According to the Bureau of Labor Statistics, the national turnover rate reached an all-time high of 16.3 million separations in March of 2020. This was mostly attributed to a rise in layoffs and discharges, since businesses were unable to afford the breadth of their workforce.
So, what is the result of increased turnover in a post-pandemic job field and the already competitive nature of sales?
We all know that sales reps are held metrically to meeting quotas, number of calls, and appointments set. You might begin to imagine why turnover rates for Sales Development Representatives (SDRs) are uniquely higher than other industries. Competitive environments yield burnout and a desire to switch teams or fields.
SDR Attrition Rates — The Raw Numbers
In order to assess the expected attrition rate of Sales Development Reps, we must look back to pre-pandemic numbers. LinkedIn reported a worldwide turnover rate of 10.9% in 2017.
How did that compare to the turnover rates for sales development reps, given their highly competitive work environment?
According to The Bridge Group, turnover rates for SDRs averaged 34% in 2015 and 30% in 2017. Not just that, but the distribution of attrition rates is surprising. More than 1 in 10 companies experienced turnover rates in excess of 55% annually.
Both in the 2015 or 2017 findings, annual attrition rates for SDRs are three times higher than the average attrition rate for all industries (30% vs. 10.9%).
Reasons behind the High SDR Attrition Rate
There are multiple reasons as to why SDRs are constantly shuffling out and why the SDR attrition rate is so sky high. Here is a narrowed down list of reasons that I have witnessed lead to separations of SDRs:
- SDRs become frustrated with their work that can sometimes become repetitive and unsatisfying. They are mostly unable to set meetings and conduct efficient sales prospecting. Even when they do, attendance at meetings is lacking.
- Someone—normally a boss or supervisor—nags on SDRs to meet their quotas. They might even put them on a demeaning Performance Improvement Plan (PIP).
- The performance pay that SDRs expect is not coming in because they are underperforming. As such, they really only receive a base pay.
- The too much or too little problem. SDRs are either not given enough content, or given too much to read up on. SDRs feel forced to make calls with no know-how of what to say or they drown in a tsunami of content they can’t use.
What Does this Mean for your Sales Organizations?
First, let’s examine the correlation between attrition rates and company performance. The same Bridge Group survey finds the following statistics on this relationship.
The x-axis measures annual attrition rate and the y-axis measures the percentage of reps who meet their quotas. There seems to be a correlation between companies with lower attrition rates and higher percentage of reps meeting quotas.
Now, let’s put the SDR attrition rate numbers into perspective. If you have 100 people on your sales team, you experience a standard 34% turnover rate (14% voluntary and 20% involuntary), and each sales rep on the team has a quota of $1 million, then the annual cost for your company to replace sales reps is $20.2 million.
The Effect of SDR Attrition Rates on Quotas and Revenue
Between 2015 and 2016, Richard A. Rocco, PhD reported survey findings from the Center for Sales Leadership at DePaul University on Sales Effectiveness & Sales Acceleration. He found that
- Missed quotas happen frequently at a rate of 42%
- These missed quotas have a correlation with turnover—26.9% for inside sales and 25.7% for outside sales
- Reasons for turnover included voluntary resignation (50%), involuntary dismissal (33%), and retirement (22%)
When high turnover yields more missed quotas, it begs the question: how much money are companies losing annually by replacing new SDRs on their sales teams?
Well, the Center for Sales Leadership at DePaul University also concluded that that it costs almost $100k to replace an SDR. This includes the cost spent on training, acquisition, and missed quotas.
You need an engine that will not only deliver the right amount of content to your SDRs, but also personalized content that converts calls into qualified leads at a higher rate.
Most B2B Sellers typically hire candidates fresh out of college to staff their Sales Development teams. As a consequence, these junior SDRs don’t really know much about how business works in general, let alone in-depth knowledge of any industry or business operation.
Therefore, it is difficult for them to speak in a way that indicates they understand the industry and the role of the person they are calling, leading the prospect to believe that it is a waste of time to talk to SDR, let alone agree to a meeting.
SOMAmetrics Intelligent Prospecting (SIP) delivers the right information regarding the target prospect so your Sales Development Reps (SDRs) can carry expert level conversations with a senior executive and book a meeting.
If you can dramatically increase the effectiveness of your SDRs, you will see two benefits immediately:
- You will book more qualified meetings with fewer SDRs, reducing the challenge of SDR attrition
- Your SDRs will stay with you longer and have longer average tenure as their confidence and skill level increases, and as they begin to earn more in performance pay.
Read our other informative blogposts below:
Read the book The Radical Pipeline Strategy: How to Grow Pipeline and Revenue by Optimizing Sales Development. This book outlines tested best practices and implementation strategies that I developed while rebooting and building 65 SDR and Inside Sales organizations.