True Impact of Sales Attrition and the Sales Rep Boomerang
Ah the boomerang in sales talent, we hear about it pretty often. A sales professional left the organization for greener pastures only to find out that the grass wasn’t greener on the other side. Sure enough, 9 months, maybe 18 months later, the sales professional returns to the patch of what they thought was brown, to continue marching on at their original organization.
It happens all the time. What’s surprising about it is that sales managers and leaders talk about this scenario with pride, as if they’ve succeeded at something. Really the only thing that they’ve succeeded at is not retaining their employees.
Even if the sales professionals come back, it’s likely because that the other org was simply worse than the one they left and they didn’t want to risk another short stint on the resume. The devil they know is better than the devil they don’t.
So sales leaders, don’t fool yourself into thinking you did something great because you had a boomerang.
Not only that, we’ve never met one sales leader who has calculated the cost of a boomerang. So let me help with that and break it down for you really quickly.
To keep it simple we’re just going to look at it like an attrition, because that’s what it is. And we’ll assume that when the boomerang lands ‘back home’ they jump in on day 1 with the same production they had when they left, which is impossible by the way. It’s impossible because they’re starting fresh with minimal pipeline, even though they may know the product and industry. But we’re going to keep it simple. Here’s the breakdown:
This scenario looks at a software seller on a $650,000 annual quota who typically produces $540,000 in ARR. So also not at the top of the leaderboard, but productive enough to stay on the right side of good standing (debatable I guess).
To keep it simple just assume the rep ‘leaves’ on January 1.
2 months downtime: It will take you 2 months to fill the role, during this time there is 0 productivity out of this seat
12 months ramp: If you tell a head of sales that a seller who would generate $540,000 in ARR leaves on January 1st and they can get $200,000 out of that empty seat in the year, they will take it. We may be generous here. The $450,000 represents months 3-12 if the sales professional never left.
Pipeline transitioned: Sales orgs NEVER get as much value out of the pipeline of an exiting rep as they think, for many and obvious reasons, but we’ll say there were a couple good viable deals in this pipeline – $40,000.
So the raw bookings impact is $240,000 vs. $540,000. This is the $200,000 from the new seller plus the $40,000 in bookings that’s likely closed by other sellers on the team when the pipeline of the departing rep is distributed.
Customer LTV factor: ARR is not revenue. If your customer churn is ~15%, that ARR will be around for 7 years, so the revenue impact is calculated via (bookings * LTV). Don’t forget this little formula when looking at attrition!
Throw in a bit of recruiting and training costs (and by the way our estimates are way below what you’d find just about anywhere else searching for these stats).
Really the only upside is that when the boomerang lands, the ramp period for that ‘new rep’ should be shorter since they’re ahead of the curve on product / industry / customers / value proposition. So you could throw a couple hundred thousand on that line if you want to be aggressive there.
Your boomerang is easily a two million dollar problem.
Didn’t think so.
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