Sales force turnover matters

Sales force turnover matters

We’ve recently had the opportunity to work with a sales force in the oil and gas industry. Today the U.S. oil and gas industry is experiencing a tremendous boom … and because of this fortunate development, the oil and gas industry is facing a talent shortage – including in Sales.

As the demand for energy increases according to Bain, “the dearth of skilled technical talent poses as much a threat to the industry’s ability to meet demand as the decreasing availability of oil and gas reserves.” Bain identifies five factors contributing to the shortage of technical talent: rapid industry growth, highly specialized and experienced jobs, an aging workforce, constraints on supply, and rising technical complexity.

The report goes onto share “this impending shortage of technical talent represents the greatest corporate challenge” to the industry.  It is interesting to note the talent shortage is also apparent when it comes talented sales reps.

Right now, some companies in the industry are seeing significant sales force turnover. While an aging workforce accounts for some of the turnover, that is only a piece of the puzzle.  An additional reason behind the sales force turnover stems from companies raiding competitors’ sales teams.

This is easy in an industry where many of the sales people are located in a handful of geographies – making it easier for sales people to join another company without uprooting themselves and their families.  It’s a trend we saw in the ‘80s in the Silicon Valley where people were able to go “up and down the street” moving from one software firm to the next. That same competition is occurring today in the oil and gas industry, where where operations are concentrated in certain geographies, like Texas, Louisiana, and North Dakota.

So for companies facing high sales force turnover, how do you stem the tide? Better yet, how do you turn it around? Money is part of the answer. Compensation packages must be in line with the industry – but just “buying” sales reps with significantly richer compensations packages will likely result in losing them when a better offer comes along.  Three additional initiatives that have a positive track record for addressing the sales turnover issue are:

As the U.S. economy turns upward, other industries will face the same sales force retention challenges that the oil and gas industry presently is encountering.  For all companies – losing top sales people to competitors is something they never can afford.

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©2012 Sales Horizons™, LLC

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About Richard Ruff

For more than 30 years Dr. Richard Ruff and Dr. Janet Spirer - the founders of Sales Horizons - have worked with the Fortune 1000 - such as UPS, Canon USA, Smith & Nephew, Boston Scientific, Owens & Minor, Textron - to design and develop sales training programs. During his career Dick has authored numerous articles related to sales effectiveness and co-authored "Managing Major Sales", a book about sales management, "Parlez-Vous Business" which helps sales people integrate the language of business into the sales process, and "Getting Partnering Right" – a research based work on the best practices for forming strategic selling alliances. Dr. Ruff received his Ph.D. in Organizational Psychology from the University of Tennessee and a B.S. from Rennsselaer Polytechnic Institute.
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