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Leveraging the Employee Life Cycle
Four ways to stem sales force turnover.
For the rest of the December 2006 issue of CRM magazine please click here
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Retaining good sales reps is a constant challenge for businesses today. According to the Bureau of Labor Statistics, in 2005 the national average for turnover rate for professional and business services, including sales, was 58 percent, an increase of about 10 percent from 2004. As sales force turnover continues to climb, it affects the corporate bottom line. Consider the following financial impacts:
  • separation costs, including paperwork, severance, and unemployment;
  • vacancy costs, including overtime or temporary employees; and
  • replacement costs, including advertisements, interview time, testing, relocation and training, and salespeople's decreasing productivity when colleagues depart--especially in team selling situations. The Employment Policy Foundation holds that dollar figures attached to the above examples would cost a company an average of about $15,000 per employee. More startling is the impact sales force turnover can have on customer satisfaction. One strategy for improving employee satisfaction and helping productivity is to understand workers' life cycles. The employee life cycle comprises key phases, performance milestones, and challenges for employees. Through learning and incentive strategies, employers can help support and retain employees through these times. Phases, milestones, and challenges can be different for every organization, but in general the employee life cycle can be divided into four milestones: selection and hiring, new hire development, ongoing performance management, and career development. Companies need to determine appropriate employee performance measurements for each phase of the life cycle, and to focus on helping employees meet those requirements with organizational support, recognition, and rewards. Following are ways to motivate and retain salespeople in each phase: 1. Selection and hiring. Clearly describe the job and the skill sets required for it based on organizational goals prior to the interview process. This will help align a new hire's expectations with the reality of the position, and is the most cost-effective way to approach the selection and hiring phase of the life cycle.
    2. New hire development. Identify the first milestone required to remain in the position. For example, one of the top three global technology companies requires its sales associates to make their first sale within 90 days. All learning and rewards should focus on this single task, such as providing basic sales training courses on easy-to-sell, quick turnover products. 3. Ongoing performance management. After sales reps meet their first milestone, they need to concentrate on building their portfolio and increasing their product knowledge. Network within the company and share best practices--this is critical to building relationships and a solid product knowledge base. At this time, sales reps can receive additional training on high-dollar products. 4. Career development. When sales reps feel appreciated and valued, they are more apt to be satisfied with their job. It's imperative, as reps become seasoned, to include them in the innovation process: Provide them with specialized assignments that they oversee. For instance, a well-known telecommunications company created an innovation strategy council of sales reps and executives who work together to solve customer satisfaction problems. It's important to provide the sales team with ongoing support. For example, frequent individual and team coaching by skilled sales managers will help sales reps hone their abilities to successfully find, win, and grow customers. The life cycle approach reduces sales force turnover by enabling companies to hire the best people, to better develop the talents of both new hires and veterans, and to align individual goals with corporate goals and maximize investment in improving sales force performance. Dennis Costello is vice president of learning strategy for Maritz Learning. He can be contacted at dennis.costello@maritz.com.
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