“..no hesitation in recommending this as a…well-thumbed text on any sales manager's bookshelf, as well as a practical 'how to' volume for sales people.”—ChangingMinds.org
The Zero-Turnover Sales Force: How to Maximize Revenue by Keeping Your Sales Team Intactby Doug McLeod
There’s no question about it…Sales force turnover can be disastrous to the financial health of an organization, whatever its size, whatever its products or services. With a salesperson’s exit often costing at least 150% of that employee’s annual compensation, a high rate of turnover can translate into/b>
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No company's sales force should be a revolving door.
There’s no question about it…Sales force turnover can be disastrous to the financial health of an organization, whatever its size, whatever its products or services. With a salesperson’s exit often costing at least 150% of that employee’s annual compensation, a high rate of turnover can translate into millions of dollars lost each year.
The Zero-Turnover Sales Force exposes the outdated Old School management practices that perpetuate this costly but avoidable problem. This eye-opening book examines the real reasons for high turnover, explains how it can be avoided, and gives readers specific strategies for maximizing the effectiveness of their sales force. The book demonstrates how to combat “the 12 Assassins of Sales Force Stability,” such as cold calling, straight commission sales compensation, weak recruiting, unfocused training, fuzzy goals, and unrealistic expectations.
Sparkling with fresh thinking on hiring smarter, appreciating the values of younger salespeople, retaining top sellers, eliminating wasteful cold calling, and conducting sales meetings that work, The Zero-Turnover Sales Force is a powerful must-read for any corporate executive, sales manager, or salesperson who aspires to management.
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The Zero-Turnover Sales ForceHow to Maximize Revenue by Keeping Your Sales Team Intact
By Doug McLeod
AMACOMCopyright © 2010 Doug McLeod
All right reserved.
Chapter OneA Tantalizing What-If
A Stable, Unchanging Sales Force
Imagine a world in which you have the same sales force 90 days from now that you have today. One hundred twenty days from now.
A year from now.
If your sales team gives you indigestion on a daily basis and haunts your dreams at night, this will be a terrifying vision. For most sales executives, though, retaining productive salespeople is simply an alluring fantasy that's totally unconnected with reality. A stable, unchanging sales force? Hardly any recruiting? No ramp-up cycles? Are you delusional?
No, you are not.
Companies of all sizes are already operating in a Zero-Turnover Sales environment. They're able to do this because their sales executives and company management had the vision to do the things we'll cover in this book. They surmounted another challenging issue, too: the impatience of top executives who want revenue shortfalls addressed immediately but haven't a clue about how sales works. As we'll discuss later, the majority of CEOs, COOs, and other such company bigwigs today do not come from sales backgrounds. They're finance people, lawyers, and entrepreneurs. And whatever their calling, they have little patience with anyone who doesn't chirp, "I'll have everything turned around by this time tomorrow." Remember this: The boss didn't get to the big office with a snap of the fingers. He or she got there with a plan, and that's how we're going to fix your sales force turnover issues. Planning and persistence make it happen—and no successful plan blossoms overnight.
BUILDING A ZERO-TURNOVER SALES FORCE IS NOT A QUICK FIX
There's no silver bullet that will instantly transform an underperforming sales force. We can't simply write a memo, fire off an e-mail, or call a meeting and expect to turn around a group of people that was hired and trained the wrong way and spends its time unproductively. Top management, of course, will want this.
One of your jobs is to be the wise counsel of patience, perhaps even secreting copies of this book in boardrooms, executive washrooms, and golf lockers. And among the first items on your to-do list to reduce sales force turnover is to get the bosses to buy into the idea that these conditions absolutely must exist:
Your sales force is stable.
You hire and train the right people the right way in the first place.
Old-school ways of contacting prospects are tossed out the window.
The sales manager leads rather than attempts to motivate.
When you have them firmly in place, the enormous expense of turnover will be all but eliminated, and dependable long-term revenue will follow.
What's more, if you make the bosses think that it's their idea, you're way ahead of the game.
The easiest way to implement a Zero-Turnover Sales Force is to start from scratch. If you have the good fortune to manage a brand-new sales force in either a new company or a new division of an existing company, you have the blank canvas on which to craft a neat, clean beginning. Most of us don't have this luxury. We're stuck with the muck that our predecessors—decades of them in many companies—have bequeathed to us. But if we're the ones who have been in charge and if we're being honest (and why not be honest once in a while, just for the exercise?), we may have to admit that the muck is our own creation.
You most likely have "if this, then this" scenarios in place for your salespeople: If this idiot doesn't make budget again, he's gone; if she blows one more close, she's out of here; if they don't pound those phones, cold calling exactly fifty or a hundred unsuspecting prospects today and every day, the whole wretched bunch of loafers is history. That's it, period, the only way to do it.
And when they're gone, you'll start all over again.
If this sounds familiar, take comfort: You're not alone. Most sales forces are in constant states of flux. Likely suspects are recruited. New hires cycle through the training regimen. Veterans (some of whom have actually been there for months or years) pound the phones, make the cold calls, work on the presentations, dance the challenging Buying-Cycle Boogie, and try to bring home the bacon. The High Priest of Negotiation struggles to feed the God of the Budget. And somewhere down the hall or up the elevator or across the time zones, there is the Voice on the Phone. This voice rules your life. It may couch its words in more or less conciliatory language, but the message is always the same:
The investors/board/shareholders/Big Cheese is/are all over me about revenue. You've got to hit those numbers! If you don't, roll those fakers out of there and get some hot bodies that can sell. And if you can't do that, I'll put somebody in your chair that can!
You can only rage, meditate, work out, or bend paper clips so much before you begin to question whether the way you've been doing things—the Old School way—is in fact the right way.
CONSIDER SOME TANTALIZING WHAT-IF'S
Given the scenario we've just laid out, you might even begin to ask yourself some important questions—some thought-provoking "what-ifs":
What if you weren't actively recruiting salespeople all the time?
"Wait," you plead, "I can't do that! There has to be fresh talent in the pipeline. You never know when somebody will quit or I'll have to bounce 'em out of here. When that happens, I'll need a fresh sack of meat or two to cover the business!" This is true, unless you've created a sales force that experiences little or no turnover, in which case your need for fresh troops will obviously be very, very small.
What if your staff was at full speed right now, without working up the new hires?
In the Zero-Turnover environment, you seldom have to wait for one or more recently hired salespeople to finish their initial training and get up to speed. That costly and inefficient start-up period evaporates when you rarely have to bring new people aboard. Of course, it's laughable to think that every salesperson is going to perform at the same dizzying level. If that were the case, we'd all be phoning it in from the Bahamas. But while individual skill levels and sales outputs may vary, lack of turnover keeps the entire sales force intact, focused, and heading in the same direction. And when you're managing a bunch like that, life gets a whole lot easier.
What if you didn't have to fire someone this week/this month/ever?
Now really, do you enjoy firing people? If you do, please wait outside. I've known a few of your kind, and there's a special place for you. But if you'd really rather not ruin lives, upset families, and overcrowd the unemployment office, then you're as normal as someone like us is going to get. In that case, what you would rather do is lead the sales team, coach your salespeople, exercise your creativity, and go forth and dominate the market. In short, you would rather do what you do best instead of constantly feed an eating machine that sucks in unsuspecting souls at one end, digests them, and then spits them out the other end. That's a treadmill to oblivion. But it doesn't have to be that way.
This book shows you how to create a selling environment that not only makes people want to stay aboard, but actually makes it possible for them to do so. Remember, though: There's no silver bullet. There's only vision and hard work.
Back to the top of the chapter: What if you really did have the same sales force 90 days from now that you have today?
A tantalizing question, indeed.
But before we begin to roll out the answers, let's look at what really happens to the bottom line when sales turnover is a fact of life.
Take a serious look at the turnover in your sales force over the last three years. If the number is north of one or two a year, it's too high.
Talk to every person on your team who came from a competitor. Find out why each of them left that former job. Zero in on the turnover issues that the other guys are experiencing. You'll be amazed at what you learn. By the end of this book, you'll be able to avoid repeating the problems that are bedeviling your competitors. Advantage: you.
Go ahead and dream. What if you were out of the hiring and ramping-up business and were able to spend all your time leading an intact sales force? Plot out a plan of action that assumes the presence of a sales force that's always tuned up and ready to go. How different does that look from the results you're getting now?
Chapter TwoThe Real Cost of Sales Force Turnover
Most managers have no clue how much it really costs every time a salesperson quits or is fired. Why would they even want to know that? It's a frightening pile of numbers. Who wants to wallow in all that bad news? We're salespeople, after all. We're optimists. Stuff those dreary statistics and let's go sell something!
Yes, but you're going to build a Zero-Turnover Sales Force. When you've achieved that, your turnover costs are going to plummet. So what's the big deal? Why do we need to devote a chapter to the cost of sales force churn? This short but important chapter is necessary because you need to understand where you are now and what it means if you're going to move ahead. In a practical business environment, a sales executive should have a feel for the actual cost to the company when its sales force is in a state of flux.
Of course there's also the bottom-line damage that results when someone remains on the job but is lost, bored, burned out, poorly trained, or simply the wrong person for the job. We'll deal with that later in the book. But more importantly, there's a very real cost every time someone jumps ship or you give him or her the boot, and that's what we'll examine here.
THE STAGGERING DOLLAR COST OF SALES FORCE TURNOVER
The actual dollar cost of sales force turnover can be staggering. For example, if a salesperson making $50,000 a year bolts a company or gets tossed out, given that the rule of thumb for calculating employee exit costs is 150 percent of annual compensation, the replacement cost for that person is $75,000. Now multiply that by 10 salespeople per year, which is not an unusual turnover rate for even midsize companies, and that company has $750,000 in turnover costs. Then again, if it's an even larger firm and it has 100 turnovers per year, we're looking at a big fat $7.5 million in sales turnover costs every single year.
Think about it: Could it be that your company's policies—even your personal management style—are draining millions of dollars from the corporate coffers in turnover costs alone? Absolutely. And sales force churn will cost your company in other ways, some of them hidden, that most sales executives never consider.
THE VARIABLE COSTS OF TURNOVER
There are plenty of other costs that can be figured in, above and beyond the 150 percent rule, every time a salesperson bails out or is fired. For instance, if you take the yearly or quarterly revenue you've budgeted for that person's accounts, divide it into a weekly amount, and then multiply that amount by the number of weeks the position is vacant, you'll see the amount of revenue that is being lost.
And keep in mind that while someone else may be covering those accounts until you bring a new body into the fold, the position is still essentially vacant, because the fill-in cannot possibly devote the same amount of time and energy that a full-time salesperson would.
There's also the potential for loss of revenue from the fill-in salesperson's regular list while he covers for The Departed.
Plus, revenue can be lost if the person who leaves was part of a big proposal or critical project. If the project falters significantly, that cost alone can be staggering.
Finally, there can be missed opportunities for revenue production as the new hire ramps up to speed. Many companies find that a new salesperson will function at only about 25 percent of potential for the first month or so, and at only about 50 percent for perhaps the entire first quarter or even longer.
But squandered opportunities and lost revenue are only the tips of some very muscular icebergs. There's the cost of finding that new person in the first place. Advertising, recruiting agents, Internet costs, and the time spent by your human resources crew to generate interest in the job opening and process résumés have to be included. If you cost out the time spent on all the picky little chores that have to be part of the recruiting and hiring processes, it can easily hit many, many hours for every position filled.
Do you psychologically pretest your applicants? How about drug screening? Do you do credit and background checks? Are the applicants legally qualified to work in your country? All these things cost.
Furthermore, the new hire has to be trained to sell your product or service your way. Larger companies need to indoctrinate new salespeople into the company culture. Needless to add, these time-consuming but necessary activities chew valuable pieces out of many people's schedules.
Then there are what I call the desktop costs of hiring new salespeople. These include all the support tools they'll need, some of which don't cost much on their own (although some definitely do), but which collectively add up to an impressive pile of piastres that has to come from somewhere. Such costs include the time your security, I.T., and support people spend on setting up I.D. cards, desktop computers and laptops, employee e-mail accounts, individual phone numbers, company credit cards, cell phones, pagers, vehicles, business cards, and other personalized bric-a-brac. If you have to rearrange a bullpen, repaint an office, or purchase or redeploy equipment and material for a satellite or home office, those tasks have to be done by someone, and they all cost money.
ONE MORE COST TO CONSIDER—YOU!
There's one more cost to consider when a salesperson hits the road to somewhere else and it's among the most important in the sales department's budget: your time as a manager.
I suspect that you are not blessed with an abundance of spare time. If you're any good at what you do (and I know you are), even when you discover a few unclaimed minutes lying around, you gather them up and whip them into some kind of useful activity.
How much of your time goes into making sure all the elements of the new-hire process come together? What would you do with that irreplaceable time if you didn't have to spend it working new hires into your sales force? After all, the new person is of no real value until he or she is in the fold, provided for, trained, and ready to rock. The cost of your time in managing the addition of new salespeople is hard to calculate, but it's incredibly important.
What are we going to do about this?
First, we're going to put away the calculator and Tylenol.
Then, we're going to put together a sales force that you can reliably expect to remain on the job, pleased to be there and productive for a long time to come.
Do the math concerning the cost of sales force turnover at your company. You should be able to work it out for your competitors, too. No matter what the damage, it's good to know where you stand.
Get a handle on how much of your time is spent recruiting, interviewing, hiring, training, working up, and mollycoddling new salespeople. What's the hard cost of that time to the company? What's the soft cost in hassle to you?
Punch all those numbers, even the little ones, into a presentation and show it to the Big Cheese. Demonstrate how a Zero-Turnover Sales Force erases many of those expenses. Remember that the bottom line is top of mind for anyone in the big office, and that by identifying ways to eliminate unnecessary expenses, you go to the head of the line as a valuable, problem-solving manager.
Excerpted from The Zero-Turnover Sales Force by Doug McLeod Copyright © 2010 by Doug McLeod. Excerpted by permission of AMACOM. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Meet the Author
DOUG MCLEOD (Scottsdale, AZ) has spent more than 30 years in the marketing, sales, and communications industries. His experience includes all levels of the sales process—from street-level selling to strategic marketing and sales management to business ownership.
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