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The Cost of Replacing a Sales Rep

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 time and money is well spent? This is Part I in our series "How onboarding impacts sales force productivity (SFP)". Throughout the series 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 own sales onboarding plan.

Let's begin by posing a couple of questions for you to ponder. 1) Could you use onboarding to address the following situation? 2) 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 according to one source, 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%. To make matters worse, 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 series. First, we'll set the stage by giving you a few eye-opening facts about sales and sales reps.

Then, in upcoming posts, 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. But 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 (https://www.internetretailer.com/2015/04/13/millio...).

A fascinating piece from the 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 matter 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.

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