Retained Sales Search vs Contingency Sales Recruiting

Whether you are considering a retained sales search or contingency sales recruiting option, the goals should be the same. To find a solution that can consistently deliver the best possible talent. Most clients also like it done yesterday. Attractively, sales recruiting firms offer companies the ability to interview candidates with zero obligations and only incur a fee should they decide to hire a candidate. This “contingent” fee model is seemingly a no brainer for companies as all of the risk is borne by the recruiting firm. Or is it?

There’s a little shared fact that permanent position recruitment companies only fill 20% of the searches they receive (data and source here). Considering this poor success rate, there are situations where the “contingency” model falls short. The alternative is “retained” sales search where a company pays an engagement fee upfront in return for: being a higher priority, a deeper commitment, a more thorough search, higher accountability and in most cases a better outcome. Traditionally used for executive roles, I believe there are a few non-executive roles/situations that require hiring a retained sales recruitment firm.

The Case for Retained Sales Search

Critical Roles / Failure is Not an Option. Sales Talent’s own fill or success rate with contingent sales recruiting (2013-15) is 46.8% which is over 2x the industry average of 20%. Sales Talent’s success rate jumps to 95.2% (2013-15) with the retained searches (industry success rates for retained searches is unavailable). If you are hiring for a mission critical role and failure is not an option, the data clearly shows the effectiveness of using retained sales recruiters.

Among the reasons for the dramatic increase in success are:

• Retained searches become the recruiter’s #1 priority.
• Increased commitment by both sides – recruiter and client.
• Increased time spent researching the hiring profile and building a candidate pool.
• Much higher response rate by candidates. Elite talent understands that retained search is only utilized for key roles.  

Limited Candidate Pool. Some companies have learned that one strategy to combat the low fill rates of most contingent recruiting firms is to simply hire more of them for the same search. Having too many firms on a search can be problematic in most situations. Namely, the better recruiters will want no part of joining a free-for-all but this approach is the kiss of death when there is a limited candidate pool.

Again, there are a few reasons for this.  Elite talent (even B+ talent) wants to feel targeted and special. Getting called by 3 different recruiters for the same role paints a picture of desperation (candidates give us this exact feedback). In addition, if you don’t land a candidate on the 1st attempt, the data shows us that subsequent attempts have a very poor conversion rate. This holds true even if the comp gets increased. We’ve been brought in on worked over searches enough times to understand that you usually get one chance to hit the ball. The lesson? In limited candidate pool situations, be prepared to go with the retained sales recruitment model.

The Case for Contingency Sales Recruiting

Most sales roles can (and should) be effectively filled by conventional contingency sales recruiting firms.  Situations that come to mind:

• Large available gene pools, aka a specific background isn’t required.
• Higher turnover positions. Decreasing costs becomes a primary consideration with these roles.
• Volume hiring for similar roles. The opportunity to earn significant fees over time will attract and motivate skilled recruiters in much the same way a retainer will.
• Recruiting for generic sales talent. Those candidates can be used for other searches.
• The caliber of talent is less important.
• You’re a marquee company (think Google) that recruiters aspire to work with.

Options

If you are facing a challenging hire and hiring a retained sales search firm isn’t an option, there are creative options. For example, granting an exclusive for a predetermined period of time is one way to motivated a skilled recruiter. No matter which path you choose there is wisdom in the old adage “you get what you pay for”.