Salespeople often don’t pursue big-whale (large deals) sales because of the uncertainty of conversion. They want to avoid spending significant resources on an uncertain prospect. However, firms and managers can help to reduce this reluctance by taking specific steps. Sales leaders can adopt a process of allocating leads based on matching the portfolio magnitude with opportunity magnitude and conversion uncertainty. They can also support salespersons by reducing uncertainty and increasing rewards. Finally, they can take past performance and experience into account to allocate leads.
Salesperson prospecting (identifying sales opportunities among potential customers) is at
the heart of a firm’s customer acquisition and salesperson performance. However, contrary to expectations, salespersons are not keen on prospecting as it takes up 25% of their time and is full of uncertainty. And even though “big-whale” (enormous value) sales can push a firm’s sales volumes up quickly, helping salespersons achieve their targets more easily, they are often reluctant to pursue these opportunities. A study examines this phenomenon and tries to answer the question: Why do salespeople avoid big-whale sales opportunities, and what can be done to reduce their reluctance towards such prospects?
The study found that this unexpected behaviour results from cost-benefit analyses by salespersons. Conversion of such opportunities can drain both salesperson and organizational resources. The uncertainty around conversion further makes this issue critical.
Every salesperson’s nightmare is spending a great deal of time and effort on a customer and not completing the sale. Then they are left worse off than they would have been pursuing smaller sales opportunities. This risk-aversion, based on a cost-benefit trade-off and an attempt to conserve the limited resources available, is at the heart of salespersons not chasing big-whale prospects. Instead, they use the time and resources to convert multiple smaller opportunities.
This study has important insights for firms and sales managers who want to encourage their
salespersons to pursue big-whale sales opportunities. Statistical tools are available (and beyond the scope of this post) that can help managers calculate the magnitude of the opportunity and the conversion uncertainty of a potential sale based on empirical customer data. They can then calibrate these two factors and match them to each salesperson’s average portfolio magnitude to allocate big-whale leads to salespeople most likely to convert them.
Managers should also support salespersons working on large opportunities with additional
benefits, for intrinsic (e.g., sense of meaningfulness, sense of competence, and sense of progress) and extrinsic (e.g., awards, commissions, and bonuses). This will tip the scale in favour of benefits in the cost-benefit analysis. Another way to support these salespersons is by providing additional resources to reduce the resource constraints.
Since conversion uncertainty plays a crucial role in salesperson decision making, managers
can also work to control that uncertainty. To do so, they can curtail salespersons’ pursuit of highly uncertain prospects, improving their overall conversion record and decreasing their feeling of uncertainty regarding prospect conversion. In addition, frequent feedback can also help salespeople to improve their chances of prospect conversion. An overall improvement in chances of prospect conversion can then work to affect their decisions regarding big-whale sales positively.
Because both past performance and experience impact how salespersons respond to
conversion uncertainty, firms can also assign portfolios based on these factors. Salespersons with high past performance do relatively well with bigger portfolios if the conversion uncertainty is low. This rule also applies to inexperienced salespeople. When allocating large value portfolios to them, managers also need to work to reduce their conversion uncertainty. Those with poor past performance, on the other hand, do better with high-value portfolios if the conversion uncertainty is high. They essentially have nothing to lose so they do not try to conserve resources and exert greater efforts to prove themselves.