An Analysis of the Relationship Between Job Tenure and Sales at Avatech

An Analysis of the Relationship between Job Tenure and Sales at Avatech

The Theory-Tenure and Sales Performance

The primary purpose of this study was to determine the correlation between job tenure and sales performance for the outside sales representatives at Avatech. We hypothesized that the tenure of a sales professional has a positive effect on sales volume. We tested the sales performance of the employees in our 24 month sample and predicted a positive correlate with job tenure. This would provide reinforcement to the sales quota benchmarks that are established during the first 90 days of employment. We also sought to reinforce previous research which supports this theory.

The History

Avatech is an authorized Autodesk reseller with 15 employees and 4 locations in Wichita, Tulsa, Kansas City, and the corporate headquarters located in Dallas, Texas. The Dallas office has 10 employees, Tulsa has 2, and Wichita has 3. The Wichita office also covers the satellite office in Kansas City. In each of the 4 markets there are competing resellers. Within Dallas, there are 5 other resellers, in Tulsa there are 3, in Kansas City there are 2, and in Wichita, Avatech is the only authorized reseller. The Dallas and Wichita offices have a MTA (Metropolitan Trading Area) of a 250 mile radius. The other Resellers have the same MTA and all resellers are able to compete within their given MTA.

Autodesk has a reseller channel that focuses on 3 vertical markets. BSD (Building Systems Division) includes products for Architects, Structural Engineers, and HVAC design; ISD (Infrastructure Systems Division) includes products for civil engineering, mapping and municipalities; the third division is the MSD (Mechanical/Manufacturing Systems Divisions) which includes products for manufacturing design. Not only does Avatech compete against other resellers that sell the same product, but both Avatech and Autodesk face aggressive competing software programs from other developers who wish to erode Autodesk's market share.

Within the 3 vertical markets, Avatech has a dedicated sales rep and application engineer devoted to each market. The territories of these reps are within the 250 mile MTA of each location. There are some overlapping areas of coverage, however most accounts are designated by the sales representative. The company maintains a database of 25,000 contacts, and a client base of 2,000 companies. The average price for one seat of software is $3,500. Companies who purchase from Avatech range from single person firms to Fortune 1000 companies.

Method

A sample of 10 sales professionals employed between November 2003, and October 2005, were used in the study. This sample included employees from 3 offices, Dallas, Wichita and Tulsa. Due to significant employee turnover, the sample included a substantial number of sales representatives who left the company within the time period under evaluation, and employment status at the time of this study was not known. Sales representatives who had been employed for less than 12 months at the time the data was collected were included in the final sample.

Employees were hired with a 90 day probationary period, and given a monthly sales quota of $42,000. They were given a 90 day extension if the average sales reached $30,000. Those with average monthly sales of less than $30,000 were redeployed. Only the "best" of all sales associates advanced to the next increase in quota, which increased every 90 days. During the first 90 days of employment all newly hired sales professionals were given extensive training on the products they sell. Each sales representative had an application engineer, a complete database of existing clients, qualified leads, and a vertical product to sell within a given territory. The reps did not compete for the same client base in the company, but did compete against other Autodesk resellers within our MTA (Metropolitan Trading Area).

Model Design

A correlation between-subjects design was used, based on job tenure, and sales performance. A separate regression analysis included job tenure as an independent variable. Stepwise regression was used because no hypothesis was advanced regarding the degree to which each of the independent variables would relate to the dependent variable, sales performance. Using this approach, the 90 day probationary period is the first range established to reach the monthly target goal of $42,000 in overall sales.

Tenure

For the purpose of this study, job tenure was defined as the number of months each individual had been employed at the time the data was collected. The mean tenure for Avatech' sales reps in this study was 12.6 months. Sales performance was defined as total sales commissions divided by number of months employed. In order to improve the accuracy of the average monthly commissions measure, sales representatives who had been employed less than 12 months, or had left employment within the first 12 months were included in the analysis.

Results

In our research, the individuals having longer tenure had significantly higher sales than those who had low tenure. Although sales demographic data is not disclosed in this research, there are indications that in this study there was a strong correlation between job tenure and sales performance. The attached sales figure spreadsheet and sales chart will validate the sales plan, that tenure does play a key role in achieving sales goals. The sales figures are a sampling from actual November 2003, until October 2005. The chart lists the tenure and average sales for the period in which each sales rep was employed. Although the sample size is small, based on the number of sales people listed, if records were researched to a date prior to November 2003, the sales results and sales figures would remain the same. Although not included in the initial regression analysis, a separate procedure was utilized to identify correlation between tenure and sales performance. When tenure was included as an independent variable, the correlation with performance increased substantially. These results for the 24 month test period are displayed in the scatter chart on page 5.

Cogent Analysis

Special considerations for some sales professionals