Recruiting and retaining the best sales people could be the competitive tipping point that helps your business to succeed. Building a sales force with independent sales representatives offers many advantages for small to large companies.
Finding and keeping good sales people is fundamental in the medical sales industry. According to the US DePaul Centre for Sales Leadership, DePaul University, Chicago (for salary based sales reps) the average sales staff turnover per annum is 12 to 18% – with 24% of firms reporting turnover higher than 20%. Some specialty sales areas and for some companies these figures can soar as high as 100%. Now consider the potential turnover of Independent Reps on commission only. Regardless of the type of sales rep placed, high sales rep turnover can impact the bottom-line for your company.
Building a Sales force with independent sales representatives saves companies millions of dollars
A company can spend $3M annually for 20 Direct Salary Sales Reps
Consider the Company’s Savings of utilizing Commission Only reps versus Direct Salary Reps. The Estimated total cost of a direct Salary Sales Rep with a base salary of $50,000.00 is at $150,000.00 PER REP. In fact, consider the cost for recruiting, hiring & training expenses, salary, variable incentive compensation, payroll taxes & 401K contribution, paid vacation, insurance & workers’ comp, auto, travel, meals, computer & communications equipment, inside sales support…… 20 Reps x $150,000.00 = $3,000,000.00
Should you use your own Sales Managers to locate and align Sales Team Members?
Small Businesses may often start out utilizing key players of their team – even Principals such as Owners, VP of Sales, Regional or Territory Sales Managers. This can have a serious impact on sales as it takes significant time away from focusing on actual sales. According to DePaul: “Best estimates indicate that managers spend nearly 50% of their valuable time on recruiting, retention and rehire issues when they should be spending it helping their top performers excel and elevating the performance of the moderate performers in the sales organization.” Therefore, building your Sales force with independent sales representatives should include rep teams with management team members or utilize independents for management positions.
What does it cost to recruit a Direct Salary Sales Team?
Pursuing this further, recruiting fees range from $150,000-$350,000 for 20 Direct Reps. Certainly, recruiting and retaining the best sales people could be the competitive tipping point that helps your business to succeed. Nobody denies, effective sales recruitment that identifies sales team members who can deliver results is critical. Recruiting Fees can range all over the board depending on the variables of search agreements. These variables include quantity of reps, locations, hiring company and more. Additionally, it is important to consider many factors to obtain the best recruiting arrangement for your company. Recruiting arrangements can be based on a contingency agreement, contract, retained, or other creative arrangements.
Recruiting for Direct or Employee Sales staff members typically range from 15-35% of the first year’s salary. With this in mind, let’s look at some numbers for those that process better visually.
20 Sales Reps at $50,000.00 annual base pay for Salary Reps, plus Recruitment Fees = Total Investment*
(*without inclusion of other costs such as variable incentives, payroll taxes & 401K contribution, paid vacation, insurance & workers’ comp, auto, travel, meals, computer & communications equipment…)
|Direct (Salary) Reps Placed||Annual Salary (Reps)||Recruiting Fees|
(% 1st YR Salary)
(x # Reps)
|Recruiting Fees based on 1st year Salary||Total: Salary + Recruiting Fees|
|20 Sales Representatives||$50,000||15%-35%||$1,000,000||$150,000-$350,000||$1.15 M – $1.35 Million|
Additionally, successfully managing, training and compensating your sales team with creative commission structures goes further than simple recruiting. Generally, there are numerous critical elements to the success of your sales force – whether you are hiring direct salary or building your sales force with independent sales representatives.
Managing Your Independent Sales Team
In conclusion, whether hunting for new sales accounts or farming for added revenue from existing accounts, the sales environment is more complex today than ever before. Furthermore, recruiting and hiring terms need to be creative in today’s job market.