Last year, sales organizations on average replaced 25% of their total head count. For organizations with thousands of salespeople, and for those with far fewer, this results in a large need to recruit, assess, select, hire, on-board and train replacements who hopefully will deliver results that are better than those individuals that they have replaced. Considering that turnover statistics for sales organizations have remained relatively constant (depressing so) for the past 20 years, it would suggest that organizations have a great deal of difficulty finding sales talent that will both fit well into the organizational culture, and also, will perform up to the productivity standards set for new hires. Given the huge numbers in play here and recognizing the organizational imperative to drive organic revenue growth, it is not surprising that there is a fair amount of discussion, consternation and content about what can be done to improve the onboarding experience.
This of course makes sense in that every month of acceleration in the time to productivity in a typical company, the resultant revenue gain will be a pickup of perhaps $50,000 to $100,000 in revenue for each month that is shaved off the ramp up curve. In companies with recurring revenue business models, this acceleration in the time to productivity increases the enterprise valuation by $500,000 to $1,000,000 for each month for each new hire. With numbers like this at stake, it clearly and compellingly pays to get onboarding right.
Three areas of success
According to a January 2020 study by Michael Ahearn and Phillip Wiseman from the University of Houston published by the Sales Management Association (SMA), most company onboarding programs that were deemed to be effective by the survey respondents (there were many respondents that did not consider their onboarding efforts successful) focus on three areas of learning. These include characteristics of the role, the company’s sales process and product features. Less effective programs focus on competitor characteristics instead of product features. All of this makes sense of course in that imparting this knowledge to each and every new hire is a prerequisite for success.
What does seem disturbing, however, is the average length of time most companies spend on onboarding education compared to the amount of time necessary to grasp new learning. According to Harvard Business Review as well as other studies, grasping a new skill may well take up to 10,000 hours of practice to get to mastery. You may or may not subscribe to this theory in full, but given that most onboarding programs today are well less than 120 hours, there is such a huge gap between “mastery” and reality that it is hard to fathom that any new recruit is remotely on-boarded in a best in class fashion and ready to be in front of prospects and customers. According to Sirius Decisions, 18% of B2B organizations put new reps in front of customers on the first day. It is hard to make a case that this type of behavior makes sense in any circumstances.
Vicious vs. Virtuous Cycle of Onboarding
Our view is that effective onboarding is a critical leverage point in improving sales rep productivity, and done correctly, a major driver of increasing revenue growth for sales organizations. Of course, proper selection; hiring individuals with the requisite competencies for the role matters a great deal, as does ensuring that all front-line managers are properly skilled and trained to do effective coaching of both new recruits as well as their more experienced and successful reps. Further, effective onboarding must do far more than equip a seller with knowledge of characteristics of the role, knowledge of competitor behavior, and sales process.
The data suggests that what really must be imparted to the new recruits is the skill to engage in a value driven conversation during a discovery process. In addition, successful reps must be able to use information obtained during this discovery process and be able to connect the dots between the value delivered by their organization’s product or service applied to the customer’s problem or pain. This then must be customized by the buyer persona, delivered with compelling stories for impact, done in a natural, buyer friendly fashion. Doing this well is not easy, especially in today’s world of geographically dispersed talent, rapidly evolving market dynamics and investor demands for results.
Many onboarding programs fall far short of any of the above, resulting in an extension rather than a reduction in the time to productivity, and potentially producing unnecessary stress into the new recruit’s psyche, which increases the potential for this new hire to lose confidence and be at risk of exacerbating the turnover statistics. This becomes a vicious cycle as opposed to the proverbial virtuous cycle that we tend to strive for.
A thoughtful onboarding program, including knowledge transfer through classroom training, e-learning, direct field observation by their manager, coupled with technology to drive sustainment and engagement can dramatically improve the probability of success, and significantly shorten the ramp-up time for a new recruit. Yes, it will not happen without a meaningful investment of time and effort. But considering the alternatives along with the enterprise valuation metrics that can be gained, it is time and money well spent.
Best in class sales organizations get quite adept at communicating to customers the ROI that will result from proper adoption or use of their product or service. Perhaps we should take this medicine ourselves, and all get better at understanding that properly equipping our new recruits with much higher levels of initial readiness will result in revenue gains that are a step change for the firms that do it well.