Case History - Achieve Lowest Turnover in the Entire Sales Force

Posted by Dave Kurlan on Tue, May 27, 2014 @ 16:05 PM

turnoverFrom time to time, I get pretty cool emails that make me want to write positive articles instead of negative ones.  Today, I got one from an OMG (Objective Management Group) Partner, who wanted to let me know what he learned from one of his clients at a company that you all know quite well (but whose name will be withheld).

He wrote, "They have the lowest turnover of all the departments."

That's good, right?  Maybe not.

The Question That Must be Asked

Why would an enterprise (that has standardized on OMG's Sales Candidate Assessment, had OMG customize it for every sales role in the company, and has terrific data from its first year of use) have one department with significantly lower turnover than all the others?

Could it be any of the following 10 Reasons?

  1. Difficulty of the Role,
  2. Capabilities of the Different Sales Managers,
  3. Differences in the Various Selling Profiles,
  4. Differences in the Criteria for a Recommendation on the Assessment,
  5. Varying Interviewing Skills,
  6. Varying Expectations,
  7. Differences in Team/Department Cultures,
  8. Demand for the Different Products/Services,
  9. Varying Degrees of Competition Across Departments, and/or
  10. Luck of the Draw.

In most companies, each of those possibilities are always in play.  However, in this particular company, it wasn't any of them.

The Actual Reason

In reality, it was a very simple difference and you could say that this department was being really smart or that the other departments were being stupid.  

OMG's customized Sales Candidate Assessments could say that a candidate is recommended, not recommended or worthy of consideration.  They could also indicate that a candidate is recommended ideal or recommended perfect.  Each of these 5 possible recommendations is extremely accurate and predictive.

The department with the lowest turnover followed the recommendations, remained patient, and did not hire any candidates that were not recommended.  The other departments thought they knew better despite very strong statistical evidence to the contrary.  Our statistics AND THEIRS showed that 75% of the candidates who were not recommended, but hired anyway, failed within 6 months.  Why would anyone, anywhere go against a powerful statistic like that?  They're Smarter-Than-Us-Professionals, I declare - or STUPID.

You don't have to reinvent the wheel.  You don't have to be creative.  You don't need magical powers.  And you don't need to perfect your gut instinct.  Just use a tool that is proven to work consistently and reliably, and use it the way it was intended to be used.  And when it comes to sales selection, you'll be in good shape.

Image Copyright: sorapop / 123RF Stock Photo

Topics: Dave Kurlan, sales hiring, sales recruiting, sales candidates, sales turnover, objective management, sales selection

How Do Companies Retain Their Underperforming Salespeople?

Posted by Dave Kurlan on Fri, Apr 30, 2010 @ 05:04 AM

I explain the difference between lousy salespeople and good salespeople in terms of line items and investments in this article.

Tony Cole was my guest on this week's episode of Meet the Sales Experts.  Among his many helpful tips was his "Where's Waldo" exercise.  He asked a great question about under performers.  "Did you hire them that way or did you make them that way?"  He talked about his new book, (available in January 2011), Resurrecting Anthony, and 6 Tips for success.  He said that the Fundamentals don't change much and that you must:

  1. Set unbelievable goals
  2. Hold yourself accountable
  3. Be willing to change
  4. Don't let the small stuff get to you
  5. Stay healthy
  6. Have a great partner in life

Click here to listen to the episode with Tony Cole.

Last month I published 3 articles and a white paper on Sales Longevity - The Science of Predicting Sales Turnover.  In one of the articles and in the White Paper, I identified the 5 primary factors that impact turnover.  Yesterday, while reviewing the findings and answers from a Sales Force Evaluation with a client, the conversation turned to the possibility of replacing some of their reps.  As we began to talk about the 5 factors, they wondered how they were able to retain these people who, for the most part, weren't very good and weren't a very good fit for the roles they were in.  Three of the factors came up big in explaining why the tenure of their 9 salespeople:

  1. Figure it Out Factor - all of there salespeople had FIOF's of below 50.  My research shows that while people with a FIOF over 75 ramp up more quickly, people with lower FIOF's can be retained longer.
  2. Sales Quotient - most of their salespeople had SQ's between 110 and 135.  My research shows that the best salespeople have SQ's over 145 but that salespeople with SQ's between 110 and 130 can be retained longer.
  3. Experience - most of their salespeople are very experienced.  My research shows that you are much more likely to retain people with at least 5 years of experience than those with less experience.

Topics: Dave Kurlan, sales force evaluation, sales recruiting, sales management, Sales Force, sales turnover, retaining salespeople, sales assessments

The Top 5 Factors to Predict Sales Turnover

Posted by Dave Kurlan on Fri, Mar 05, 2010 @ 05:03 AM

Yesterday, I began a discussion about sales longevity or, if you prefer, turnover.  What are the factors that lead to turnover and how much of that can be predicted?  Start with yesterday's article on How Long Will a Salesperson Stick?

Get ready for a discussion that is backed by data - more Science of Sales Force Management stuff!  Speaking of science, my guest on this week's episode of Meet the Sales Experts, Lee Levitt, had a lot to say about Pipeline Coverage and Shape, metrics and 5 powerful tips for Sales Force Effectiveness.  Click here to listen to the show.

Salesperson Longevity - What Did We Find?

I mined the data and it wasn't easy!  Some of the factors I expected to see just didn't materialize. For example, I assumed that money motivation would make a difference.  Wrong.  Not even a tiny difference. A money motivated salesperson is not even 1% more likely to stick than one who isn't motivated by money.  I assumed that salespeople who were paid mostly on salary might tend to stick around longer than their colleagues who were paid mostly by commission.  Wrong.  I thought that there was a chance that stronger salespeople stuck around longer than weaker salespeople.  Wrong again.

So what did I learn?  Here are the Top Five Factors to Predict Sales Turnover / Longevity

The most important factor in predicting sales longevity is --- EXPERIENCE!  Salespeople with at least 5 years of sales experience are far more likely to stick than those without 5 years of experience.

Factor #2 has little to do with the salesperson but everything to do with Sales Longevity.  It's how closely sales management will manage the salesperson.  Salespeople who were not closely managed simply didn't stick around as long.  I had to draw a conclusion relative to whether the turnover was voluntary or involuntary. I concluded that salespeople who were more or less ignored and also under performing likely reached a point where the company gave up and terminated them. I also concluded that salespeople who performed but were ignored probably left on their own.  But whether or not you agree with my conclusions, don't miss the bigger point.  Closely managing your salespeople leads to sales longevity in your company.

Factor #3 is the compensation plan.  Salespeople who are compensated mostly by commission are more likely to stick than salespeople who are compensated mostly by salary.  Why? Salaried salespeople and those with limited bonus opportunities, reach a point where they need more money.  Does this contradict the money motivation finding?  No.  This is need versus want.  They'll leave when they need more money.  Money motivated salespeople simply want more money and sell more to earn it.

Factor #4 is a reverse factor finding.  Huh?  Objective Management Group (OMG) has a powerful finding called the Figure it Out Factor or FIOF.  It's a score that accurately predicts how quickly a new salesperson will ramp up in their new positions.  A score of greater than 75 identifies candidates in this group.  Well, these same salespeople, the ones who will ramp up more quickly, are LESS likely to stick!  Yes, they'll have an immediate impact, but they will tend to not have sales longevity in your company.  Salespeople with low FIOF scores are the ones who are most likely to stick.  Slow starters, big finishers!

Factor #5 is another reverse factor finding.  OMG has another score called Sales Quotient (SQ) which allows companies to rank their hirable candidates. Strong salespeople have SQ's over 135 and the elite have scores over 145.  But these real strong salespeople - A Players - aren't the ones who are most likely to stick.  Rather, salespeople with SQ's between 110 and 130 - B Players - have the greatest sales longevity.

Summary:The good news is that there are five specific factors that allow us to predict sales longevity.  The bad news is that these factors are inconsistent with the factors that allow us to identify and predict who the top performers will be.  So it raises a new question.  Should you be striving to hire A Players - those with high Sales Quotient and Ramp up Scores or should you be hiring for Sales Longevity - B Players who will stick around longer?

Verne Harnish, the Growth Guy, and I had this very discussion  over email this morning.  He said, "small companies can do both".  He said that "entrepreneurial firms should go after experience - we don't have time to ramp up someone - let the big companies train!" He also said that "companies should go for A players with more than 5 years of experience", something that  both Neil Rackham (SPIN Selling and Rethinking the Sales Force) and Brad and Geoff Smart, (Topgrading) have been saying right along.  However, our data shows that only 16% of the A players with experience stick for more than two years. And that brings us back to the original question. 

What do you think - A's or Longevity?  Should the answer be a direct relation to the length of your sales cycle?  Should you go for longevity when you have a long sales cycle and for A's when you have a short sales cycle? We're interested in what you have to say!

Topics: sales assessment, sales recruiting, sales management, sales candidates, sales turnover, Neil Rackham, topgrading, verne harnish, money motivated salespeople, salespeople, sales experience

Salesperson ROI - How Long Must They Stick to Pay Off? - Part 1

Posted by Dave Kurlan on Thu, Mar 04, 2010 @ 09:03 AM

Is there a connection between sales success and tenure?  Is it really a given that a successful salesperson will stick around longer than an unsuccessful salesperson?

There are other factors, like the compensation program.  Will an unsuccessful salesperson who is compensated mostly by salary stick around longer than a similarly unsuccessful salesperson who is compensated mostly by commission?

Does their role factor in?  Will an unsuccessful account manager hang around longer than an unsuccessful hunter?

How about sales management?  Will an unsuccessful salesperson who is either closely managed or pressured to perform, hang around longer than a similar salesperson who is not closely managed and not pressured to perform? 

Let's say you have a 12 month sales cycle and an 8 month learning curve.  Essentially, it will take nearly 2 years to get your new salesperson producing consistently.  In that 2 years, maybe you'll pay out close to $150,000 in subsidies. 

Using your average margin, how much revenue must be gemerated to offset that subsidy?

How much revenue much be generated to produce a satisfactory ROI?

How long must the salesperson stick around in order to produce that ROI?

If we can predict longevity, does that help you determine whether you will realize a ROI with a sales candidate? 

Objective Management Group has the raw data and plan to mine it to provide answers to these questions.  Look for my findings in the next several days in Part 2 of this installment. [UPDATE - Click here for the Top 5 Factors That Predict Sales Longevity]

In the mean time, what do you think? Can you identify any other possible variables?  

 

Topics: Dave Kurlan, sales motivation, sales turnover, sales retention, objective management group

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Best-Selling Author, Keynote Speaker and Sales Thought Leader.  Dave Kurlan's Understanding the Sales Force Blog earned a medal for the Top Sales & Marketing Blog award for six consecutive years. This article earned a Bronze Medal for Top Sales Blog post in 2016, this one earned a Silver medal for 2017, and this article earned Silver for 2018. Read more about Dave.

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