The biggest risk to any business

Salespeople play a critical role in the success of any business. They are responsible for bringing in revenue, closing deals, and ensuring that the company stays afloat. However, salespeople can also be the biggest risk to a business if they are not properly managed or trained.

According to research by The Brooks Group, 90% of all salespeople fail within their first year on the job. This high failure rate is a clear indication that there are significant risks associated with hiring and managing salespeople.

So, what are some of the risks that salespeople pose to businesses? Let's take a closer look.

1. Reputation Risk

Salespeople are often the face of a company. They are the ones who interact with customers, build relationships, and represent the company's values and mission. If a salesperson behaves unethically or engages in questionable practices, it can damage the company's reputation.

• According to research by PwC, 39% of companies have experienced reputation damage as a result of unethical behavior by their employees. Salespeople who engage in unethical behavior can lead to lost customers, negative reviews, and damage to the brand's image.

• A study by Edelman found that 53% of consumers say they have stopped doing business with a company because of poor customer service.

• According to a survey by Salesforce, 80% of customers say that the experience a company provides is as important as its products or services.

• The 2021 Edelman Trust Barometer found that 56% of consumers say they have lost trust in businesses during the COVID-19 pandemic.

2. Compliance Risk

Salespeople are often responsible for ensuring that their sales practices comply with industry regulations and legal requirements. Failure to comply with these regulations can result in fines, lawsuits, and other legal repercussions.

• According to a survey by The Sales Management Association, only 55% of companies have a formal process for monitoring compliance with sales policies and procedures. This lack of oversight can put companies at risk of non-compliance and legal issues.

• The Ponemon Institute found that the average cost of a data breach in 2020 was $3.86 million.

• According to a survey by Thomson Reuters, 39% of financial services firms have experienced a compliance-related fine in the past year.

• The 2020 Global Enforcement Report by TRACE International found that the average fine for Foreign Corrupt Practices Act (FCPA) violations was $16.9 million.

3. Revenue Risk

Salespeople are responsible for bringing in revenue for the company. However, if they are not properly trained or managed, they may not be effective in their roles. This can lead to lost sales, missed opportunities, and ultimately, a decline in revenue.

• According to research by CSO Insights, only 53% of salespeople meet or exceed their sales quotas. This means that nearly half of all salespeople are not generating the revenue that the company needs to succeed.

• The 2020 CSO Insights Sales Performance Study found that only 44.5% of salespeople met their annual quota.

• A study by Gong.io found that the average sales call-to-meeting ratio is 82:1.

• According to a report by Aberdeen Group, companies with effective sales training programs achieve 15% higher profit margins than companies without them.

So, what can businesses do to mitigate the risks associated with salespeople? Here are some strategies to consider:

• Hire the Right People: one of the most important steps in mitigating sales risks is to hire the right people. Businesses should look for salespeople who have a strong track record of success, a good work ethic, and a commitment to ethical behavior.

• Provide Training and Support: salespeople need to be properly trained and supported in order to succeed. Businesses should provide ongoing training and development opportunities to help salespeople improve their skills and stay up-to-date on industry trends.

• Implement Sales Policies and Procedures: businesses should have formal policies and procedures in place to ensure that sales practices comply with legal and regulatory requirements. This can include regular monitoring and oversight of sales activities.

• Incentivize Ethical Behavior: businesses should incentivize ethical behavior by tying compensation and rewards to ethical conduct. This can help to promote a culture of ethical behavior and minimize the risk of reputational damage.

In conclusion, salespeople can be the biggest risk to a business if they are not properly managed or trained. Companies should be aware of the risks associated with salespeople, including reputation risk, compliance risk, and revenue risk. By hiring the right people, providing training and support, implementing sales policies and procedures, and incentivizing ethical behavior, businesses can mitigate these risks and ensure the success of their sales teams.