Adding new talent to your sales team to accelerate growth may appear straight-forward, yet many companies fall short in keeping talent and getting them to an acceptable level of productivity within a year.
If you are part of a B2B organization with a long sales cycle, it can take more than a year for a new hire to generate enough sales revenue to pay for themselves — even though the cost of a new hire effects your bottom line on day one.
To that end, hiring a bunch of sales people at once can be a drag on profitability, unless you can get new hires generating revenue faster.
In a “buoyant” economy, even companies that aren’t planning to hire new sales talent, they still are hiring to address attrition and the deliberate churn of poor performers. Pile on the factors of recruiting effort, to guarantees to on-boarding, hiring a salesperson is an expensive endeavor.
A third of new salespeople won’t succeed.
The cost of a new hire flameout is much higher than their salary when you factor in recruiting and training costs, travel & entertainment, management time, and lost revenue opportunity. A rule of thumb is that it will cost you about 2x the fully loaded base salary.
If you are hiring a number of salespeople that will make a difference in your revenue goals, it stands to reason that their costs will also make a real difference in your profits.
The Impact of Reducing Time to Revenue
If, for example, your firm has a sales cycle of 9 months, reducing the time to revenue from nine to five months can reduce your net cost of a new hire to break-even in the first year — which means faster growth in the business.
How to Speed Up Revenue Generation
At heart, I’m a (simple) math geek that likes simple explanations. To speed up revenue generation from new hires, you need to reduce the number of months spent:
- Learning — Develop an agile approach that adapts to new hire skill sets and that goes beyond knowledge transfer and product training
- Waiting — The faster you introduce new hires to customer situations, shadow learning and selling opportunities, the sooner their real learning begins;
and, Increase the number of months they are selling — start them off with smaller, short sales cycle opportunities, or late-stage ones and give them intensive coaching and training.
It a simple math problem: Fewer months Learning & Waiting + More months Selling = Revenue Sooner
We aren’t suggesting that you lop-off items from your on-boarding plan to reduce on-boarding time. Rather, we suggest that you re-orient how salesperson on-boarding is spent. If your on-boarding plan hasn’t changed much in the past few years, it may be time for a fresh look toward shortening the line to revenue.