knew what they were doing, and had fun. Why would you want to leave that?

Imagine you work at a growing company, and you might be hitting or beating team-wide sales goals. But internally the team’s struggling with growing pains, such as:

  • Missed quotas: 30 percent, 40 percent, or more of the sales team is missing quota.
  • Team attrition: Salespeople just keep coming and going … 10 to 50 percent of the sales team is leaving every year (whether voluntarily or involuntarily).
  • Ramp times keep lengthening for new sales hires, such as going from two to four months when you were smaller to now six to eight or more months.
  • Rep count is growing faster than leads: As the team has gotten bigger, each rep is getting fewer leads passed to them. Lead generation isn’t keeping up with sales team or goal growth.

And despite all this, and the other reasons, the board is still telling you to keep hiring more salespeople to drive growth! It’s pouring water faster into a leaky sales team bucket.

It’s Not You, It’s Me

Now, if say, 30 percent of a sales team is missing quota, is it the fault of the people or the system? Was 30 percent of the team really mishired? If you are losing 25 percent of your sales team a year (whether they leave or are fired)—is it the people or is it your system? If almost every new sales hire is taking twice as long now to ramp, is it them—or your system?

See the pattern here?

Who sets quotas and incentives? Who defines territories, roles, and responsibilities? Who’s ultimately responsible From Impossible to Inevitable by Aaron Ross and Jason Lemkinfor hiring and training? Who promotes, hires, and trains the sales managers on the front lines?

It’s not the salespeople. Ultimately, it’s the responsibility of the VP Sales and CEO to ensure sustainable sales success, not the individual salespeople. Your sales “system” and environment have enormous effects on salespeople, either helpful or hurtful.

Until you fix the systems, you’re going to struggle getting repeatable success.

Defects in the System

Your ability to scale a sales team depends on making everything a system. When salespeople leave for any reason—missed quotas, dissatisfied, bad apple—it means you have “defects” in your system.

Your ability to scale a sales team depends on making everything a system.

Sales team attrition should be much lower—say 10 percent or less per year overall (and with 0 percent voluntary attrition). Not only is it incredibly expensive in time, money, and lost opportunities—it also frustrates prospects and customers when their point people keep changing. A commonly accepted estimate of the cost of one lost salesperson is one and a half to two times their annual comp.

At two times their comp, losing five salespeople with targets of $150,000 is a cost of $1.5 million.

A $200 Million Loss?

In 2013, rumor had it that Salesforce.com lost 750 of their 3,000 people in sales (25 percent attrition). If their average comp was $125,000 (which is probably low), then this was a cool $187.5 million lost.

That much turnover disrupts everything in the sales team and with customers.

Common Sales Attrition Causes

There can be a million underlying causes behind high sales attrition, but the three most common ones are:

  • Lead generation: The company isn’t doing enough to support the reps with quality leads.
  • Specialization: The company isn’t specializing at all, the right ways, or going far enough with it.
  • Management: Leadership (mostly the CEO & VP Sales) isn’t connected with what’s going on “in the trenches,” or is still very traditional or conservative. We love this quote: “People leave managers, not companies.”

Do Your Salespeople Have a Headwind to Success?

You need to dig and discover the root problems that are making it so hard for people on the team to succeed. Is it that they need more leads? Maybe your products are weak or are targeted to the wrong markets.

Maybe you’re an early company with completely wacky sales expectations. Or you’re targeting a “slog” market. Maybe some of your sales managers or leaders are doing more harm than good with their management style. Maybe your VP Sales is a bit crazy and is just hiring a bunch of random people into a disorganized system (it happens), and you gotta rebuild it before even lead gen matters.

Don’t Make Assumptions

In addition to looking at those areas of Lead Generation, Specialization, and Sales Management, go talk to your people, one by one, and identify patterns that lead you to discover the main one or two problems that are causing high attrition.

  • Don’t just blame salespeople for failing. What else contributes to the systemic problem(s)?
  • Keep up the one-to-one coaching, and don’t let individual salespeople use team wide problems as an excuse to give up.
  • Great reps with a great (or even good) manager and fair compensation will prefer to stay.
  • People leave managers, not companies. Which managers have high churn, and why?
  • Voluntary attrition should be 0 percent.
  • Overall attrition should be 10 percent or less, but but not 0 percent, because no company has perfect hiring and coaching.

About the author

Aaron Ross

Aaron is the author of From Impossible to Inevitable. Aaron is married with 12 children (mostly through adoption), loves motorcycles, and keeps a 25-hour workweek. He’s a keynote speaker and best-selling author of Predictable Revenue, called “The Sales Bible of Silicon Valley,” based on an outbound prospecting system that’s created more than $1 billion across Salesforce.com and other companies. He’s cofounder and CRO of Carb.io, a Pipeline Automation software company, and is also the cofounder of PredictableUniversity.com.

  • Dave Kirk

    Left an organization like this only far worse last year. Starting a new sales organization in a SaaS company. Bound and determined to do it right. Bought the book today, will read and apply. Looking for help.

  • John Hoskins

    Aaron good article and teaser for your book. I really like your questions for diagnosing the root cause. Likely it is a combination of all of the above. To me it starts with the right hire. If you don’t do that, all the other support mechanisms including leads, comp plans, great management, training, coaching, incentives are like seeds on concrete.

    Oh and hat tip to anyone who can raise 12 kids. Your wife must be a Saint. Look forward to reading your book.

  • Neal

    These are great points. It is amazing how many sales organizations constantly fail to look at their leaders, process, comp plans or quotas. Would love some feedback on a relatively new sales blog http://cognitiveseller.com I touch on many of the latest sales techniques and challenges faced in today’s market.

  • Neal

    These are great points. It is amazing how many sales organizations constantly fail to look at their leaders, process, comp plans or quotas. Would love some feedback on a relatively new sales blog http://cognitiveseller.com I touch on many of the latest sales techniques and challenges faced in today’s market.

  • Dear Aaron, thank you for this wonderful post. It sure got us thinking on the root cause. It is easy to remember what happened last month and hard to non-selectively play the events/situations over time. I guess many answers lie where you pointed out: understand the system better.

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  • Jesse Davis

    Great post, Aaron! I really agree with your points. In my experience, another reason that salespeople churn is that they aren’t properly motivated by their comp plans. Your book was what originally got me thinking about separating sales into roles. And I think comp plans have to differ by specialized roles. As an example: here is how I calculate comp plans for inbound (lead qualifiation) reps: http://www.ringdna.com/blog/compensation-for-inbound-SDRs

  • Dobie

    Aaron, actually the biggest cause of sales staff churn is that they’re not right for the role. So many companies hire people to fill sales vacancies, only to see them fail miserably because they don’t have what it takes to be a salesperson in the first place. Industries such as car sales, insurance, estate agents and retail, for example, have high attrition rates amongst salespeople because they hire the wrong people for the job. The insurance industry knows this is a problem, yet they consider 80% attrition as “normal”, and so they keep doing it. We suffered from around 35% attrition in our company, until we decided to have a good look at our hiring process. To reduce the “gut feel” hires, we implemented a profiling process prior to interview, and this has helped us to make more accurate appointments, particularly for new business sales.

    The truth is, it doesn’t matter how good your comp plan is, if people aren’t right for the job they won’t succeed. This causes unhappiness, friction and ultimately they leave. We use Selling Profile to help us get it right when hiring, and this has helped us to improve our retention rate and success. Have a look at http://www.sellingprofile.com for more info, it is a real game changer in terms of reducing attrition and improving motivation and success in your sales team.

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