Researchers from NEOMA Business School, Copenhagen Business School, Eindhoven University of Technology, and University of Georgia published a new paper in the Journal of Marketing that develops and tests a framework of salespeople's decision-making while prospecting.
The study, forthcoming in the the Journal of Marketing, is titled "Why Salespeople Avoid Big-Whale Sales Opportunities" and is authored by Juan Xu, Michel Van der Borgh, Edwin J. Nijssen, and Son K. Lam.
Contrary to the intuition that salespeople gravitate toward big-whale sales opportunities, in reality they often avoid them. This new study integrates contingent decision-making and conservation-of-resources theories to develop and test a framework of salespeople's decision-making while prospecting. Findings from three multimethod studies enrich current understanding of this important salesperson behavior.
The researchers make three contributions to marketing literature. First, by showing that salespeople conduct rational benefit–cost analyses to decide what opportunity to pursue, they shed light on the tension underlying such decisions and challenge the intuition that salespeople gravitate toward large opportunities (i.e., big whales). The benefits can be intrinsic and extrinsic, while the costs can be explicit (e.g., resources such as time and effort) or implicit (i.e., opportunity costs). Second, the study demonstrates that salespeople use a calibration decision-making strategy (i.e., calculating expected benefits by accounting for conversion uncertainty) for solution selling at the portfolio level. Counterfactual analyses show that in solution selling, ignoring the calibration effect leads to serious under- or overestimation of conversion rates, sometimes up to 100%.
Third, the findings about the contingencies of the calibration effect pinpoint important biases in salesperson decision-making. Specifically, when faced with high levels of conversion uncertainty, high performers and inexperienced salespeople perform much worse because their resource-conserving tendency makes them more sensitive to the costs associated with uncertainty. Simulations reveal that when high performers or inexperienced salespeople believe their portfolio magnitude is large and conversion uncertainty is low, their quota attainment can improve by as much as 50%. These results call for further research to apply decision-making theories to personal selling when efforts are costly and resources limited.
The research team claims that, "For practitioners, our study reveals actionable ways for managers to successfully manage salespeople's avoidance of relatively large opportunities, better understand the role of conversion uncertainty in salesperson decision making while prospecting, and effectively manage salespeople's decision-making when prospecting by altering their benefit–cost calculus and uncertainty calibration and paying attention to salespeople's portfolio characteristics."
Full article and author contact information available at: https://doi.org/10.1177/00222429211037336
About the Journal of Marketing
The Journal of Marketing develops and disseminates knowledge about real-world marketing questions useful to scholars, educators, managers, policy makers, consumers, and other societal stakeholders around the world. Published by the American Marketing Association since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline. Christine Moorman (T. Austin Finch, Sr. Professor of Business Administration at the Fuqua School of Business, Duke University) serves as the current Editor in Chief.
About the American Marketing Association (AMA)
As the largest chapter-based marketing association in the world, the AMA is trusted by marketing and sales professionals to help them discover what is coming next in the industry. The AMA has a community of local chapters in more than 70 cities and 350 college campuses throughout North America. The AMA is home to award-winning content, PCM® professional certification, premiere academic journals, and industry-leading training events and conferences.
