Businesses that know how to leverage the enthusiasm of their new salespeople and the experience of their veteran staff will have the most success attracting new customers, research finds.
Srinath Gopalakrishna, professor and chair of the marketing department at the University of Missouri Trulaske College of Business, and his research team worked with Shelter Insurance, headquartered in Columbia, Missouri, to analyze the success rate of salespeople in finding potential customers and converting them into long-term customers. The goal was to provide businesses with a guide to maximize their ability to find new customers through their sales force and better distribute resources among their sales group.
“Prospecting for new customers is a really important element of everything that happens in a business,” Gopalakrishna says. “We hope this helps companies put their salespeople’s efforts to a productive use.”
Ironically, the team of researchers found that salespeople with less experience had more success attracting new customers, which could be an asset to businesses with less advertising resources.
“If you don’t have as many resources and want to start bringing in more customers, this research suggests it may be a good idea to seek newer, more energized salespeople, who are more likely to actively network and aggressively seek out new customers as opposed to just letting them come to you,” Gopalakrishna says.
The findings also showed that implementing strategic advertising—featuring the product and the salesperson—helped bring in more customers. However, the more experienced salespeople had more success converting that advertising into new customers compared to their less experienced counterparts.
“We wanted to determine where advertising dollars were more effective for the company, and our research suggests that as a business you may want to allocate the advertising dollars to the more experienced salesperson up to a point,” Gopalakrishna says.
Researchers also found that incentive rewards, raises, and bonuses increased new customer acquisitions to a greater extent for salespeople with more experience than those with less.
While there has been previous research about how to successfully attract new customers, those findings are applicable broadly at a firm level, Gopalakrishna says. The study was one of the first to consider the problem at the level of individual salespeople and how they could effectively prospect for new customers.
“This research is special because it provides direct action items firms can utilize to hire the best salespeople and determine the best way to support them,” Gopalakrishna says.
Businesses are often good about training their salespeople, but in order to be truly successful, they need to take a closer look at what makes individual salespeople effective in attracting new customers. Although the study only included contracted insurance agents, he says, the finding could be applied to other settings, such as residential real estate and direct sales.
“I hope that this research encourages firms to take a closer look at the prospecting function, meaning how to go looking for new customers in an effective way,” Gopalakrishna says. “Most firms understand that finding new customers is important, but this research highlights the role of important moderating factors that play a role in making that process more effective”
Coauthors of the study are from Iowa State University and Cleveland State. The paper appears in the Journal of Business Research.
Source: University of Missouri
by Pate McCuien-U. Missouri
Published on 2022-12-16