Skip to main content

Attrition Rate

Definition​

Attrition Rate measures the percentage of sales capacity lost to turnover (voluntary and involuntary departures) over a given period.

Why It Matters​

  • Quantifies team stability and turnover impact
  • Drives hiring urgency and capacity planning
  • Benchmarks against industry standards
  • Predicts future capacity risk
  • Reveals organizational health issues

Formula​

Basic Formula​

Attrition Rate = (Capacity Lost to Attrition / Beginning of Period Capacity) × 100%

Example Calculation​

Scenario:

  • Q4 Beginning Capacity: $11.0M
  • Q4 Attrition: $5.0M (5 people left)
  • Q4 Attrition Rate: $5.0M / $11.0M = 45.5%

This means 45.5% of the starting capacity was lost to attrition during the quarter.

Time Periods​

Quarterly Attrition Rate​

Quarterly Rate = (Q Attrition / Q Beginning Capacity) × 100%

Use for: Short-term capacity planning, immediate hiring needs

Annual Attrition Rate​

Annual Rate = (Annual Attrition / Average Capacity) × 100%

Use for: Long-term trends, benchmarking, strategic planning

Annualized Quarterly Rate​

To compare a single quarter to annual benchmarks:

Annualized Rate = Quarterly Rate × 4

Example: 12% quarterly rate → 48% annualized (very high!)

Industry Benchmarks​

Attrition LevelAnnual RateQuarterly Rate
Low< 15%< 4%
Average15-20%4-5%
Above Average20-30%5-7.5%
High30%+7.5%+
Critical40%+10%+

Industry Average (SaaS Sales): ~13.1% annually, ~3.3% quarterly

Worked Example​

Company: North America East Territory​

Q1 2025:

  • Beginning Capacity: $17.0M (15 people)
  • Attrition: $2.0M (2 people)
  • Attrition Rate: 11.8%

Q2 2025:

  • Beginning Capacity: $15.3M (13 people)
  • Attrition: $2.3M (3 people)
  • Attrition Rate: 15.0%

Q3 2025:

  • Beginning Capacity: $13.3M (11 people)
  • Attrition: $2.5M (3 people)
  • Attrition Rate: 18.8%

Q4 2025:

  • Beginning Capacity: $11.1M (9 people)
  • Attrition: $5.0M (5 people)
  • Attrition Rate: 45.5% ⚠️ CRITICAL

Full Year 2025:

  • Total Attrition: $11.8M
  • Average Capacity: $14.2M
  • Annual Attrition Rate: 83% 🚨 CRISIS

What Drives Attrition Rate?​

Organizational Factors:​

  • Compensation below market
  • Poor management or culture
  • Lack of career progression
  • Unrealistic quotas
  • Inadequate training/support

External Factors:​

  • Market conditions (hot job market)
  • Competitor recruiting
  • Industry consolidation
  • Remote work opportunities

Natural Factors:​

  • Retirements
  • Relocations
  • Career changes
  • Performance terminations

Impact on Capacity Planning​

High Attrition = Chronic Understaffing​

Even if you backfill immediately:

  • New hires start at 0% capacity
  • Take 5+ months to reach full productivity
  • Meanwhile, more people leave
  • Creates a "hiring treadmill"

Recovery Lag Effect​

Attrition Rate: 40% annually
Average Recovery Lag: 6 months
→ You're always 6 months behind target capacity

Best Practices​

1. Track Monthly​

Don't wait for quarterly reviews. Monitor departures in real-time.

2. Segment by Cohort​

SegmentWhy It Matters
By TenureAre new hires leaving or veterans?
By PerformanceLosing top performers or bottom performers?
By ManagerIs one team experiencing high attrition?
By TerritoryAre certain regions more challenging?

3. Set Acceptable Thresholds​

Example policy:

  • Target: < 15% annual attrition
  • Yellow Flag: 15-25% (investigate)
  • Red Flag: > 25% (immediate action required)

4. Calculate "Acceptable" Attrition​

Not all attrition is bad. Some is inevitable and healthy:

  • Performance terminations (bottom 5-10%)
  • Promotions out of role
  • Retirements

Healthy Attrition: ~8-10% annually

Common Pitfalls​

  • Measuring headcount attrition instead of capacity attrition (losing a top performer ≠ losing a bottom performer)
  • Not accounting for leaves of absence (temporary vs permanent loss)
  • Comparing quarterly to annual benchmarks (without annualizing)
  • Ignoring seasonality (Q1 often has higher attrition)

References​

  • Industry benchmark: 13.1% from Bridge Group's SDR/BDR benchmarks
  • SaaS sales attrition typically 15-20% annually for AE roles
  • Enterprise AE attrition tends lower (~12-15%), SMB higher (~20-25%)
Edit this page