We’ve all heard the news - there’s a massive problem happening in sales - quota attainment has been in a steady decline for years.
When reps aren’t hitting quota, retention becomes an issue. If the company can’t make them successful - if reps can’t get commission cheques - they tend to leave.
This leads to another headcount to fill, another territory untapped, another $4K spent on recruiting, and another quarter of reduced productivity as they ramp.
So as sales leaders, what do we do?
We throw spiffs. We do team outings. We celebrate wins. We buy a foosball table. We do our best to create a good culture and environment so reps will stick around. But is that the right approach?
Most of these are expected and are certainly not a competitive advantage. If you really want to get your reps to stay longer and maximize their contribution during that time, put down that ping pong paddle and focus on your onboarding metrics.
SaaS metrics 101
We’ll come back to onboarding metrics in a moment.
But to understand onboarding metrics, we need a crash course in SaaS metrics first.
In SaaS businesses, we use the bowtie funnel a lot to visualize the sales and customer process.
The first part of the funnel is your Customer Acquisition Cost (CAC), going from awareness to purchase.
The second part is the customer advocacy piece, going from implementation to expansion, which will drive lifetime value (LTV) of that customer to your company.
Metrics are derived from this bowtie funnel, and both venture capitalists and SaaS executives use these metrics as key indicators of the health of your business.
The more effective you can drive purchases (CAC) and the longer you can keep customers (LTV efficiency), the healthier you are as a SaaS company.
Over to onboarding metrics
Why don’t we apply the same concept to sales reps and onboarding metrics?
The first part is the hiring funnel, moving prospects from interview to hire. This is the “CAC” equivalent, or the cost & time it takes to find, recruit and hire a new rep.
The second part is the development piece, once the hire is made, and moving reps from onboarding to promotions. This is the “LTV” component of the rep retention equation.
The problem is that many don’t look at retention as a flow. They look at it as “Here’s our onboarding. Here’s our training. Here’s your quota/territory”.
Retention isn’t an onboarding metrics considered at this stage. Yet in SaaS, your team responsible for onboarding and implementation has already got “renewal and LTV” top of mind.
If you want to have great retention, long term performance, and value from your reps, it actually starts with amazing onboarding.
Again, let’s assume you hired the right person. The key to driving LTV of that rep is the three stages - onboarding, on-going development, and retention (defined by culture and promotion paths). But if you haven’t nailed your onboarding, the risk of that rep leaving will go up immensely.
The 8-step process for how to create great training and better onboarding metrics
Great onboarding drives tremendous ROI across your onboarding metrics and increases rep LTV in a few key ways:
- 69% of employees are more likely to stay 3 years at your organization when you provide a great onboarding experience.
- Employees ramp 34% faster when you extend your onboarding program longer.
- 77% of new hires who hit their first performance milestone had formal onboarding training.
With that in mind, here are the 8 things you need to do to build a great onboarding process that drives the right onboarding metrics.
1. Start with the end in mind
Align your onboarding to quota attainment as the end-state onboarding metrics you want to hit. After all, that’s how your company pays its bills, so it should be the north star for all your onboarding and subsequent onboarding metrics.
2. Measure your leading indicators
Map out milestones for your reps to hit, all the way up to quota attainment, so you know early if you’re on track. These onboarding metrics should roll up ultimately to quota attainment, so ask yourself the question: what measurable things do reps do between day 1 and full quota? Then make those your onboarding metrics.
3. Train on market knowledge
Many companies start onboarding with the sales process. I think that’s wrong. Have reps understand the company mission, vision, values, and the market you operate in. This will set them up really well for the next step...
4. Train on customer knowledge
It’s essential to have your reps understand who your customer is and why they bought. Far more important than product or sales process knowledge. Have reps read case studies, watch customer videos and listen to a series of call recordings that led to that outcome - the discoveries, demos, executive alignment, negotiation, implementation. Rather than just shadowing a rep for a day or two, where the learning is heavily based on what meetings they may have, a better way to absorb knowledge is by listening to how an entire case study evolved.
5. … THEN train on product knowledge
After the rep understands the customer, the challenges you solve, and the value you bring, add the product into context. Which products or solutions help solve the challenges that customers are having, and specifically, how, what were the use cases?
6. Give reps just enough sales knowledge to be dangerous
Now you’re getting into the meat of the sales process. How do you identify leads and accounts? What’s the prospecting playbook? How do you conduct a good discovery? How do you conduct a demo? Space out the sales knowledge throughout the onboarding period (beyond the first two weeks). Do reps need to understand proposals, contracts, and negotiation tactics on their first week when, realistically, they're not going to need it until a few months in?
7. Practice, practice, practice
Add a lot of practice in your onboarding. I think reps should be on the phone within their first week. It will have them taking onboarding more seriously and that your boot camp is not a 2-week party. Have them practice their elevator pitch, their attention grabbers and value statements. What’s more, build in these practices as sales onboarding metrics. Have them practice mock discovery calls, whiteboarding sessions, and demos. Have them go through certification. The more they practice, the more comfortable they’ll get with delivering your message.
Continuously refine your onboarding process as cohorts go through it to achieve better and better onboarding metrics. Find ways to speed up your onboarding metrics. Is there a correlation between how early reps get on the phone and closing their first deal? Is there a correlation between time to certification and time to third deal? You need to analyze these onboarding metrics and understand which exercises and activities during onboarding are driving key results.
It’s important to think of onboarding as having a significant impact on retention. Just like onboarding clients to your software/product, those critical first months might determine how long a rep will be productive for your company, ultimately driving LTV for you. And to track those objectives, it’s critical that you track the right onboarding metrics and hit your number.