In Chapter 13 of their new book, Aaron Ross and Jason Lemkin talk about how to make a startup succeed despite their attrition sales.
Sales culture is different than any other because companies assume that most people will sink or succeed on their own. They expect 10 salespeople to fail and only a quarter of them to make it.
CSO Insights estimates that for every 100 salespeople, 25 are lost each year. That means you need to hire (and train and ramp) an extra 25 per year just to stay afloat.
Managers and HR people are the first on the chopping block. They’re easy to replace.
Beating the Odds On Sales Team Churn Rates
It is expensive when there are a lot of changes in the sales team because it takes time and costs money, but also customers can get frustrated. Salespeople need to be friendly with customers.
EchoSign grew from $1 million to $50 million in revenue and didn’t have a single VP Sales Brendon Cassidy quit. He had a great team, they knew what they were doing, and it was fun.
Imagine you work at a growing company and are beating team-wide sales goals. You might be hitting or even exceeding the goal, but internally there’s trouble with growth pains like:
- When salespeople don’t hit their quotas, they risk getting fired or demoted.
- Many salespeople are leaving my company every year, and I’m not sure what to do.
- When you were smaller, ramp times for new hires went up to two months. Now that you’re larger, it takes six-eight months.
- The sales team has grown, but the lead generation hasn’t been able to keep up.
Despite all of this, the board is still telling you to hire more salespeople. They are pouring water into a leaky bucket.
It’s Not You, It’s Me
If 30% of your sales team is missing quota, are they to blame for the lack of success or is it because there’s something wrong with how you’re hiring? If 25% leave each year and 75% make quotais this a problem with people who can’t handle the pressure or does it mean that there’s something wrong in your system?
See the pattern here?
It’s the responsibility of managers to design and implement quotas, incentives, territories, roles and responsibilities.
Ultimately, it’s not the responsibility of individual salespeople. Instead, you have to look at what your company is doing on a global level.
Until you fix the systems, it will be difficult to get consistent results.
Defects in the System
Your ability to scale a sales team depends on making everything systematic. When you lose your top performers, it means there are flaws in the system.
Your ability to scale a sales team depends on making everything a system.
With the cost of one lost salesperson being about two times their annual compensation, it’s important to think really hard before letting them go.
If I had to replace five of my sales people who were making twice their salary, it would cost me $1.5 million.
A $200 Million Loss?
In 2013, I heard that Salesforce.com lost 750 of their 3,000 salespeople (25% attrition). If those people were making an average salary of $125,000 a year ($187.5 million), then this was a huge amount they had to lose.
When we have a lot of turnover, it disrupts the entire team and our customers.
Common Sales Attrition Causes
There are many reasons why people leave sales jobs, but three of the most common ones are:
- The company isn’t doing enough to provide quality leads for the sales reps.
- The company is not specializing in any way, and it needs to go much further with this.
- Management doesn’t know what’s going on in the trenches and they’re not very open to change.
Do Your Salespeople Have a Headwind to Success?
In order to help your team succeed, you have to figure out the root causes of their problems. For example, is it that they need more leads? Maybe your products are weak or targeted incorrectly.
Maybe you’re an early company with completely wacky sales expectations. Or maybe your VP Sales is hiring a bunch of random people into disorganized system (it happens), and then lead gen matters.
Don’t Make Assumptions
Look at all of the areas that have been identified as reasons for high turnover. Talk to each person individually and find out what their main problem is.
- In many cases, there are other factors that contribute to the systemic problems in sales.
- If you want to keep motivated, don’t let the team-wide problems discourage individual salespeople.
- When an employee is happy with their manager and they are being compensated fairly, the likelihood that they will stay at a company increases.
- People quit because of their managers, not the company. Who are these high-churning managers? Why do they have so many people quitting them?
- We should always have a 0% voluntary attrition rate.
- When it comes to attrition, the goal should be 10% or less. We can’t get rid of all turnover though because no company has perfect hiring and coaching.
Need Help Automating Your Sales Prospecting Process?
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Go through a variety of filters to zero in on the leads you want to reach. This is crazy specific, but you could find all the people that match the following:
- A company in the Financial Services or Banking industry
- Who have more than 10 employees
- That spend money on Adwords
- Who use Hubspot
- Who currently have job openings for marketing help
- With the role of HR Manager
- That has only been in this role for less than 1 year
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