Let’s talk about the real Elephant in the room- Sales Rep Turnover.What does sales rep turnover cost your rental company annually? I can tell you it’s costing you a lot more than you think.
The rental industry like many industries has an average turnover rate of more than 30 to 40% each year. According to workhuman.com and integritysolutions.com replacing the average sales rep cost a company 1.5 times their annual salary and commissions. Within the equipment rental industry that equates to more than $150,000 per year in total costs per lost sales rep. What makes up these expenses you ask? To break it down, the costs come from a number of different places. First, it comes from hard costs like: hiring ads, recruiting and candidate selection. Future expenses come from less tangible costs like lost time and effort while leaders conduct interviews, coordinate training and complete new hire on-boarding. As Paul Petrone stated in his LinkIn Sales Blog for November 2021 “Leaders goals are hard to hit if they are focused on retention, turnover, hiring, interviewing, on boarding and training”.
Lastly, it’s hard to judge the exact cost of lost deals, credits from miscommunications, lost account activity and inactivity from the new hires. In addition, what is the unspoken cost of companies that no longer have a relationship with your new rep and stop doing business with you all together?? Imagine the impact of your organization top 2 sales reps leaving on the same day! Those two reps most likely account for 70-80% of that market revenue for you. According to Depaul University, it takes 189 days to replace the average sales rep. In addition, it takes over 90 days to train and have a sales rep affectively on their own. A recent Gallup.com article cites that sales rep turnover is a $1 trillion loss to the American economy every year!
Successful sales in the rental industry are largely based on relationships. Sales rep turnover and valuable loyal customer relationships are critical. Many rental companies have their sales reps sign non-compete agreements in an attempt to minimize the impact of losing key reps to the competition. Unfortunately, sales rep's turnover can still have an extremely high impact on the overall success of an organization's revenue. Noncompete agreements might so become a thing of the past. According to NBC news “President Joe Biden’s push to ban noncompete agreements and limit a worker’s ability to leave their job for a competitor could cause a major shake-up..”
So, what causes the high sales rep turnover currently affecting the sales industry? As many of us have heard in exit interview poles, the number one cause for sales rep turnover is a lack of leadership. The second major cause to sales rep turnover is changes in the pay or commission’s structure. Many organizations notice a large surge in rep turnover shortly after a change in the pay structure or commissions payout errors. Once again, this is preventable, and it could simply be addressed by great leadership and proper coaching and communication. Third, sales reps stated that they often felt that their career development with clearly defined goals was important. Sales representatives wanted to work for a company willing to invest in their success. Reps stated they quit their jobs if training was not a priority for the organization they worked for. Sales reps felt that sales training, leadership training and skills development was something critical to their career and livelihood. Reps stated training made them feel they were valued and that they had a positive outlook and future with the company.
Henry Ford “the only thing worse than training your employees and them leaving is not training them and they decide to stay."
According to spiff.com sales blog on sales rep's turnover - 52% of sales reps (when doing an exit interview) stated that they had not had a meaningful conversation regarding their happiness and success with a leader in the three months prior to them quitting. This statement proves that many leaders simply assume “if you aren't complaining then nothing's wrong”. This is the equivalent of me deciding not to do an oil change on my car until after the check engine light has been on for at least a couple of months - it's just not a great formula for success. What’s the magic pill to prevent sales rep's turnover and increase customer loyalty? It's simple, well-trained leaders who invest in their sales reps and have regular meaningful communication. If you properly train your sales managers to be more engaged, more attentive and more people orientated. Your employees will feel more valued and less likely to leave. If you train your managers, how to best deliver and describe the commission package you will have less confusion about compensation. Lastly, if you invest in the training of your sales reps, you show that you were looking to increase, not only their sales skills but that they are valued. Your sales team will be less likely to leave or seek opportunities elsewhere. Furthermore, many rental companies feel that doing an annual sales training or sales summit is enough that people feel valued. However, as we can tell from the numbers above, sales training and management engagement needs to be emphasized at a minimum of once every quarter. Even if this is just a one day or half day training and interaction. Quarterly engagements keep the sales reps feeling valued and sharpens their skills.
Most rental companies don’t train because they don’t have the time to organize and develop the proper training materials - it’s time consuming. For the cost of an 85ft boom rental for a month you could bring in professional trainer or industry professional. For example, when you get sick you go to the doctor because he is the “professional” – this is no different. Call in a specialest to maximize the return on your management or sales training.
The rental equipment industry is a relationship-based sale. Repeat business is what keeps the industry alive. The turnover of sales reps in your rental company is costing your organization hundreds of thousands if not of millions of dollars every year in lost opportunities and increased costs. If you want to truly be successful in the coming years, sales rep turnover needs to be addressed. Having a profitable branch is not about finding a cheaper tire supplier or refurbishing a scissor lift. It's about retaining your people, training them, and maintaining a relationship with your reps and your customers.