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Sales Force Turnover Rose in 2002
Sales Performance International conducted a study that gathered input from major sales organizations at 113 companies, the majority of which have global sales teams and are focused on selling technology or financial services.
Posted Jan 10, 2003
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The average turnover among sales professionals in 2002 more than doubled what experts say is the average annual level of 15 percent, according to a recently released study. Sales Performance International, a Charlotte, NC-based consulting firm, conducted the study, which gathered input from major sales organizations at 113 companies, the majority of which have global sales teams and are focused on selling technology or financial services. The study shows that in some cases turnover was as high as 40 to 50 percent. However, other companies reported virtually no change, citing a tight job market, according to SPI CEO Keith Eades. According to the study, there were several factors accounting for the higher turnover. Nearly 50 percent of those surveyed cut back sales staff because of the recession. Ten percent of the study respondents said the sales professionals left of their own volition for new opportunities, either because sales had declined in their sectors or because they were made better competitive offers. And 15 percent of the responding high-performing sales professionals left because of compensation changes implemented to make up for sales losses. Eades says he was not surprised by the results, but notes that sales organizations continue to cut sales jobs as a way to remain profitable. "Sales management at some companies downsize the bottom 20 percent of the sales team each year, regardless of the economy, while others use market conditions as an excuse to make basic changes in their go-to-market strategy," Eades says. He notes that an emerging reason for sales force turnover is the dislocation or disaffection when a new sales process is implemented. "The changes in philosophy and compensations are too much for some sales professionals, so they go elsewhere," he says. However, the economic downturn and tough business climate had some survey participants intent on retaining their entire sales team and getting reps refocused for the expected upturn in business. Based on studies by The Gallup Organization, the turnover goal for the top 75 percent of a sales force should be as close to zero as possible.
Analysts at Gallup say that turnover remains a major corporate problem, because of the high cost of replacing employees. High turnover can also cause service disruptions for customers. The costs from turnover and service disruptions vary widely, depending on whether top producers or marginal reps are leaving. The out-of-pocket replacement costs for a poor producer versus a top producer may appear similar, but the opportunity costs are enormously different, according to Benson Smith and Tony Rutigliano, consultants from Gallup. "Every sales manager experiences turnover, but the important thing is to hang on to the high performers, bring in promising newcomers, and let the laggards go," SPI's Eades says.
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