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Avoiding Revenue Losses When Sales Reps Leave

When sales reps leave a company, their managers usually reassign their customers to other reps, yet fear sales losses during the transitions. A study in the Journal of Marketing presents a guide for choosing how to reassign customers to new reps by using data commonly available in companies’ customer relationship management (CRM) systems.

Studying a Fortune 500 company, researchers found that customer annual sales dropped 13% to 17% one year after sales rep transitions—over $10MM in lost revenue in the year studied. What type of rep should replace the previous one? As expected, new hires are less effective than experience sales reps in preventing sales losses.

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However, contrary to common belief, a “star” sales replacement with a past sales history superior to the incumbent, but from a different customer base, does not help as much as a “clone,” a rep who shares a similar background with the incumbent in terms of industry and customer experience. By choosing the right replacement strategy, the firm in question could have saved 40% of its revenue loss (up to $4MM) with better sales rep transitions in the year under study.

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