The High Cost of Haphazard Sales Onboarding
As the IT staffing industry continues to grow, services are increasingly commoditized by off shore competition and low-cost, high touch providers who focus on "skill marketing." As a result, IT staffing firms are (have been) feeling their margins being squeezed. To counter this, results based selling and the ability to sell business outcomes rather than features and benefits becomes the differentiator. IT staffing firms who figure out how to build an organization of salespeople who can differentiate themselves based on the ideas and insights they share and align pricing with the business outcomes or business results customers receive from using their service will win the day and grow profit margins. However, this transformation is not easy and it doesn't start by simply hiring experienced sales reps.
Analyst firm CSO Insights found that average quota attainment for sales reps in 2018 was 54.3% — far below the 2014 rate of 63%. And earlier this year, a number of cloud based software companies cited poor sales execution in earnings calls for missed revenue targets. One CEO stated that "new reps were only selling at 50% of the production as experienced sales reps and that they need to improve the support of [their] new reps with training and coaching to help them ramp and close new business.”
The underlying theme is that staffing firms must develop the internal capability in which they equip their sales teams with the skills and knowledge to stay on message across each stage of the buyer's journey. Not only that, they must develop this internal capability to the point that it is scalable, repeatable and predictable.
In essence, sellers must be "conversation ready." If that were not enough, they need to develop the internal capability of making this But the journey of every great salesperson becoming "conversation ready" starts with and ties back with your approach to onboarding including how they were onboarded into the organization. Sales onboarding impacts revenue attainment and revenue growth. Sales onboarding impacts market share. Sales onboarding impacts gross profit margins and employee retention.
In this blog post I'm going to share how the high cost of haphazard sales onboarding dramatically increases costs for IT staffing firms and stagnates growth.
The quality of your sales onboarding program defines sales rep productivity and sales effectiveness and plays a large role in achieving predictable quota attainment. When organizations fail to enable their salespeople with the skills, knowledge, competencies and capabilities to be "conversation ready," they miss revenue targets and struggle with employee turnover.
Unfortunately there is no such thing as a cloning machine where you can reproduce a carbon copy of your top performer. But, you should have a clearly defined target profile of your ideal sales rep including the target behaviors required to carrying out and execute the day to day tasks and responsibilities. I'm referring to behaviors that you can't necessarily teach but are part of your sales rep's DNA. Your target behaviors should align with your values and how your ideal buyers buy your services. Without this, you will likely struggle to determine what skills and competencies need to be built, what knowledge needs to be taught and what applied learning needs to take place.
Sales reps are hired to meet a sales quota and must be equipped with corresponding skills, competencies and capabilities. In addition, each new sales rep comes from a different background, comes from different work experiences, and possess different education levels and skill sets. The ability to understand and recognize this is important because the sales leader must have an understanding of how long it will take to ramp up a new sales rep to quota attainment. When sales onboarding is haphazardly designed it becomes extremely difficult for the sales leader and the organization to predict time to first deal, time to third deal and quota attainment. It's why many in the IT staffing industry say things like "If I hire 10 people I'm lucky if 2 are still with me 12 months from now." But it doesn't have to be this way.
Teaching new sales reps your company history, company service offerings and internal processes is important. However, sending your people into the field (from sales onboarding) to talk about your company, company history and service offerings or a candidate will NOT drive revenue and it certainly will NOT accelerate time to quota attainment. Instead, a great sales onboarding program that accelerates sales time to quota attainment equips sellers to go into the field knowing:
- Exactly who to call (buyer personas)
- Common problems and goals that are top of mind for targeted buyers
- How to engage buyers in conversations regarding their goals and challenges
- Exactly what to say and questions to ask
- How to respond to frequently asked questions
- How to respond to blow-off objections
- What to say in a sales prospecting email
- What to say in a voice mail message and so forth...
If your onboarding program is teaching your sellers to go into the field pitching your company service offerings and/or candidate skill sets or your recruiting methodology, your sales onboarding program has expired, much like that stinky carton of milk in the back of the fridge.
A great sales onboarding program also ties together all of the content including sales scripts, objection rebuttals, email and voice mail templates and playbooks and combines it with virtual role play scenarios, coaching and comprehension exams designed to develop the capability deemed vital to the salesperson’s success; hitting quota. This is what makes salespeople "conversation ready."
Without a sales onboarding program that incorporates the skills, competencies and knowledge that drives sales revenue and is tied to measurable, verifiable and irrefutable metrics that are reinforced over time through coaching, sales leaders are depending on the charm of their sellers or charity of customers to meet revenue targets. The problem with that approach is hiring the "George Clooney's" and "Jennifer Aniston's" of the world is not a scalable and repeatable solution.
The moral of this story is that IT staffing firms can’t assume that a strong economy and high demand for IT consultants automatically drives sales results. No sports team at any level fields a team for a game without consistent and on-going practice. Can you imagines a college or pro football, baseball, hockey or basketball team showing up for a game without practicing all week? That is absurd! Why would any sales leader let their people enter the field without proper practice and preparation? And why would anyone expect a positive result? You wouldn't, nobody would.
Finally, good sales reps can recognize a poor sales onboarding program. They also know that a poor onboarding program will likely translate into a lack of success which translates into turnover. They decide to move on. Without seeing a clear vision for success and hitting their personal goals, sales reps-GOOD sales reps, leave.
In work done by Dr. Bradford Smart, author of Topgrading, the estimated cost of a bad hire ranges from 5 to 27 times the amount of the person's actual salary. According to SBI research, the average cost of a miss-hired salesperson exceeds $500,000. These costs include recruiting, salary, benefits, and lost customer opportunities.
According to the 2018 Sales Compensation Administration Best Practices Survey, most companies consider a sales turnover rate of 15% to be ideal. How many sales leaders and IT staffing firms have a sales turnover rate of 15% or less? At Menemsha Group we've been working with one large IT Staffing provider who for years was burning through millions of dollars annually on sales turnover. By revamping their sales onboarding program we've helped them reduce their turnover costs by 70%!
Eliminating these risks and negative outcomes starts with effective sales onboarding and continuously training and coaching your sales reps.
What steps are you taking to improve your sales onboarding and reduce employee turnover? How is your sales onboarding accelerating time to quota attainment? Let's start a conversation in the comments section below.
Also be sure to check out our step-by-step guide to making successful sales onboarding repeatable and predictable.