subject: Increasing Sales By Decreasing Employee Turnover [print this page] One of the keys for increasing sales is to control and decrease turnover of sales staff and management. Not only is turnover very costly in terms of hiring, training, and terminating costs, but it is also very counter productive when it driving sales revenue.
One of the main reasons that turnover has such a large impact on sales is because of the knowledge that is lost when the sales person leaves. Below is a summary of the knowledge that is lost:
Product knowledge: When an employee is hired, they are given a tremendous amount of training. First, they will be given some amount of formal training that could be anywhere from a couple of days to a couple of weeks. Once the formal training ends, the training does not stop. There is typically a ramp up period where the employee continues to learn from peers and on the job. This ramp up period typically lasts anywhere from three to six months. And even after the employee is fully ramped up, the depth of their product knowledge will typically continue to expand day in and day out.
Customer knowledge: Success in sales is dependent on knowing your customer. This includes knowing their business, their challenges, their drivers, the key players, politics, culture, organization structure, etc. While a sales person works with a customer, they will learn a tremendous amount about them. Some of the key details of the customer may be documented in a customer relationship management system. But in most instances, there is a tremendous amount of customer knowledge that will exist only in the sales person's head and leave with the sales person if they leave the company.
Opportunity knowledge: When working on sales opportunities, there will be a tremendous amount of details of interactions, communications, drivers, relationships, competition, and processes that the sales person will be knowledgeable of. A lot of key opportunity details will be documented and shared with management, but it is likely that the sales person is the person that has and understands most of the details and factors involved.
By only looking at those three areas, it is clear that when a sales person leaves, a tremendous amount of knowledge walks out the door. It is probably a safe assumption that losing this knowledge and then spending the time and money to replace it will have a negative impact on sales. Thus, by retaining sales people and decreasing turnover, a company can improve effectiveness in increasing sales.
If the goal is keep retain employees, there are some key things that can be done to improve effectiveness in this area.
Turnover is comprised of terminations and resignations. The biggest contributor to these actions being taken by either the employee or the employer is poor sales performance. Either the employee is not happy with earnings and goes somewhere with better potential or the employer is not be happy with the employee's performance in increasing sales and takes action with the hope of positive change.
Actions like terminations and resignations are reactive and sometimes taken when things are too late. There are proactive actions that can be taken earlier in the process and these can deliver decreases in turnover and have a positive impact on increasing sales.
Compensation: Utilize compensation plans that have realistic targets. The plan should be setup so that commissions are directly tied to the sales person's actions and successes.
Training: Improve any areas where more training could improve sales performance. Do the sales persons have the knowledge and skills needed be effectively increasing sales?
Coaching: Utilize sales coaching to pick up where the training leaves off to ensure that the sales person stays on track to with increasing sales.
