Did you know: Losing a sales rep costs an average of $115,000?
4 Ways you are driving your sales reps out the door
Unfortunately for today’s sales manager it has the exact opposite effect, and a direct bottom line impact to the productivity of their teams. Sales jobs are a dime a dozen these days, and a quick search through indeed.com confirms this. Currently, there are more than 340,000 openings under the title of “sales representative”, with more than 10,000 at a salary of 6 figures.
Money to burn?
A recent DePaul University report on sales representative turnover indicates that the time to replace an open position ranges from 5.8 – 7.8 months, averaging 6.2 months. Acquisition costs of a rep average $29,000, training costs average $36,000, and lost sales in territory average $50,000.
Does your budget have an extra $115,000? Does your territory have room for a 6 month opening? What do you do when the answer is emphatic, “No!”? Take a look at these four key mistakes of today’s sales managers and decide which ones you can change today.
1. Setting not-so-“SMART” goals
Do your sales reps have a clear understanding of what they are to accomplish this year? Most managers are quick to answer yes to this question when asked. “Everyone knows we need to sell 1 million widgets this year!” Great. Print that on a banner, hang it in the office and go golfing. You are clearly not needed here.
What is each representative’s stake in this 1 million widget milestone?
Sales representatives are clamoring for the Specific, Measurable, Assignable, Realistic and Time related steps to meet that achievement—the SMART path. Until you have provided these, you are just offering dumb goals.
“Joe, in order for us to sell 1 million widgets this year we need you to hit 10,000 sold. That translates to 834 widgets a month or 208 per week. Last year you sold an average of 200 widgets a week, so this is a very small increase. We will be meeting every two days for at least 15 minutes to discuss how you are trending toward our plan.”
2. Compensation confusion
Nothing irritates a Type A assertive personality like impacting their money. Nothing infuriates that same person more than telling them they are going to get one thing and then giving them something else.
Compensation plans need to be set PRIOR to the start of the fiscal year and they need to stay consistent. Changing compensation throughout the year needs to be reserved for emergency situations only (i.e. the compensation plan burned up in a fire or the CEO was locked up in the loony bin.) Once you pick a plan for the year—ensure the reps clearly understand and then don’t change it. Conversations around compensation should be held face-to-face and then both manager and representative should sign documentation verifying that conversation. Real life scenarios should be used to model the compensation plan.
“Joe, this year’s compensation plan is 5% of the total sale for every widget sold. If you hit 100% of quota, or 10,000 widgets at $100 a piece you will make $50,000 in commission. Understood?”
3. It’s not you, it’s my manager
Sales reps, sanitation workers, kindergarten teachers—it doesn’t matter what profession you pick—when they leave it’s because of their manager and not the company. You can set up great compensation plans or host pizza parties but it won’t matter if the manager is just plain horrible. Time for a 360? Click here for the resources you need.
4. Don’t fail the trust fall
How do you like to be supported at work? Do you like constant feedback? Do you just want to be left alone? Do you have a mug that says “Don’t even look at me until my second cup?” Write down your support profile and how you want to be treated. Go ahead—we’ll wait. OK wonderful—now go ahead and crumple that into a tiny ball and throw it away. It doesn’t matter how you want to be supported! Don’t expect that your reps want to be treated the same way. Until you ask them—really delve into each person on your team and how they respond best—you will never truly be able to support them in the manner they need.