One thing I’ve noticed when talking to hiring managers about sales testing is that today they are, almost without exception, highly cognizant of the costs of making a bad hire. This is a big change from when I started this company in 1986. Then it was fairly common to speak to even senior managers who just had no clue about how expensive it can be to hire a sales dud.
When one calculates the financial costs of a failed sales hire and one looks at the potential financial upside of hiring more sales winners, the dollars spent on sales tests are like the proverbial ‘drop in a bucket’. This is nothing new. What is new is that unlike managers of the past, modern hiring managers know this intuitively and therefore have no argument with it.
Nevertheless, I am sure there are still at least some hiring managers who might see the few dollars spent on sales testing as an unwarranted and unjustifiable expense. So, in the mindset of words that ‘bear repeating’, I thought I would spell out a few areas that show, both from an upside (potential profit) and downside (potential loss) perspective that the financial justification for a sales test is clearly a ‘no brainer’ decision.
Because the dollar cost of using a sales test varies dramatically, as does the number of tests used when hiring a single sales person I am starting with a couple of simple assumptions. Our service tends to be quite inexpensive. The customized version of our service works out to be about $32 per report. Assuming you test 8-10 candidates to hire one sales person I have pegged the total cash outlay for a single sales hire at a nice round $300.
So the question you need to ask yourself is whether you can justify spending $300 to not only avoid a bad hire but also to ensure a good hire. You decide!
Cost of a Hiring Failure
I’m starting off with my big gun here, the cost of hiring a sales person who fails and is terminated. Here is a link to our Cost of Failure Calculator. You can input your own specific numbers and be as conservative as you like. You will see that even if you are really conservative and look at things very narrowly a bad hire will cost in the tens of thousands of dollars at a bare minimum.
Working with Borderline Candidates
Hiring a real dud like the above situation vs. a top performer is easy, in the sense that what you are dealing with and how you deal with it is pretty clear. What is more common, or at least more difficult is when you realize you’ve hired a rep who is borderline-not quite bad enough to let go but just not making it. You can often avoid this with a sales test but if you find yourself in this situation the test results provide insights about training, motivating and managing the rep. These insights save you valuable time.
Higher Sales Higher Profits
Have you ever run the numbers to compare the sales and profits from a top performer vs. an average performer? Every business is unique of course, but the financial difference, if looked at over a one to two year period is significant. A major benefit of using a sales test is the ability to hire sales candidates with the same success traits as your top performers. A sales test that is customized around the traits of your top performers is a very precise tool for truly understanding who has the potential to be a sales rock star.
Time is Money
I looked it up and this famous phrase was indeed coined in 1748, by none other than Benjamin Franklin. If it was true then it is even truer today. Using a sales test saves time in many ways. Below I’ve listed just five.
- Time saved by working with high potential vs. low potential salespeople.
- Time is saved because test results show you how to manage, train and motivate from day one.
- You save time by identifying and vetting job candidates much faster which is critical in the current tight job market.
- By testing early in the process, a sales test enables you to devote your valuable interview time exclusively to top candidates.
- Using a sales test with your current staff identifies not only the success traits of top people but also clearly tells you if you have been wasting time training someone who will never thrive.
The Bottom Line
How much is your and your manager’s time worth? What did your last failed sales hire cost you? How profitable will it be if your next hire is a top performer?
Does the cost of a sales test seem justifiable to you?