What Your Open Sales Positions Really Cost You

Any opening at a business in the residential building products industry is costly. Any day you don't have a salesperson filling it, you are potentially losing traction and money. But, there are many other ways unfilled positions hurt your company.

Immediate Costs

First, you have to find, hire and train a new employee. The costs for those few things alone are in the thousands for even junior roles. Delaying hiring isn't going to make them go away.

Secondly, the output of the former employee stops immediately. Which means a loss of revenue and territory gain during the period it stays open.

There is always an impact on the team members left behind. They may be asked to take on more customers or territory. Employees can shoulder the extra responsibility for a short time, but letting it drag on has very negative impacts.

Lastly, usually, when someone leaves a company, a few may follow suit.

Continuing Impact

When you have an opening you can sometimes react from fear and hire the wrong person. This compounds the issue because you likely won't be keeping an ill-fitting employee which doubles your costs of hiring, training, etc. So, don't hire from a place of scarcity for starters.

Secondly, acknowledge the fact that you will be losing sales for a bit. According to David Skok, a blogger for entrepreneurs, it takes an average of 11 months for new sales reps to break even. The main takeaway is that even a great salesperson is not going to immediately start churning out ROI. I would say in my experience you can plan on at least a quarter for superstars and more likely somewhere in the 6-11 month range.

If other employees or managers are asked to take on extra responsibilities and territories for too long, you run the risk of losing them as well. While it is good for them to train and assist your new sales rep, don't make them take on too much for too long. Also, if it is a long-term situation, you need to consider giving them additional pay.

Your management performance will likely be impacted – first from hiring, interviewing and training the new employee and then from putting out little fires while everything settles back to normal.

Customers will notice the change – some can be fiercely loyal to their reps and may react quite poorly. Make sure you are prepared to step in and smooth feathers. Help your new sales team member figure out the best approach for these customers or you risk losing both the employee and sales. And you should accept that some customers may leave just based on the change.

Big Picture

When you tally everything up and consider easily measurable and hard-to-gauge ways a salesperson vacancy impacts your business, the picture should be clear.

Consider the hard numbers. For someone making $30,000, 16% of salary is the average cost of turnover. When you look at experienced sales reps making $50K-$75K the cost is more like 20-30% of a year's salary. So it pays to make sure you hire well and quickly.

The key to overcoming this challenge is to take it positively. See it as a chance to create a better team, and act quickly. The sooner a new hire can be made, the better it is for the department.



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