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!