The Hidden Cost of Sales Staff Turnover: What Would Halving Your Turnover Be Worth to Your Business?

One, I was in a meeting with a company I'd done some work with well over 10 years ago, and I was talking to the sales guy and the general manager.

And it worked out that essentially only one person, only one person h- of the 15 or 20 salespeople who were there 10 or so years ago was still there.

I went, "What the hell? Where's all that knowledge gone? Where are the people?" Well, I know they've gone to other places, or they've retired, or they've joined competitors, or they got annoyed with the, the CEO, or whatever it was that they left.

But the point is, only one person, in fact, this person was the junior at the time, and now they're the senior.

And then I was talking to my other client, David Horlock, who we were talking about, um, the work we'd done with 13 countries across Asia, and the fact that we'd broken sales records three years in a row.

Um, and David made the point, "Lee, it wasn't just sales records we broke," and it was $120 million business.

We went up 40%, 35% and beyond.

As he said, it gets harder and harder to keep breaking records if you've just broken a record and then you've got to break another record the next year.

But he said, "Lee, it wasn't just sales revenue, it was profit.

We 5X'd our profit." In other words, what happened was not only did we get sales up, but because we also had better staff retention, we had better staff retention.

And as he said, when you have to keep replacing staff, particularly sales staff, well, one, new people, new people aren't as capable of selling bigger deals as experienced people.

Experienced people are able to sell bigger deals and also protect the margin better, so the contribution to profit goes up.

And then David started talking to me about, "Lee, you know, you've heard of the rule of 72, haven't you?" I went, "Yeah, yeah.

In finance, they talk about it." In fact, the rule of 72 talks about years it's going to take to double your investment or years it's gonna take to double the amount of capital you've put in there.

Um, so the rule of 72, talking about, uh, staff turnover, says that years to double is the number 72 over what's the annual turnover rate.

So let's say if the annual turnover rate in the sales team is 15%, and I think that's conservative because sometimes it's as high as 30% and even 50%, 72 divided by 15 means 4.8 years.

So as I said, as applied to staff turnover at a 15% annual turnover, the cumulative number of staff departures over time reaches a whole team of roughly every 6.7 years.

Now, let's, let's just calculate this out.

What 15% actually means, let's say you've got a sales team of 20.

So if it's a sales team of 20, annual turnover rate of 15, that means three people a year are leaving, which therefore means over three years you've just lost nine people, which is almost 50% of your team.

Over five years, 15 people have gone, which is three-quarters of your team.

And of course, um, over 10 years, you've lost 30 people.

In fact, you've replaced your team one and a half times over 10 years.

So straight away you go, "What are we doing to, one, make sure we recruit the right people? Two, then induct them.

Three, then train, train, retrain, retrain, manage, motivate, keep them engaged." Now, at this rate, on 15%, as I said, you'd replace the equivalent of a 20-person team every 6.7 years.