Within sales organizations, companies often perceive salespeople as a necessary evil, as opposed to an asset. If dollars and cents were attached to that asset, a company’s hiring practices may be taken more seriously and the loss of a salesperson may be seen as an expense.
If you hire three people and even lose just one of them, the average cost can easily be over $100,000. As a business owner, if you haven’t bought into the seriousness of making a bad hire, perhaps it’s time to take a closer look. Consider just some of the costs:
- Base salary
- Commissions paid
- Value of the territory
- Resources invested to find new people
- Lost opportunity cost during transition
- Customer loss to competition
Even for a small company, the numbers attached to these categories can be significant. Often, business owners will choose to brush the whole issue off as the cost of doing business. Making a bad hire is not about the “cost of doing business.” It isn’t prudent to accept the role of a salesperson as being transient. A revolving door will cost you more in sales and profits than you could imagine. This is a number that should be continuously tracked in your financial reports in the same way you track other costs.
In my previous articles, we discussed the fact that business owners should devote the time into making a good hire. At the end of the day, it's an exercise in elevating a company’s perception of their salesforce. As a business owner, you don’t want to leave money on the table. If you want to find out what your cost of a bad hire is, reach out to your local Sandler Trainer.