Understanding the Impact

In the past year, the technology industry has experienced a range of challenges associated with employee tenure. From ‘The Great Resignation’ and ‘Quiet Quitting’ to the recent waves of layoffs, many organizations have experienced instability. There is no more direct causation between attrition and a company’s growth than within a sales organization. These individuals are responsible for new and maintenance revenue and a loss can have serious impacts to the long term financial health of a company. 

Although the full cost of attrition can be hard to measure, as there are many qualitative factors that contribute, we’ve designed a Rep Attrition Cost Calculator that you can download below to assist with some of the hard sales-oriented data. 

We often hear of companies losing Enterprise Account Executives due to compensation. For example, Company A refuses to pay Employee more money on their base salary or create a more generous variable compensation plan and then the Employee leaves for another more lucrative opportunity. While the immediate effect of losing the rep is obvious, the long term financial impact to the company’s annual revenue and quota attainment can be tremendous. 

Using our calculator with the above example, the attrition of an EAE who carries a $1M quota, could potentially result in an $800k negative to the company’s revenue (based on a 4 year LTV). 

How to Soften the Blow

In understanding the potential ramifications of losing a rep, it’s even more important to prevent attrition and move quickly to fill the open seat when it happens. Below are some ideas to soften the blow. 

1. Update compensation plans annually using market rates as the determining factor, not standard small percentage increases. If your top rep can get a $20k base salary increase on the market, but is only offered $5k more internally, it’s an easy decision for them to leave. 

2. Proactively give healthy compensation increases. Do not wait for an employee to resign before offering them a compelling raise. 

3. Offer career pathing and/or promotion alternatives instead of wage increases if budget is constrained

4. Invest in corporate culture, employee happiness and professional development to ensure employees are feeling fulfilled in all other aspects of their role

5. Utilize our Attrition Cost Calculation to advocate for better offers for top candidates

6. Finally, if you are forced to backfill, partner with a recruiting firm to ensure a top quality hire is made as fast as possible