Like every organisation, you know the importance of selecting the best candidates when hiring sales professionals, helping those employees develop into your top performers, and retaining them over time.
This concept is at the heart of what we refer to as ‘effective retention’. In our research and ongoing work with top organisations, we do not simply predict and evaluate only performance or only retention. ‘Effective retention’ is looking at these two factors together and understanding that as an organisation you must focus on retaining sales people who are performing well.
It’s not enough just to retain people; it’s not enough just to hire top performers.
The key to achieving effective retention is gathering systematic data and using a systematic process for hiring. With systematic data about your specific company, you can build accurate predictive analytics that consistently maximise ROI. Predicting effective retention is the ultimate goal of most systematic selection processes.
In order to best understand effective retention and how it can be achieved through systematic data and processes, let’s break down the concept in terms of retention and performance.
Predicting Retention when Selecting Sales Professionals
In over 35 years of gathering data and research, we have found a number of data points that typically predict retention.
For example, previous job stability often predicts future retention. People who stay in their previous jobs for longer periods of time tend to be more easily retained than those who were jumping around prior to applying to your organisation. In many cases, past behaviour predicts future behaviour (although predicting retention cannot be achieved with only one data point – the person may have had good reasons for changing jobs).
Once you start collecting systematic data about your own organisation, you will be able to see patterns in terms of which types of candidates tend to stay at your specific company. This will reflect people who are ‘stayers’ and who fit well with your workplace culture.
We have found that compliance with a systematic selection system can double retention, compared to skipping components of it. The best predictor of retention is to follow every step in your predictive selection process.
Predicting Retention Only?
If you are only concerned with retention, it’s easy to predict and improve it… if you don’t include metrics having to do with performance. Simply hire stable, dependable, loyal people who fit in with your company culture and who will stay indefinitely.
Of course, that isn’t necessarily what you want for your business. After all, the loyal and dependable employees may not be the sales professionals who will perform and generate real results.
If you only focus on retention, you may find you have a performance problem.
Predicting Performance when Selecting Sales Professionals
As discussed in previous posts, top performing competitive sales professionals share a number of critical attributes:
- They are self-managers
- They are highly motivated by achievement and challenge
- They are high energy, with significant drive and ambition
- They require middle-to-high levels of independence.
Using a selection tool specifically designed for selecting high performing sales professionals, such as our POP™, can help organisations select the top performers from the candidate pool.
With systematic data collection, these selection tools are refined over time to be customised for your specific organisation based on how well employees perform in your sales environment. If your sales environment is more competitive or relationship-based, for instance, you may find nuances in the types of candidates who generate the most sales.
With a focus on predicting performers, organisations can hire top performers for their specific sales environment.
Predicting Performance Only?
We have worked with many organisations who were only predicting performance when selecting sales people – and we have seen the retention problems they have struggled with.
Related: Warren Buffett’s Talent Criteria
Without any thought to retention, organisations will spend time and money hiring and training top performers only to have them leave a short time after. Possible reasons include that they are not being challenged enough, they don’t like the compensation strategy, they don’t like the workplace culture, they aren’t being given the right level of independence and/or coaching, or they feel as though they don’t have progression opportunities.
Whatever the reason, continually losing top performers is an expensive and ill-advised strategy.
Predicting Effective Retention
It should be obvious by now that the solution is to predict both retention and performance together – predicting ‘effective retention’.
If your company can not only select the top performers, but select those who are likely to stay at your organisation for a long time, you will experience an exponential increase in profitability. Effective retention reduces the expenses of hiring and training (giving you bottom line growth) while improving overall sales and productivity (giving you top line growth). It’s a win-win!
To select for effective retention you must have a systematic process for hiring that can be replicated and will be followed, and you must collect ongoing data to track the types of people who are retained in your culture and the types of people who are performing well in your culture.
Effective Retention Example:
About Company A:
- Hires 1 000 sales reps annually
- 50% retention rate at 12 months
- Average sales rep performance is R3 500 / month (850 average reps in the company)
- Top sales performers average R7 250 / month (150 top performers in the company)
- Turnover costs are R10 000 / rep.
ROI of Improving Retention ONLY:
Company A improves retention by 10%, translating into an additional 100 reps retained at 12 months.
- R4,2 million in additional sales revenue / year
- R1 million in turnover savings
ROI of Improving Performance ONLY:
Company A hires 100 more top performers; however, 50% will terminate.
- R4,35 million in additional revenue / year
- No turnover savings
ROI of Improving Effective Retention:
Company A improves effective retention by 10%, translating into an additional 100 reps retained and more top performers hired.
- R8,7 million in additional revenue / year
- R1 million in turnover savings
Improving effective retention translates to double the ROI compared to addressing retention or performance independently.
While it is harder to predict both retention and performance at the same time rather than either one individually, the results speak for themselves.