John Care Workshop: Calculating The Cost of Losing an SE & Retaining your Team
Last week, Vivun hosted PreSales author, industry legend, and thought leader, John Care, for a workshop on how to reward and retain PreSales to avoid the great resignation.
In case you missed the session or are interested in revisiting the information and lessons, look no further than this post.
To start, let’s check out the state of PreSales.
The industry is experiencing exponential growth and success, leading to highly qualified talent pools and demand for open recs to be filled ASAP. With over 1.8M current PreSales employees across 206K companies and a 6% year-over-year growth rate reported on LinkedIn, PreSales has never been hotter.
In our most recent Winter ‘22 Benchmark Report: The War for PreSales Talent the growth number is even higher. PreSales leaders reported that their teams grew 47% from 2020 to 2021, and they project their teams in 2022 will grow 44%. This reflects that the most growth-oriented companies were included in our survey and the mentality in PreSales is full-steam ahead.
PreSales leaders need to be prepared for:
- Skyrocketing growth and advocating for increased headcounts to the C-Suite
- Hiring, onboarding, and scaling top PreSales talent
- Actively fending off churn and retaining team members
Estimate the Total Cost of Losing a High Performing SE to Understand their Value
On a fundamental level, PreSales leaders need to understand the value of talent to recruit while also fending off the great resignation, and we can by estimating the total cost of replacing a top performing SE with a framework developed by Care.
To do the exercise, Care asks leaders to estimate the short- and longer-term impact on their business and their team (assume there is minimal excess SE capacity elsewhere). Consider all costs such as: replacement costs, opportunity costs, overall team impact, soft costs (morale, etc.)
The derived formula is Cost = 2.2 FBC + 0.93 Quota
Where: FBC = Fully Burdened Cost = On Target Earnings plus 40%
SE’s OTE = $150K
40% of 200K = $60K
FBC = $210K
Quota = $5M
Cost = 2.2 FBC + 0.93 Quota
Cost = 2.2 ($210K) + .93 ($5M)
Cost = $5,112,000
(Normal data is between 3 to 7 million dollars/euros/pounds.)
You can also use this sheet to help you calculate the cost of losing an SE and can reference Care’s book on SE Management for more info on the formula.
Now that we’ve realized this hypothetical top performing SE—if lost—would cost the company and PreSales team over $5M, we can start to view loss of talent in not just a qualitative fashion but how it will directly affect the bottom line. And given the state of PreSales in 2022, top talent is being actively recruited, with offers in their inboxes promising more money and opportunity, so investing in actively preventing churn should be a number one priority. And the cost of this priority can be surfaced through Care’s formula.
This is an excellent figure to share with the C-Suite leadership to help them quantify and quickly get onboard with initiatives like increased headcount, promotions, investing in coaching, and compensation hikes.
To avoid losing top talent, let’s review Care’s “The 3 + 1 Rules of SE Leadership”.
Rule #1: Develop and Serve Your People
Care says, “Your #1 job is to help your SE team become even better SEs, and then to help them grow and to expand beyond the traditional SE role. Most managers can readily grasp the develop concept (and HR will certainly give you a major assist in that area), but the serve concept leaves many struggling. Yes—you are the boss, so organizationally and culturally they do indeed work for you, but the key question is how can you work for them? There is far more to be gained by making every team member 10% more effective, than by making yourself 10% more effective.”
To help apply Rule #1, Care developed a mnemonic called RADAR (Recruit, Attract, Develop, Advance and Retain). Everything you do around Rule #1 should have at least one of these items as its focus.
Recruit – build up the pipeline – internally and externally
Attract – actually get those people onboard and into position
Develop – make those people better
Advance – how do they progress—in or outside of your org
Retain – make sure they stay (within the company, NOT your org)
Use this template to see how you’re doing with each of your employees.
Then SE leaders need to create a SE Value Proposition for their org which asks two questions: Why join? Why stay?
Care says, “Very few organizations ever formally write that down, and even fewer use it as a marketing and recruitment tool.” He cites the software company, Service Now, as a company that embodies the SE Value Proposition.
Rule #2 Run Your Business as a Business
While most sales organizations do a fantastic job of measuring and monitoring the opportunity pipeline and deal progression with tools like Salesforce, most of those measurements revolve around sales revenue metrics. Yet SE organizations rarely set any metrics to measure their internal efficiency, and if they do it’s across multiple spreadsheets, making it difficult to get data that will have an impact.
To get the stats needed for PreSales to be run like a business, Vivun’s platform—Hero—let’s leaders surface team insights, delivering metrics that matter like win rates, support ratios, and efficiency. That way when leaders are in meetings like QBRs, departments won’t be swayed by the loudest voice in the room but rather hard data that often provides a different perspective on deals that sales to easily commit.
Rule #3: Serve Your Customers
Care says, “SE teams are unique within companies in that they have multiple customers, each equally important depending upon the situation. It is a balancing act between the account managers and sales leaders that you work with, the end-user customers themselves who actually buy your stuff, and for many companies, the network of partners who directly or indirectly resell your services. You need to keep these customers happy, without necessarily doing everything they want when they want it. I’ll note right now that serving does not mean saying “yes” to everything.”
Apply these insights in your org!
Quantifying the real value of an SE and what it means to lose them is at the very heart of understanding why Care’s 3 Rules are critical to the success of PreSales teams. With the templates provided, you can take action to assess your team today and attract the top talent you desire.
Practice Rule #2 when you run your PreSales team as a business with Hero by Vivun.
Want to learn more from John Care? Check out his latest book for PreSales Managers.