What’s ROI of sales representatives and why it’s so important

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22 June 2022
Commission ICM/SPM ROI technology

Why identifying the best sales representatives and keeping them in the company is important to both your team’s morale and your company’s bottom line?

ROI – definition

ROI – Return On Investment, is a method used to assess the profitability of IT, marketing and training projects. ROI allows you to estimate the ratio of the profits achieved to the investment costs incurred by the company.

We know this phrase: the best investment your business can make is people. We will add: sales representatives in particular. Unfortunately, most organizations do not see the real impact of their best employees until they leave – and the cost of replacing them is often high. Therefore, maintaining effective sales representatives is the key to growth and success.

How much does an employee cost?

The entire recruitment and HR team spends countless hours to recruit the best fitting people to your company. They look for people needed at the moment in your company and who will fit with the team and will work for a common success. So what happens when a good, trained and experienced sales representative leaves for the competition?

 

The ideal employee attrition rate should be less than 15% per year.

 

Average business loses 29% of its sales representatives each year.

Companies that pay competitively have 50% lower sales turnover.

 

Only 55% of newly hired sales representatives are successful in their first year of work.

 

The cost of the employee’s turnover

Hiring a new sales representative costs about three times his/her salary.

Sales representatives typically perform best after the first year of work, with a peak between 2nd and 3rd year of work in the company.

Top sales representatives have the potential to increase team productivity by 20%.

Solutions for turnover of sales staff:

  1. Check the competition.

Compare the performance and salary of sales representatives with your  competitors from the industry. Maybe you just pay not enough. Or maybe money is not the problem?

  1. Encouragements and coaching.

Identify what will be able to motivate each sales representative and improve their performance. Maybe instead of higher commissions, an employee needs extra insurance or additional payments to a child’s school?

  1. Balance of commission and sales territories.

When sales territories are well planned, sales representatives perform up to 20% better. Therefore, check what establishing of sales territories is about – we wrote about it in our previous post.

Control the results

Check the results of the sales department employees on an ongoing basis. Thanks to this you will be able to react early to a problem or individually appreciate the top performance of the best employees. Invest in software that allows you to create and automate sales plans, sales territories, payment of commissions for employees and their real-time preview, and what is important – eliminate 99% of the errors that occur in public available spreadsheets. Ask SANDS Partners or Xactly about Xactly Sales Performance Management.

Statistics sourced from Sales Management Association, B2C and Xactly Insights.

Do you have more questions? Let us know! Our headquarter is located in Wrocław market square and we have good coffee in our office. Check here for details.

This article was created by our partner, Xactly Corporation and published with their approval.

Xactly is leading the way in Sales Performance Management, enabling businesses to unleash their true Sales Power. Check for more information:  https://www.xactlycorp.com 

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