JM Insights in the Classroom
This research reveals actionable ways for managers to (1) successfully manage salespeople’s avoidance of relatively large opportunities, (2) better understand the role of conversion uncertainty in salesperson decision making when prospecting, and (3) 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. Furthermore, salespeople should be aware of the biases their past performance success and experience create in their decision making when prospecting.
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Xu, Juan, Michel van der Borgh, Edwin J. Nijssen, and Son K. Lam (2021), “Why Salespeople Avoid Big-Whale Sales Opportunities,”” Journal of Marketing.
Contrary to the intuition that salespeople gravitate toward big-whale sales opportunities, in reality they often avoid them. To study this phenomenon, the authors integrate contingent decision-making and conservation-of-resources theories to develop and test a framework of salespeople’s decision making when prospecting. Study 1 reveals that the performance impact of salesperson initial judgment of opportunity magnitude follows an inverted U shape, indicating that salespeople’s avoidance of large opportunities results from rational benefit–cost analyses due to their conservation of resources. Interestingly, salespeople use a calibration decision-making strategy (i.e., calculating expected benefits by accounting for conversion uncertainty) at the portfolio rather than prospect level, in solution- but not product-selling contexts. Ignoring this calibration effect can lead to under- or overestimation of conversion rates of up to 100%. Study 2 shows that salespeople’s past performance success and experience bias this calibration. Simulations reveal that when high performers or inexperienced salespeople believe their portfolio magnitude is large and conversion uncertainty low, they are less concerned about resource conservation and improve their quota attainment by 50%. Study 3 confirms the theoretical mechanism. These findings shed new lights on salespeople’s decision making and suggest ways for sales professionals to improve effectiveness when prospecting.
Special thanks to Holly Howe (Ph.D. candidate at Duke University) and Demi Oba (Ph.D. candidate at Duke University), for their support in working with authors on submissions to this program.
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