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More than 35 years ago, the insurance industry embarked on an intensive program to solve the problem of costly, wasteful turnover among its agents. Estimates at that time indicated that there was a turnover of better than 50% within the first year and almost 80% within the first three years. After the expenditure of millions of dollars and 35 years of research, the turnover in the insurance industry remains approximately 50% within the first year and 80% within the first three years.
What is the cost of this turnover? Nearly incalculable. Consider:
- the substantial sums paid new salesmen as salary, draw on commission, expense accounts, and so on, which are wasted when those salesmen fail to sell;
- the staggering company costs, in time, money, and energy, of recruiting, selecting, training, and supervising men who inherently do not have the ability to succeed; and
- the vast costs caused by lost sales, drop-outs, reduced company reputation, poor morale, permanently burned territory, and the like.
What accounts for this expensive inefficiency? Basically this: Companies have simply not known what makes one man able to sell and another not. As Robert N. McMurry has observed:
A very high proportion of those engaged in selling cannot sell….If American sales efficiency is to be maximized and the appalling waste of money and manpower which exists today is to be minimized, a constructive analysis must be made of what selling really is and how its effectiveness can be enhanced….We must look a good deal further—into the mysteries of personality and psychology—if we want real answers.1
It was the obvious need for a better method of sales selection that led us to embark on seven years of field research in this area. The article that follows is based on the insights we gained as to the basic characteristics necessary for a salesman to be able to sell successfully. Confirming the fact that we are on the right track is the predictive power of the selection instrument (battery of tests) that we developed out of the same research; see the exhibit “How Well an Instrument Measuring Empathy and Ego Drive Predicted Sales Success.”
Our basic theory is that a good salesman must have at least two basic qualities: empathy and ego drive.
This is an ARTICLE PREVIEW. As per HBR regulations, to continue reading register now at HBR.org or purchase a single copy PDF.