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Experience Sales Advice

Stop the Churn

I never thought I would ever write a public service announcement, but that is exactly what this post is going to become. STOP the CHURN! I aim this message at companies that are sacrificing long-term talent for short-term gain. Whether you are a newcomer to my web site or follow me with regularity, you know I mostly aim for the sales side of the audience; but not this time. I point my finger in absolute disgust at companies that are using talented workers as throw-away pawns in an effort to forge some semblance of profitability.

My routine is to regularly “stalk” websites, postings, and even job listings in order to stay abreast of changes in sales and the competition. I am seeing something I find unsettling. A trend among companies to hire hastily and hope for the best. Are they expecting exceptional talent at low-ball prices? What is the reasoning? The fiduciary responsibility of any company’s executive leadership is to the stakeholders, whether those stakeholders own part of the company or not. This responsibility is being ignored. I often use the phrase, “Churn-n-burn” when I talk of a salesperson’s desire to sell and get out quick. Well, it is apropos when it applies to those that are sacrificing bottom-line dollars to make themselves look good.

I will give you two examples I have personally observed without revealing the names of the innocent.
FIRST: I have followed this particular company over the past 18 months and have seen advertised an opening for a account manager/sales representative listed 6 times for the same area! You do not have to have higher math skills to understand the people have only lasted three months! More likely 45-60 days since there will be some time period necessary to fill the position.

SECOND: Another company decided they would branch out from their inside-based verticalized sales model for a sales model based on territory. This is a model I embrace, so it is one I fully understand and believe in when a company’s strategy is to go to the next level of revenue. They brought in sales management to execute this strategy,  which they in turn brought in territory-based sales people. For those not familiar, this type of change takes time–a long time to see end results. So what was the outcome? Within 4 months the senior VP was let go and within 5 months the personnel he brought in was gone; some sales people with as short tenure as 45 days. Seeing a pattern here?? The second example is pretty extreme, but none the less true.

This is costing companies thousands of $$, let alone the cost in terms of brand damage. Think I’m wrong? Ask any reputable company what a revolving door of personnel does for company reputation. I wrote an article, “Hiring the Right Salesperson” where I mentioned the cost associated with hiring the wrong person. Think about how costly it is to the company in both tangible and intangible elements. Hire for the long-term. Hire and treat employees as you do your product. Use “Life Cycle Management” theory and apply it to the employees. If, as a company, you continue to go through not only sales people, but any employee you must understand your variable costs are going to be skewed. Is that the overall intent, screw with the variable costs at the right time to make the contribution margins look better? Let it be understood that this will catch-up on the backside–BIG TIME!

Show this to your company’s executives. See their reaction. Was it snuffed? I’ll let you decide.

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Happy Selling!

Ed Warner

4 replies on “Stop the Churn”

Ed,

I spent roughly 18 years in high tech. When I first got into the business the selling mind set was investment approach. Management understood the mindset of your clients. A bad decision on the part of your potential client in buying the wrong solution would stifle a career or could cost him a job. When I was hired by one company I was told here is a bunch of non-producing accounts, most of which had never purchased products before, go see what you can do. On my first visit to one of these companies I told the VP of Engineering I was there to invest in his company and earn his business. He asked me if I had not read the news paper recently about the bad economic times this particular industry was going through. My response was yes I had and none of my other clients had money to buy either but my company had products that would allow him to roll out applications faster and much less expensively than he was doing then. Over the next 3+ years we did more than $30M in sales. We did it by understanding his business and providing solutions that solved problems and saved money. The company I was working for was eventually acquired and I went on to another high tech company and did the same with another client. At one point I got calls from my customer asking me who to contact within his own company to get things done. I was able to do this because I was given the time to understand my customers business, get to know the personnel and build confidence we could deliver.

I went on to do three startups and saw the sales environment change. I’ll call it the Cisco model of selling became the rage. Weekly sales targets and everything geared towards the short term. What executives failed to understand was the difference in a company that dominated its market with commodity products that in any many cases weren’t available elsewhere to a company who had products that might be significantly better in some ways but were seen as a risk to a buyer in going outside the norm. I learned another dynamic while working for the startups. You had the pressure to deliver sales because of the nature of limited funding that a startup has while at the same time trying to figure out what the market was for that companies products was in the first place. In my case I learned the defined market was too limited to be successful and had to find new potential markets. In today’s environment that’s a formula for failure for a company.

The reason the company you mentioned is churning sales people is because senior leadership doesn’t understand the relationship between marketing and sales. Seven years ago marketing produced brochures. I suspect in too many companies that is still true. The problem I see is hiring a six figure sales people and not having a marketing department that can keep them busy calling on prospect clients. The role of marketing should be to generate leads and research and understand potential markets and then steer sales in the right direction. Sales should then track production to make sure leads and the appropriate markets are being worked and if not corrective action taken. Your churn and burn company is hiring sales people for the contacts and relationships those people may have instead of building a business model that will sustain them over the long term.

Hi Ed,
There is plenty of truth in what you say.
But in this economy all businesses
are in hyper-Darwinian mode.
I’ve seen many experienced and competent
employees dumped because management sees them merely as an expense. And when the top line numbers are plummeting in a recession, management’s knee-jerk reaction is to remain profitable by reducing overhead. It’s short-term thinking but that’s (unfortunately) what many companies are doing simply to survive.
The flip side is that employers may be setting themselves up for a big problem in a few years; When the economy is back on track they will no longer enjoy the current buyer’s market for talent at reduced prices. It will be interesting to see how companies deal with rising labor costs for experienced workers– especially top-notch salespeople– when better days come.

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