How onboarding impacts sales force productivity
It's no secret that onboarding tends to be a "have to" instead of a "want to," but how do you make sure you've optimized onboarding, so your time and money is well spent?
Throughout this blog we will be talking through the cost of replacing a sales rep, what the current trends are for sales onboarding, sales onboarding best practices, and, finally, how to build your sales onboarding plan.
Let's begin by posing a couple of questions for you to ponder:
- Could you use onboarding to address the following situation?
- If so, how?
It costs approximately $115,000 to replace a sales rep. Yikes! That's a scary big number. But it's the average tab when you factor in separation costs, replacement costs (including lost time in the field) and costs for acquisition and training.
What's more, the same source cites an average turnover rate for salespeople of 28%. Research tells us that, on average, it takes from 5.8 to 7.8 months to replace a rep. The average is over six months, 6.2 to be precise.
What's up with this? Unfortunately, what's going on is business as usual for too many companies. Of course, reps will continue to come and go.
But how can you onboard reps in a way that will lead to productivity quickly, optimize job satisfaction—and extend their tenure so you can maintain sales momentum and reduce the costs of acquiring and training of new reps?
We posed those questions at the start to underscore that those are exactly the questions savvy employers are asking—and answering—to propel new reps toward productivity.
So relax. You don't have to come up with answers because we're going to discover them together in this blog.
We'll set the stage by giving you a few eye-opening facts about sales and sales reps.
Then, we'll take a look at how street-smart employers are using onboarding as a tool to shorten the path to productivity for new sales hires. We'll examine trends, look at best practices and wrap it all up with a blueprint for helping you build a program that puts new reps on the fast track toward productivity.
First, let's look deeper into the sales environment so we can understand the nature of the challenge.
Commerce—buying and selling—by consumers as well as businesses (buying and selling from other businesses) is what keeps the economy rolling along. If we consider just the B2B piece, we're talking about 4.5 million sales agents in the United States alone.
A fascinating piece from The Brevet Group offers a peek at selling's underbelly. For example:
- "Nearly 13% of all the jobs in the U.S. (1 in 8) are full-time sales positions. . . . Today, salespeople are more important than ever, and the sales profession is nothing like the negative stereotype of the past."
- "Over one trillion dollars (that's nine zeros) are spent annually on sales forces."
- "55% of the people making their living in sales don't have the right skills to be successful. This stat is not so much about the lack of sales talent as it is about the inability of most sales organizations to provide sales reps with the specific tools and training they need to be successful."
- "Continuous training gives 50% higher net sales per employee."
So let's connect the dots. Healthy commerce depends on sales reps. But turnover among salespeople is high, and it costs more than $100,000, on average, to recruit, hire and train new ones. What's more, it takes months for all of this to happen.
What's wrong with this picture? What will it take to integrate new hires into an organization in a manner that will:
- Speed them to productivity
- Create commitment to the organization
- Reduce the stress and costs of frequent turnover
- Lead to success and job satisfaction
- Create more effective long-term employees
The answers may well be right under the noses of harried sales executives who are overlooking and undervaluing onboarding as a practical, and very doable means to an all-important end. In part two of this series, we'll review the onboarding landscape and look at current trends.
Sales onboarding trends
Earlier, we noted the average cost to replace a sales rep ($115,000!), took a look at some under-the-radar facts about the sales profession and began to connect the onboarding and sales force productivity (SFP) dots. Now, we'll survey what companies are doing with onboarding and highlight four important sales onboarding trends.
In a report on the state of sales productivity in 2015, Salesforce found that companies are pouring more and more money into increasing the effectiveness of sales reps. The report includes an infographic compiled from research by Docurated showing that 79% of survey respondents listed improving rep productivity as a key driver in meeting revenue targets.
What's more, the typical organization shells out $24,000 per person on improving productivity, even though nearly half (49%) have no or limited means of measuring productivity. Only 40% of respondents were trying to improve productivity through better training and onboarding.
All of this in the face of evidence that a carefully crafted onboarding effort has a hefty bearing on bringing reps to productivity quickly.
Consider this from the Sales Management Association:
"Sales forces effective in salesperson onboarding – getting new salespeople up-to-speed efficiently – enjoy surprising productivity advantages over their peers, our recently concluded research shows. These firms have 10% greater sales growth rates, and 14% better sales and profit objective achievement. But onboarding isn't easy – just 40% of firms with formal programs believe they're effective – nor is it consistently practiced."
According to February 2015, research, structured programs applied consistently outperform those rated lower in these categories by 37%. That means that successful programs trim 3.4 months from the average ramp-up to productivity for new sales hires.
In the light of this evidence in support of formal, structured onboarding, are more companies looking to it to help solve the SFP puzzle? Are they revamping onboarding programs to strengthen them? Leveraging technology? Making programs more intentional and giving them time to work? Let's look at some trends.
Here are some highlights from an Onboarding Trends Report from Impact Instruction Group:
A combined 71% of survey respondents are currently in the process of updating their onboarding programs, and 86% of respondents consider their updates to contain moderate to major changes.
Over 73% of respondents indicated that the largest catalysts driving change to their onboarding programs are to accelerate new employees' performance and improve employee retention and loyalty.
When it comes to technology, a combined 67% of respondents deliver less than 40% of their onboarding through technology-based solutions. However, 16% deliver more than 61% of their onboarding programs through technology-based solutions.
The majority of respondents (62%) use a company-wide intranet for their technology-based solution for onboarding, with eLearning coming in second at 55%.
With more than 80% of respondents reporting changes to their onboarding as moderate to major, it seems clear that companies are awakening to onboarding potential. It follows that they are also likely retooling their programs to include proven best practices, which we'll take a closer look at in Part III of this series.
Sales onboarding best practices
Earlier, we noted the average cost to replace a sales rep ($115,000), took a look at some under-the-radar facts about the sales profession, connected the onboarding and SFP dots and reviewed the trends in onboarding. Now, in part three we'll share some best practices companies are using to get results.
Onboarding is essentially a commodity function. That is not to say your program doesn't need to be tweaked and customized to fit your culture and business. In fact, we'll see later how some big-name companies do exactly that.
However, the fundamentals of good onboarding do not vary much from business to business and industry to industry.
In other words: Don't reinvent the wheel.
Successful onboarding is as much about imitation as it is innovation. "Best" practices are called that for a reason—they've been proven successful.
There are plenty of lists out there of what one authority or another thinks is best. So rather than give you THE list of best practices, which probably doesn't exist anyway, we suggest you check out the links below for a cross section of what's proven to work in various situations.
Before you do, keep in mind a couple of fundamentals.
We learned from the research cited earlier that structured formal onboarding programs applied consistently outperform those rated lower in these categories by nearly 40%. And we know that firms onboarding in this manner lops off almost three and a half months from the ramp-up time to productivity for new hires.
That means that you have a useful yardstick for measuring the lists of best practices you will find out there.
For example, one list of best practices we like comes at the end of a report titled "Onboarding New Employees: Maximizing Success" from the SHRM Foundation, an affiliate of the Society for Human Resource Management. But there are others. You may find these useful as well.
Onboarding advise from:
So now that you've seen how other companies add their creative twists to the fundamentals of good onboarding, you're ready to explore the final component of this blog: how to build a killer onboarding program of your own.
Now, we'll show you how to use basic onboarding building blocks to create a program that integrates new hires effectively, simultaneously laying the groundwork for commitment, satisfaction, and retention.
3 Steps to building a killer sales onboarding plan
By this time, you've learned a lot about onboarding. We've pointed out the surprisingly high cost of replacing a sales rep ($115,000), looked at some little-known facts about professional selling that underscore the importance of onboarding and reviewed onboarding trends and best practices.
Now, it's time to apply all you've learned by putting together a plan for your version of onboarding success.
Most companies under-invest in onboarding programs and focus too much on product training for new hires. This often leads to longer ramp times. (Ramp time is the time it takes for a new hire to reach full productivity). Ramp times can be 2x to 5x longer compared to best practice. This results in a serious hit to productivity, costing companies millions of dollars.
"It doesn't have to be this way. ". . . Successful onboarding programs . . . Can reduce new hire attrition by 15 percent and increase new hire productivity (e.g., achievement of goal) by 40 percent in the first year." This same source details onboarding planning by laying out three essential components or building blocks.
1. Program principles and goals.
Defining the goals of your onboarding program is an all-important first step. Why?
Because ". . . Outcomes reflect what key stakeholders expect from reps at the end of an onboarding program (e.g., at six months on the job) and along the way. Guiding principles should also be established early to ensure program design work aligns with leadership vision."
2. Program strategy.
Three strategic pieces—content, structure, and measurement—make up this second building block and are necessary for all onboarding programs. Think of content as the "what" of onboarding. In other words, what needs to be accomplished to be successful.
Embedded in content are the nuts and bolts of navigation (how to get things done), products and business (audiences, product benefits, competitive advantages) and sales (the specific sales methodology of your company).
The structure is the "how" of content deployment. Mastery of each piece of content must proceed through three steps—knowledge, practice and execution in the field.
Measurement is the "how much" piece of an onboarding program—how much content should a new hire master and by when? Milestones and Key Performance Indicators (KPIs) are the two components of measurement.
3. The execution engine.
This is the true machinery of success—the real work of implementing, sustaining and integrating an onboarding program. While space limits our explanation of these five parts of successful execution, you can review all of the details of each step here:
- Establish clear roles and responsibilities
- Build supporting and sustaining processes
- Utilize onboarding-related tools
- Establish governance structures
- Integrate sales onboarding with other programs
It has often been said that the only constant changes. This seems especially apt for the endless cycle of recruiting, hiring, training and ramping new sales representatives up to productivity. Because, once you've done that, some of them will leave (for any of a multitude of reasons, many beyond your control).
However, you can influence some of those reasons.
By carefully building a strong and intentional onboarding program, you will be doing all you can to speed new hires toward productivity. At the same time, you will be paving the way to greater job satisfaction for employees, increased commitment to your organization and lower turnover—and therefore lower recruitment and hiring costs.
What happens when you combine technology and onboarding best practices?
Check out the YouLearn mobile app we built for one of our partners.Watch now!