In 2002, Gallup polling tackled a timeless question, one that’s been bugging sales managers for as long as they’ve existed: what should your sales team turnover rate be? Is it too high? Too low? If you’re tired of combing through listings of sales people for hire and want to take those sales recruitment firms off speed dial, then you’ll need to finally answer those questions. So what’s the normal sales team turnover rate?
Gallop writers Benson Smith and Tony Rutigliano wrote in 2002:
“One sales manager told us that in his company the right number was 10%. ‘How did you arrive at that?’ we asked. ‘Simple,’ he replied. ‘Our CEO told us that 10% is the right number, and I am not about to tell him any different.’
His CEO held a similar view to that of Jack Welch, the dynamic and revered former chief executive of General Electric. Welch said on many occasions that every year the bottom 10% of his organization needed to be replaced.”
We know what you’re thinking. I’ve already heard that Jack Welsh quote, just tell me what a normal turnover rate looks like! Since “normal” and “ideal” are loaded terms, let’s go with average turnover instead. Unfortunately, there’s no consensus there either. Some estimates have annual turnover rates as low as 22%, while others say turnover rates are closer to 40%.
If you’re a sales manager, don’t worry about what a normal or average turnover rate is for sales jobs. Instead, worry about who is leaving your company. If all of your sales people turnover comes from your lowest 30% of earners, then there’s nothing to worry about. But if you’re losing top earners regularly, then you need to take immediate corrective action (and we’re not talking about simply finding new sales people for hire). Gallup’s studies concluded that the goal for sales managers is clear: ensure that close to 100% of your turnover comes from the bottom 25% of your sales force.
If your turnover rate only includes your lowest earning sales people, then a high turnover rate might actually be healthy for your company. And if not, then perhaps it’s time to look for new sales managers instead of looking for more sales people for hire.