Improve retention by breaking the sophomore/junior-year curse

Jim Ninivaggi, Senior Vice President of Business Development, Brainshark

Sales rep attrition remains a vexing issue for organizations — with companies losing about one out of every three reps each year, according to The Bridge Group. Nearly half of that turnover is voluntary, and the impact reverberates right down to the bottom line.

The effects are especially painful and pronounced when the sophomore and junior-year “curse” strikes — that is, when reps leave voluntarily in years two and three. Let’s explore what that means and how to break the curse.

Doing the math

By some estimates, it takes two or more years for companies to recoup expenses put into new sales hires. So when reps leave before that juncture, the company loses out, and it’s back to square one, investing in a next new hire. What often isn’t considered, though, is the additional loss of revenue resulting from the impact on the rep’s “lifetime value” — the future revenue reps would have produced had they stayed.

Keep in mind, reps typically don’t hit their full productivity run rate (the expected revenue of a fully functional rep) until after their second or third year. Losing a rep before they achieve that run rate is incredibly costly, forcing organizations to start all over again with a replacement rep — who is going to take two or three more years to build up to the departed rep’s run-rate performance.

By way of illustration, let’s assume “Rep A” was on course to build up to a target $1MM run rate in $250K annual increments over four years, but leaves in the middle of year two, after producing just $300K. Three problems arise: First, revenue production stops in year two while a replacement (“Rep B”) is hired and trained. Second, the company has lost Rep A’s potential future revenue. Third, it must start the cycle all over again with Rep B.

What could have been

Let’s look at how the loss of lifetime value would play out over five years:

Production if Rep A had stayed

   $250K (Year 1)

+ $500K (Year 2)

+ $750K (Year 3)

+ $1MM (Year 4)

+ $1MM (Year 5)

Total Revenue/ Lifetime Value = $3.5MM

Actual production with Rep A departing and Rep B replacing

   $250K (Year 1)

+ $300K (Year 2; Rep A Leaves)

+ $250K (Year 3; Rep B Starts)

+ $500K (Year 4)

+ $750K (Year 5)

Total Revenue = $2.05MM

Loss in lifetime value $3.5MM – $2.05MM = $1.45M

Breaking the curse

Let’s say two years into the job, Rep B leaves as well! This may indicate a recurring problem that is a continuous source of lost revenue — showing how important it is to get reps through their critical sophomore and junior years.

First things first: is your organization afflicted by this vicious cycle? It’s important to examine when and why reps leave, and if voluntary turnover peaks in years two and three, it’s time to break the pattern — and the curse.

Stop the revolving door

Reasons for turnover vary, and companies should conduct exit interviews and periodic surveys to ferret out causes of dissatisfaction. Then, sales enablement and the sales team at large — along with other departments, as appropriate — can take action to improve rep longevity.

Here are five common reasons for turnover in reps’ sophomore and junior years — and ways to avoid them.

  • Learning needs not met – All too often, after initial onboarding ends, formal learning opportunities are sporadic. In fact, according to SiriusDecisions, more than one-third of reps cite a lack of learning paths as a prime reason for leaving. Sales enablement leaders might protest — “We’ve built continuous learning paths!”  Even so, reps don’t take advantage of them. That’s why it’s important to move from a reactive learning model (where reps participate on their own) to a proactive approach, where learning — ideally in bite-sized modules — is pushed to reps at regular intervals, on their preferred devices, with the expectation that competencies will be measured and mastered.
  • No coaching culture – While much has been written on the importance of sales coaching —  and its link to retention and revenue — 77 percent of companies still say they provide too little of it, according to the Sales Management Association. Some organizations are attempting to improve coaching frequency and quality with dedicated sales coaching positions, focused on rep improvement early in their tenures.
  • Unrealistic and unfair quotas – At the start of a new fiscal year, it’s common for companies to assign the same full-run-rate quota to newer and tenured reps alike. This can set up newer reps for failure and job frustration. Instead, sales and sales ops should consider factors — such as historical data of rep production by tenure — to set realistic quotas for junior reps.
  • Amorphous career paths – A lack of growth and advancement opportunities can cause productivity to stagnate, as reps look for greener pastures. To motivate young reps, provide clear growth opportunities, enable standouts to be mentors, and have learning and assessment paths to help reps advance up the ladder.
  • No pats on the back – Your salesperson of the year likely won’t be a first-year rep — and that’s OK. Still, look for ways to encourage and celebrate meaningful successes from less-tenured salespeople (e.g. “Rookie/Sophomore of the Year,” “First Million Club,” etc.) to keep them engaged and excited.

There’s no magic involved in breaking the sophomore/junior-year curse — but rather, by finding, addressing and eliminating sources of dissatisfaction, organizations can retain reps longer and enable them to be more productive and successful.

Jim Ninivaggi is chief readiness officer at Brainshark, Inc., a leading sales enablement solutions company. Jim has more than 30 years of experience driving B2B sales productivity and previously led the sales enablement research practice at SiriusDecisions. You can follow Jim on Twitter at @JNinivaggi.