Finding the sales ‘sweet spot’

A new study analyzes best practices in reeling in clients.

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Published on Show Me Mizzou April 23, 2023
Story by Dale Smith, BJ ’88

Acquiring new customers is the sink-or-swim task for any business — an endless project that keeps sales staff and their managers in the hot seat. Although typical sales studies analyze firm-level data, marketing Professor Srinath Gopalakrishna of the Trulaske College of Business finds that lens limited. He sees the work as a people-level job, so his sometimes surprising new study takes the tack of drilling down to individual staffers.

Gopalakrishna looked at 538 commission-only salespeople working for Shelter Insurance, a $1 billion company headquartered in CoMo and operating in 14 states. His question: How well did these salespeople find potential customers and convert them into clients? The goal: to offer data-based advice to managers hiring and supporting staff on the perpetual quest for clients.

It turns out experience isn’t all it’s cracked up to be, as Gopalakrishna found that newer agents landed more customers. Especially for companies with small advertising budgets, he reasons, “It may be a good idea to seek newer, more energized salespeople, who are more likely to actively network and aggressively seek out new prospective customers as opposed to just letting them come to you.”

Next, flip the advertising strategy upside down. Ads introducing products and salespeople boosted sales across the board, an indicator that all staff should get a share of the advertising pie. But resist the intuition to favor the newbies, Gopalakrishna says. More seasoned staff did better than newer people at converting advertising dollars into customers. Similarly, he discovered that incentives, raises and bonuses more successfully increased customer acquisitions for longer-term agents.

All the youthful enthusiasm spent looking for leads can be too much of a good thing when it robs time from converting prospects into clients. Gopalakrishna suggests that managers work individually with their employees to find the best balance — the sales “sweet spot.”

More: Check out Gopalakrishna’s study “Hunting for New Customers: Assessing the Drivers of Effective Salesperson Prospecting and Conversion” in the Journal of Business Research.

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