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Gaurav Sabnis, Sharinila C. Chatterjee, Rajdeep Grewal, & Gary L.

Lilien

The Sales Lead Black Hole: On Sales


Reps' Fol low-Up of Marketing Leads
Tiie saies iead black hole—the 70% of leads generated by nnarketing departments that sales representatives do
not pursue—may result from competing demands on sales reps' time. Using the motivation-opportunity-abiiity
framework, the authors consider factors that influence sales reps' pursuit (or lack thereof) of marketing and self-
generated leads. The proportion of time that sales reps devote to marketing leads depends on organizational lead
prequalification and managerial tracking processes (extrinsic motivation), as well as marketing lead volume
(opportunity), and sales rep experience and performance (ability). Consistent with a person-situation framework,
individual sales rep factors should also moderate the infiuence of organizational processes on lead follow-up. Data
from 461 sales reps employed by four firms confirm that as sales reps' experience increases, their responses to
manageriai tracking of lead follow-up and marketing lead volume decrease; responses to the quality of the iead
prequalification process increase. As sales reps' performance improves, their response to the volume of marketing
leads increases, but their response to manageriai tracking decreases. The interplay of individual sales reps' abilities
and organizational marketing and sales processes explains differences in sales reps' follow-up of marketing leads.'

Keywords: sales leads, lead qualification, sales force, sales-marketing alignment, sales foliow-up

In too many companies. Sales and Marketing feud like one of the most contentious issues between sales and mar-
Capulets and Montagues. keting functions is the lack of follow-up of leads that mar-
—Kotier, Rackham, and Krishnaswamy (2006, p. 68) keting generates (see also Churchill, Ford, and Walker 2003;
Zoltners, Sinha, and Lorimer 2009). Sales reps complain

O
n average, business-to-business (B2B) firms spend about the poor quality of the leads; marketing complains
65% of their marketing budgets on activities such as about sales reps' poor follow-up (Biemans, Brencic, and
trade shows, product seminars, cold-calling, data- Malshe 2010; Homburg and Jensen 2007; Homburg,
base purchases, and telemarketing—all activities designed to Jensen, and Krohmer 2008). According to the executive
yield information about prospective new customers (Sirius- director of the Sales Lead Management Association, poor
Decisions Inc. 2006). Yet studies show that sales represen- follow-up "is not a small problem, it is a big problem, a 10
tatives (reps) never contact approximately 70% of the leads percent to 30 percent problem ."2 Despite widespread recog-
generated by their marketing departments (Marcus 2002; nition (Smith, Gopalakrishna, and Chatterjee 2006; Watkins
Michiels 2009); instead, the leads disappear into a prover- 2003), researchers have devoted little attention to either the
bial "sales lead black hole" (e.g., Hasselwander 2006).' causes or possible cures of this phenomenon (Chatterjee
Kotier, Rackham, and Krishnaswamy (2006) suggest that 1994; Jolson 1988).3
Sales reps often argue that many marketing-generated
'The number of marketing leads provided to sales reps can be
leads (or marketing leads) lack the potential to result in
so large that it is not possible for the sales reps to pursue all of
them, even if they desired to do so; thus, the 70% figure reflects actual sales, so they focus only on what they perceive to be
inadequacies of marketing as well as the sales function. "good leads" (Oliva 2006). However, Hasselwander (2006)
asserts that firms often lose "ready-to-buy" customers that

Gaurav Sabnis is Assistant Professor, Howe School of Technology Man-


agement, Stevens Institute of Technology (e-mail: gsabnis@stevens.edu). full text of the discussion about sales lead leakage at the
Sharmila C. Chatterjee is Senior Lecturer in Marketing, Sloan School of Northern California Business Marketing Association on March 25,
Management, Massachusetts Institute of Technology (e-mail: schatterjee® 2009, is available at http://blog.salesleadmgmtassn.com/2009/03/
mit.edu). Rajdeep Grewal is Irving & Irene Bard Professor of Marketing northem-ca-bma-march-25th-luncheon-topic-why-sales-lead-leakage-
(e-mail: rgrewal@psu.edu), and Gary L. Lilien is Distinguished Research kills-momentum-and-damages-roi .html.
Professor of Management Science (e-mail: glilien@psu.edu), Smeal Col- 3The considerable amount of money B2B firms spend on lead
lege of Business, Pennsylvania State University. The authors thank the generation activity indicates that executives hope such leads are
Institute for the Study of Business Markets for the support provided for followed up on, and the importance of this issue is well illustrated
this research as well as Jane Lorimer of the Trade Show Bureau, James in observations by key industry figures. For example, Brian Car-
Haughey of Cahners Publishing, Ralph Richardson and Jim Vick of Indus- roll, chief executive officer of InTouch, asserts that "leads ignored
trial Equiptnetit News, and James McMenamin of Chilton Publishing for by sales reps make up about 77% of potential sales lost by the
research sponsorship. The authors also thank Irwin Gross, Alok Kumar, firm" (Carroll 2012), and the Institute for the Study of Business
Robert Meyer, William T Ross Jr., David Schmittlein, Jagdip Singh, David Markets has held two recent conferences on ways to encourage
Wilson, and especially the late Erin Anderson for support, comments, and marketing and sales to communicate better. These examples sug-
feedback. gest that while practitioners are concerned about the issue we
study here, the academic community has largely ignored it.

© 2013, American Marketing Association Journal of Marketing


iSSN: 0022-2429 (print), 1547-7185 (eiectronic) 52 Volume 77 (January 2013), 52-67
sales reps never contact, and Moreau (2006) reports that We proceed as follows: We next discuss the different
disagreements about classifying leads can cause sales reps demands on sales reps' time and use the MOA framework
to discard customers that would be highly likely to buy in to develop hypotheses about which factors are likely to
the future. Both sides have support for their claims, but the influence sales reps' time allocation processes. Then, we
overall result is a significant opportunity cost associated describe the data, the Dirichlet component regression model
with poor lead follow-up. The disagreement between sales for the sales reps' decision-making process, and the estima-
and marketing also stresses the need for a viable solution to tion procedure. Finally, we present our results and conclude
the sales lead black hole. Our research takes an initial step with a discussion of the implications of our findings for
in this direction by investigating sales reps' decisions about both theory and practice.
how to allocate their time to marketing leads, which repre-
sents a trade-off with other uses of their time.
Sales reps allocate their time to customer acquisition Conceptual Background
(including lead follow-up), serving existing customers (e.g.,
Time: Saies Reps' iVIost Precious Resource
retention, relationship management, upselling, cross-selling),
and administrative or nonselling tasks. Customer acquisition Sales reps'jobs entail three primary responsibilities, as Fig-
time consists of the time reps spend following up on market- ure 1 illustrates (e.g., Churchill, Ford, and Walker 2003;
ing leads and time spent on leads that sales reps generate Weitz, Castleberry, and Tanner 2007): (1) They undertake
themselves from sources other than marketing, such as refer- customer retention activities by managing ongoing relation-
rals from existing accounts. We refer to these latter opportu- ships and growing revenues by upselling or cross-selling,
nities as "self-generated leads" because sales reps generate (2) they acquire new customers by pursuing marketing and
them independently of marketing (Jolson 1988). Kotier, self-generated leads, and (3) they perform nonsales activi-
Rackham, and Krishnaswamy (2006, p. 76) note that "sales ties such as training and paperwork. Thus, sales reps must
usually develops its own funnel, [which] form[s] an increas- choose among several ways to use their time.
ingly important backbone for sales management. Unfortu- Through monitoring and compensation mechanisms,
nately, marketing often plays no role in these processes." firms exert both direct (managerial tracking) and indirect
Sales reps spend much of their time servicing existing (compensation schemes, lead prequalification) influences
customers and on administrative tasks such as paperwork, on sales reps' time allocation decisions. Researchers exam-
conference calls, and reviews. These activities constitute ining sales force effectiveness report that time allocation
time that sales reps do not spend acquiring customers, and decisions have a significant impact on sales reps' perfor-
so we collectively refer to them as "nonacquisition" activi- mance (e.g., Deeter-Schmelz, Goebel, and Kennedy 2008;
ties. Our hypotheses address sales reps' decision making Leach, Liu, and Johnston 2005; Zoltners and Sinha 1980).
about the allocation of proportions of total time among mar- Our focus is on lead follow-up, which we define as cus-
keting leads, self-generated leads, and nonacquisition activ- tomer acquisition efforts that rely on marketing and self-
ities. Accordingly, we develop a Dirichlet component generated leads. Because of their other responsibilities,
regression model of their time allocation to account for the sales reps rarely have time to pursue all their leads. Con-
multivariate, proportional nature of our dependent variable. sider two sales reps, Jason and Sally. Both spend 5% of
We use the motivation-opportunity-ability (MOA) their time pursuing marketing leads, which might imply that
framework (e.g., Maclnnis, Moorman, and Jaworski 1991) their lead follow-up levels are the same. However, Jason
as a theoretical structure to identify organizational and indi- spends 10% of his time on self-generated leads (i.e., a total
vidual (sales rep-specific) factors that affect the allocation of 15% of his time on customer acquisition), whereas Sally
of time to marketing leads, self-generated leads, and nonac- spends 25% of her time on self-generated leads (i.e., a total
quisition activities. Firms can motivate sales reps to follow of 30% of her time on customer acquisition). Sally devotes
up on marketing leads by requiring marketing departments twice as much of her time to customer acquisition as does
to prequalify leads and demanding that managers track the Jason but a smaller proportion of her time to marketing
sales reps' pursuit of those leads. Firms also control the leads. Thus, we conceptualize the proportion of time spent
opportunity that sales reps have to follow up on marketing on marketing versus self-generated leads as time spent on
leads by providing more or fewer leads (i.e., lead volume). customer acquisition.
Finally, sales reps vary in their ability to close new leads Because our focus is on lead follow-up, we combine
(e.g., experience, or number of years spent in a sales job; past retention and nonsales activities and call them nonacquisi-
performance, or quota achievement in the previous year). tion activities. We then structure the time allocation decision
We test our hypotheses with data from 461 sales reps process faced by sales reps as the proportion of total time
from four firms and use a regression model that accounts allocated among marketing leads, self-generated leads, and
for firm-specific effects. Our results show that as sales reps' nonacquisition activities. Our goal is to identify and theorize
experience increases, their responses to both managerial about the factors that influence the proportion of time allo-
tracking of their lead follow-up activities and marketing cated to the follow-up of marketing leads; however, we also
lead volume decreases, but their response to the quality of empirically model how these factors influence the proportion
the lead prequalification process increases. We also find of time allocated to the pursuit of self-generated leads. For
that as sales reps' past performance increases, their self-generated leads, we envision two potential processes:
responses to marketing lead volume increases, but their (1) a compensatory process, such that if the proportion of
response to managerial tracking decreases. the time allocated to marketing leads increases (decreases).

The Sales Lead Black Hole / 53


FIGURE 1
Demands on Sales Reps' Time

Sales Reps' Responsibilities

Customer Customer Nonsales


Acquisition Retention Activities

Marketing Self-Generated Relationship Upselling Paperwork, training,


Leads (ML) Leads (SL) Management reviews, etc.

ML \ SL Relationship \ Upselling \ Cross- Nonsales


Time .•* Time Management ,•' Time ,«* Selling Time
Time .•*' y* Time

Allocation of Time

the proportion of the time allocated to self-generated leads attractive may not meet the immediate needs of the sales
decreases (increases) and (2) independence between the rep.
proportion of the time allocated to marketing leads and self- Monitoring by sales managers could motivate sales reps
generated leads. Because we could find no research litera- to pursue those marketing leads. Sales managers might
ture on self-generated leads and our focus is on marketing believe that a greater volume of marketing leads provides
leads, our analysis of self-generated leads is exploratory. sales reps with a greater opportunity to achieve their goals.
However, the degree of pursuit also depends on sales reps'
MOA Framework and Sales Rep Time Ailocation individual circumstances (i.e., how did Sally get so many
Ideally, marketing generates high-quality leads, and sales self-generated leads, which Jason lacked?). In other contexts,
reps follow up on most of them; however, the reality is dif- the MOA framework has proved useful in determining how
ferent for several reasons, including differences in goals such differences in circumstances might affect actions, such
and time horizons. For example, marketing, with its longer- as customer information processing of advertisements
term perspective, likely considers leads that demand careful (Maclnnis, Moorman, and Jaworski 1991), knowledge shar-
nurturing to be more attractive than sales does, because ing among employees (Siemsen, Roth, and Balasubramanian
sales reps must focus on short-term quota attainment (Hom- 2007), managerial assessments of marketing performance
burg and Jensen 2007). In addition, marketing may have a (Clark, Abela, and Ambler 2005), and new product introduc-
cost-effective way to generate a large number of leads; a tions (Wu, Balasubramanian, and Mahajan 2004). In Figure
sales rep may simply want a few leads to help meet his or 2, we identify the context-specific constructs we use to
her quota. Thus, the leads that marketing views as most operationalize an MOA framework.

54 / Journal of Marketing, January 2013


FIGURE 2
MOA Framework for Customer Acquisition Time Allocation by Sales Reps

•Lead Prequalification Customer Acquisition


MOTiVATiON Time
•Manageriai Tracking

OPPORTUNITY •Marketing Lead Volume

•Experience
ABILITY
•Past Performance

Motivation tion simply to keep abreast of the latest offerings (Caravella


Sales reps' motivation affects the way they pursue their 2006; Szymanski 1988). If sales reps have a favorable opin-
goals. This motivation may be intrinsic (i.e., related to reps' ion of their firm's prequalification process, they should be
individual performance and learning orientation; perceived confident that marketing has eliminated casual inquirers
effectiveness of individual efforts) or extrinsic (e.g., mone- and that the leads they receive should be viable. Thus, they
tary incentives; processes implemented by the firm). should likely spend a greater proportion of their time on
Although a firm might manage intrinsic factors through its marketing leads.
hiring practices (i.e., seeking employees with high intrinsic
Hi a: As the perceived quality of the prequalification process
motivation), we focus on the extrinsic factors, those the
increases, the proportion of time spent on the follow-up
firm can directly influence. Deci (1971) defines the motiva- of marketing leads also increases.
tion to work toward a specific external goal as extrinsic if
that goal can be enhanced by feedback, rewards, and cues Another factor designed to motivate sales reps is mana-
from the external environment. We focus on two features of gerial monitoring. Sales reps' compensation is usually tied
the firm environment that can motivate sales reps: prequali- closely to outcomes, such as sales quota achievement, but
fication and managerial tracking. managerial monitoring also influences their behavior (e.g.,
Prequalification is a process by which the marketing Oliver and Anderson 1994). In the context of lead follow-up
department screens the leads it has generated and discards activities, managerial monitoring (or tracking) of whether
those it deems unattractive. Although lead generation (e.g., sales reps pursue their marketing leads should act as an
cold-calling, database purchases, telemarketing) often extrinsic motivator for sales reps. We define "managerial
involves personnel outside the firm, lead prequalification is tracking" as the degree to which managers monitor sales
typically executed internally by marketing personnel. Sales reps' follow-up of marketing leads. Managerial tracking, a
reps cannot observe the objective quality of leads; they are behavioral control, contrasts with sales reps' compensation
motivated by their perceptions of lead quality or, more
based on quota achievement, which is an outcome measure.
operationally, of the marketing department's lead qualifica-
Thus, the effect of managerial tracking on marketing lead
tion process. If sales reps' perception of the quality of the
follow-up should depend on how sales reps respond to
prequalification process is low, they likely focus more on
behavioral controls. Firms that emphasize managerial track-
their self-generated, familiar leads rather than on marketing
leads. As reps' perceptions of the quality of the prequalifi- ing signal to sales reps that lead follow-up is important,
cation process increases, so should their expectations of which implies that follow-up of leads should increase.
success from pursuing these marketing leads. Sales reps Hji,: As managerial tracking of marketing leads increases, the
prefer to avoid allocating time to leads that represent proportion of time spent on the follow-up of marketing
"casual inquirers," that is, customers that gather informa- leads increases.

The Sales Lead Black Hole / 55


Opportunity Sales reps who consistently exceed their quotas do so
because of their relationships with customers and knowl-
If firms want sales reps to follow up on marketing leads,
edge of the marketplace; they have the ability to sell, iden-
they must ensure that the reps have sufficient opportunity to
tify customer needs, and communicate the value of the sales
do so (e.g., Maclnnis, Moorman, and Jaworski 1991). The offerings (Leong, Busch, and John 1989; Sujan, Sujan, and
opportunity to pursue marketing leads should increase with Bettman 1988). Prior performance, in the form of past
the number of marketing leads received; therefore, we use quota achievement, is also a significant indicator of sales
"marketing lead volume" to measure the level of opportu- reps' ability to manage customer relationships and perform
nity available. Thus, we propose the following: the selling function, and it should infiuence lead follow-up
H2: As marketing lead volume increases, the proportion of activities.^ As reps' past performance improves, their ability
time spent on the follow-up of marketing leads increases. to achieve their goals efficiently also improves. That is, as
past performance improves, sales reps should have more
time to pursue selling-related activities, including the pur-
Ability
suit of new customers. Furthermore, as past performance
In line with prior MOA research (e.g., Wu, Balasubraman- increases, existing customers should value sales reps more
ian, and Mahajan 2004), we define "ability" as the set of and be more likely to share information about potential new
skills and proficiencies needed to achieve a goal. If firms customers, increasing the attractiveness of self-generated
want sales reps to follow up on marketing leads, they must leads. With a limited amount of time, all else being equal,
account for their relevant abilities, such as managing cus- better past performance should increase the pursuit of self-
tomer relationships and selling skills. We focus on two generated leads but decrease the pursuit of marketing leads,
objective measures (sales rep experience and past perfor- though not necessarily in direct proportion.^
mance) that extant research considers indicative of sales
H3b: As sales reps' past performance increases, the proportion
reps' abilities (e.g., Coughlan and Narasimhan 1992; of time spent on the follow-up of marketing leads
Leong, Busch, and John 1989).'* decreases.
As Szymanski and Churchill (1990) show, when sales
reps gain experience, they become more efficient, and the Moderating Hypotheses
number and strength of their customer relationships increase, The time allocation process we describe here requires sales
as does their knowledge about the marketplace, all of which reps to allocate their time among nonacquisition activities
enhance their abilities to develop and sustain customer rela- (the bulk of which is customer retention), marketing leads,
tionships .5 As sales reps' experience increases, they are better and self-generated leads. With our focus on marketing
able to discern organizational signals, and their networks of leads, we also consider whether ability variables^ moderate
lead-generating contacts (e.g., vendor reps, existing cus- the relationship between motivation/opportunity variables
tomers) grow richer.6 Thus, greater experience leads sales and the time allocated to marketing leads. Figure 3 depicts
reps to focus more on existing customers; the time they spend these moderating hypotheses, as well as the main effect
on acquisition adds to their increasingly rich sets of self- hypotheses we have developed thus far.
generated leads (vs. marketing leads, whose quality is unaf-
fected by sales rep experience). We propose the following: Motivation-Reiated Moderation Hypotheses
Hß^: As sales reps' experience increases, the proportion of Prequalification process and sales rep experience. Sales
time spent on the follow-up of marketing leads decreases. reps' perceptions of the quality of their firm's prequalifica-

••Experience and past performance measure different aspects of ^Empirical research indicates that "sales reps are quota achiev-
sales rep ability. Experience indicates years spent in the job, ers rather than dollar maximizers" (Churchill, Ford, and Walker
resulting in detailed knowledge of the market, the selling process, 2003, p. 232), and their prior quota achievements influence their
and contacts with customers and vendors (Park and Holloway lead follow-up behaviors (e.g., Gaba and Kalra 1999; Ross 1991).
2003). Past performance indicates an ability to achieve (and Sales reps with better previous sales performance are more likely
exceed) quotas through selling skills (Weitz 1978). Although both to follow up on leads that offer a lower likelihood of closure but
aspects of ability should benefit sales reps, their effect on time higher revenue potential, rather than the reverse (e.g., Mittal,
allocations need not be the same. Thus, we propose separate Ross, and Tsiros 2002).
hypotheses for the effects of experience and past performance. ^Although sales reps may not allocate a fixed amount of time to
^Although we expect sales rep experience to correlate with the lead follow-up, there are limits on the amount of time, and trade-
sales rep's ability to build relationships with customers, there may offs must be made; thus, pursing one lead can make the next lead
be diminishing returns to increased ability. Thus, we estimated a less attractive (see also Kotier, Rackham, and Krishnaswamy
model with a squared term for experience as an additional 2006).
explanatory variable, but the coefficient for this squared term was 'The interactions of ability with motivation and opportunity are
not statistically significant. most appropriate here: Ability is an individual-specific variable,
^Although experience may not be the strongest indicator of whereas motivation and opportunity are firm-specific variables,
sales reps' ability, it significantly affects their knowledge of the consistent with the classical person-situation framework (Dickson
marketplace and ability to manage customer relationships, both of 1982). We estimated a model with interactions between motivation
which infiuence lead follow-up activities (Coughlan and and opportunity variables in a post hoc robustness assessment but
Narasimhan 1992; Szymanski and Churchill 1990). found no empirical support for such relations.

56 / Journal of Marketing, January 2013


FIGURE 3
Research Hypotheses

Ability
•Sales Reps' Experience
•Sales Reps' Past Experience

-b

Motivation a-b
•Prequalification Process
•Manageriai Tracking Lead FoMow-Up
•Marketing Leads
•Self-Generated Leads

Opportunity
•Marketing Lead Volume

tion process (motivation) should have a positive relation- Prequalification process and sales rep past performance.
ship with time allocated to marketing leads (Hi^). As sales Leong, Busch, and John (1989) show that sales reps' past
reps' experience increases, their knowledge of the market- performance (quota achievement in previous year) is posi-
place and the quality of their relationships with customers tively related to reps' ability to identify customer needs and
increases as well (e.g., Coughlan and Narasimhan 1992). communicate the value of sales offerings. In a meta-analysis,
Furthermore, an increase in sales reps' knowledge and rela- Verbeke, Dietz, and Verwaal (2011) demonstrate that sales
tionship quality should enhance (1) the efficiency with rep performance is positively related to selling-related
which sales reps manage their existing clientele and (2) the knowledge, degree of adaptiveness, cognitive aptitude, and
ability of these sales reps to follow up on and close leads. work engagement but negatively related to role ambiguity.
Greater efficiency in managing existing relationships, then, Dubinsky and Hartley (1986) note that past performance is
should provide more time to pursue other activities, includ- positively related to the likelihood that sales reps respond to
ing existing customer management and potential new cus- motivational cues, including information about the quality
tomer acquisition.10 Furthermore, a greater ability to close of the organizational processes. Thus, an effective lead pre-
leads should motivate sales reps to pursue more leads. qualification process should equip sales reps with reliable
Because the prequalification process legitimizes leads, sales information that enables them to pursue the goal of acquir-
reps with greater experience should spend more time pursu- ing new customers.
ing marketing leads that come from a more reliable lead As sales reps' past performance improves, their ability
generation process. We expect experience and the perceived to achieve their goal efficiently also improves. Thus, as past
quality of the prequalification to have a positive interaction performance improves, sales reps should have more time to
effect on the proportion of time sales reps spend on market- pursue selling-related activities, including the pursuit of
ing leads. new customers. Furthermore, as Mittal, Ross, and Tsiros
H4a: The positive effect of the perceived quality of the market- (2002) find, an increase in past performance can enhance
ing lead prequalification process on the proportion of confidence about taking on the challenge of acquiring new
time spent on the follow-up of marketing leads increases customers. As past performance increases, sales reps can
as sales rep experience increases. better discern organizational cues (Leong, Busch, and John
1989) and gain the ability to act on these cues (Verbeke,
can only speculate about what sales reps might do with Dietz, and Verwaal 2011). As the quality of the lead pre-
time that becomes available due to their greater efficiency, but as qualification process improves, sales reps also are more
the quality of the prequalification process increases, the option to likely to recognize that lead follow-up is important from an
pursue new customers seemingly should be more attractive and, in organizational perspective, as well as possess the ability to
the aggregate, pursued to at least some extent. exploit this recognition. Thus:

The Sales Lead Black Hole / 57


H4b: The positive effect of the perceived quality of the mar- pursue and acquire new customers increases as well.
keting lead prequalification process on the proportion of Although this opportunity is identical for sales reps with
time spent on the follow-up of marketing leads increases different levels of experience, it is not clear that all reps take
as sales reps' past performance increases.
advantage of the opportunity similarly. When sales reps gain
Managerial tracking and sales rep experience. Manage- experience, their networks of lead-generating contacts (e.g.,
rial tracking of marketing lead follow-up enables managers vendor reps, existing customers) grow richer and increase
to track how well sales reps follow up on marketing leads. the number of self-generated leads. Sales reps also should
Because the purpose of this process is to motivate sales reps recognize the efforts needed to close their self-generated
to follow up (Kotier, Rackham, and Krishnaswamy 2006), leads, which have known quality, unlike marketing leads of
managerial tracking should have a positive effect on the less certain quality. As marketing lead volume and sales rep
time that sales reps allocate to marketing leads (H^,). Lead experience increase, the total volume of leads (marketing
prequalification and managerial tracking are structurally and self-generated) also increases; in response, sales reps
different, in that managerial tracking is a behavioral control likely focus on leads with the greatest perceived potential—
mechanism (Anderson and Oliver 1987) whereas lead pre- that is, decrease their emphasis on marketing leads.
qualification has nothing to do with sales reps' behaviors. Hog: The positive effect of marketing lead volume on the pro-
The quality of the prequalification process provides motiva- portion of time spent on the follow-up of marketing leads
tional cues; managerial tracking directly motivates sales decreases as sales rep experience increases.
reps to behave in a certain manner.
Marketing lead volume and sales rep past performance.
Most sales compensation plans reward sales reps on the Sales reps' past performance is positively related to their
basis of the outcomes they achieve rather than their behav- selling abilities (Leong, Busch, and John 1989), the likeh-
ior (e.g., Raju and Srinivasan 1996). The more experience hood that they respond to goal-oriented motivational cues
sales reps have (i.e., more time in the job), the more time (Dubinsky and Hartley 1986), and the time and ability they
they have to learn that outcomes rather than behaviors mat- have to acquire new customers (Mittal, Ross, and Tsiros
ter. Thus, with greater experience, we expect a decrease in 2002). As their past performance increases, the time sales
sales reps' responses to behavioral controls, such as mana- reps need to acquire customers should decrease. Combined
gerial tracking (Coughlan and Narasimhan 1992). Because with the positive relationship between sales reps' past per-
more experienced sales reps likely believe they can meet formance and reps' inclination to respond to goal-oriented
quota targets in ways other than following up on marketing cues, past performance should positively moderate the rela-
leads (e.g., selling to existing customers), their greater tionship between marketing lead volume and the proportion
experience combined with managerial tracking should have of time spent in pursuit of marketing leads.
a negative effect on the time they spend on marketing leads.
H51,: The positive effect of marketing lead volume on the pro-
H¡¡^: The positive effect of managerial tracking of marketing portion of time spent on the follow-up of marketing leads
leads on the proportion of time spent on the follow-up of increases as past performance increases.
marketing leads decreases as sales rep experience
increases.
Managerial tracking and sales rep past performance. Method
Sales reps with better past performance should be confident
Data Coilection Procedure
in their ability to acquire new customers (Mittal, Ross, and
Tsiros 2002); however, as experience increases, sales reps' We mailed 2666 surveys to sales reps from four B2B firms,
responsiveness to behavioral controls such as managerial three of which were members of Pennsylvania State Uni-
tracking likely diminishes (e.g., Oliver and Anderson 1994). versity's Institute for the Study of Business Markets. Each
Unlike a lead prequalification process, which motivates firm represented a different industry (scientific instruments,
sales reps by providing signals about organizational priori- chemicals, copiers, and computers). Respondents reported
ties, managerial tracking is an attempt to motivate sales reps (1) their past performance in terms of the percentage of
by monitoring them, which is less effective as sales reps' their quota they achieved in the previous year; (2) their
performance increases (Baldauf, Cravens, and Piercy 2001; experience, measured in years spent working as a sales
Cravens et al. 1993). When sales reps' performance rep"; (3) the total time in hours they worked each month;
improves, increased managerial tracking should prompt and (4) the time they spent in hours each month following
heightened resistance. Thus, an increase in managerial up on marketing leads, following up on self-generated
tracking of lead follow-up, accompanied by an increase in leads, or pursuing nonsales activities. (We assume any
sales reps' past performance, is likely to result in a decrease remaining time involves customer retention activities.)
in the follow-up of marketing leads. The survey also included measures of sales reps' per-
ceptions (seven point scale: 1 = "agree," and 7 = "dis-
H5I,: The positive effect of managerial tracking of marketing agree") of the quality of their firm's prequalification
leads on the proportion of time spent on the follow-up of process (five items) and the extent of managerial tracking
marketing leads decreases as past performance increases.
Marketing lead volume and sales rep experience. As the "They also reported their experience in their current job, a
volume of marketing leads increases, the opportunity to variable highly correlated with overall experience.

58 / Journal of Marketing, January 2013


of marketing lead follow-up efforts (five items) (for survey schemes included bonuses tied to acquiring new customers,
items, see Appendix A).'2 We received 562 surveys, for a no component explicitly rewarded following up on market-
response rate of 21.08%. After screening for missing data ing leads.
related to our key constructs and an outlier analysis, we Our preliminary examination of the data showed that 39
retained 500 usable responses. respondents reported spending no time pursuing marketing
The four firms were all B2B companies, and the cus- leads. The t-tests for the differences between the explana-
tomer accounts that their sales reps handled spanned a tory variables for the zero and nonzero marketing lead fol-
range of business sizes, from small firms to Fortune 100 low-up time groups offered some support for our claims.
corporations. The size of the sales forces varied from 55 For example, sales reps who spent no time pursuing market-
(Firm 2, chemicals) to 2500 (Firm 4, computers). The sales ing leads perceived the quality of lead prequalification
reps in our sample were customer facing and handled mutu- (1.76) as significantly lower than those who pursued at least
ally exclusive sets of customer accounts for their geogra- some marketing leads (2.21). In addition, 37 of the 39
phies.'^ The compensation schemes in all four firms were respondents who indicated no marketing lead follow-up
based primarily on quota achievement, commissions, and time came from one firm (computer industry), which sug-
bonuses for top-line sales. Although the compensation gests a potential for systematic bias. We removed the
responses with no marketing lead follow-up time alloca-
tions from our analysis, leaving 461 surveys that reported
'2For the survey development, we conducted a pretest with 12 on all relevant measures.'^ in Table 1, Panel A, we present
sales reps, who indicated, during personal debriefings, whether the
questionnaire was easy to understand, unambiguous, and consis- the descriptive statistics for the independent variables
tent in terms of interpretation. We framed the time allocation ques- across the four firms, and in Panel B, we present the
tion as a monthly (as opposed to annual) measure because the descriptive statistics and correlation matrix for the entire
sales reps indicated that they most commonly considered this time sample.
frame.
'^For large firms with multiple divisions and geographical loca-
tions, the definition of a "customer account" varies in terms of '^To check for robustness, we included 112 surveys that left two
how it is allotted to sales reps. We defined customer accounts as or fewer explanatory variables blank and treated their missing val-
entities assigned to customer-facing reps, on divisional and geo- ues as random. The results were similar to our analysis of surveys
graphic bases. that offered complete responses.

TABLE 1
Descriptive Statistics
A: Firm-Specific Descriptive Statistics
Total Firm1 Firm 2 Firm 3 Firm 4
Variable N 461 51 30 100 280
Managerial tracking M 2.81 3.62 2.39 3.20 2.55
SD 1.33 1.16 1.16 1.33 1.28
Quality of prequalification M 2.87 4.60 3.23 3.14 2.43
SD 1.25 1.10 1.25 .98 1.04
Marketing lead volume M 48.61 109.30 199.48 18.42 32.14
SD 141.52 111.1 428.5 21.68 88.57
Past performance M 111.64 97.37 99.53 104.31 118.17
SD 50.37 22.32 15.53 52.73 54.47
Experience M 11.92 18.45 10.77 8.83 11.96
SD 7.53 9.69 7.56 7.22 6.40
B: Bivariate Correlation Coefficients
Variable SD MLT SLT MT QP iWLV NAQT PP
Marketing lead follow-up time proportion (MLT) .057 .091
Self-generated lead follow-up time proportion (SLT)) .156 .167 .108"
Managerial tracking (MT) 2.81 1.33 .189* -.041
Quality of prequalification (QP) 2.87 1.25 .246" -.011* .38**
Marketing lead volume (MLV) 48.61 141.52 -.084 -.001 .05 .06
Non-acquisition time proportion (NAQT) .788 .196 -.548** -.891** -.07 -.05 -.07*
Past performance (PP) 111.64 50.37 -.038 -.129* -.06 -.13** -.05 .05
Experience (EXP) 11.92 7.53 -.077* -.066 .07 .13** .08** .05 -.06
*Correlation significant at the .10 level.
**Correlation significant at the .05 level.
Notes: Managerial tracking and quality of prequalification reflect the mean scores of four items (measured on a seven-point scale). Past per-
formance is the percentage quota achieved in the previous year. Experience is tfie number of years the respondent has viiorked as a
sales rep. The sample size is 461. The means (M) and standard deviations (SD) for the independent variables apply across all four
firms.

The Sales Lead Black Hole / 59


Measure Validation and Common Method Bias criterion variables. Five eigenvalues exceeded 1 (>1.14),
and a sixth equaled .97. Factor loadings on a single dimen-
Our dependent variable is the proportion of total time spent
sion showed that neither the criterion variables nor the
on marketing leads, self-generated leads, and nonacquisi-
objective measures loaded significantly on it. In the five-
tion. We collected the five-item motivation variable mea-
factor solution, the measures loaded separately along each
sures, managerial tracking, and perceived quality of pre-
of the five dimensions, closely aligned with our definition
qualification on a seven-point scale (1 = "agree," and 5 =
of the measures. Our findings were consistent with meta-
"disagree"). We used the number of leads that sales reps
analytic research (Doty and Glick 1998) and indicated that
received from their marketing departments during the year
common method bias was not a serious issue.
as the opportunity measure of marketing lead volume. For
the ability variables, we measured sales rep experience as
A Dirichiet Component Regression Modei for
the self-reported number of years in a sales job'^ and past
Saies Reps' Time Aiiocation
performance as the percentage quota achieved the previous
year. To model the effect of the MOA variables on the time allo-
Because our measures for managerial tracking and qual- cated to marketing and self-generated lead follow-up, we
ity of prequalification were perceptual, we conducted a con- used the framework in Figure 1 and theorized that sales reps
firmatory factor analysis (CFA) to determine the reliability could allocate each unit of time to one of three activities:
and validity of the multi-item scales. The CFA model for marketing leads, self-generated leads, or nonacquisition
the two continuous multi-item constructs exhibited good activities. We view the sales rep decision process as a
psychometric properties (x^g = 31.93, comparative fit index - choice among the three activities for every time unit, based
.99, Tucker-Lewis index = .99, root mean square error of on the relative attractiveness of each option. This relative
approximation - .038, and standardized root mean square attractiveness depends on sales rep-specific and firm-level
residual = .037).i^ To ensure that the scales measured the factors.
underlying constructs in each firm, we also conducted a For sales rep i, let the nonzero attractiveness equal A¡^
multigroup CFA, which yielded fit indexes that differed by for marketing leads, Aj^ for self-generated leads, and A|n for
less than 1% from the aggregate CFA. nonacquisition activities. The probability that the sales rep
We next assessed the scale reliabilities, all of which were allocates any given time unit to marketing leads then is
greater than .80 (.89 for prequalification, .92 for managerial f(AimlAis, Ajn), to self-generated leads is f(AislAim, Aj^,), and
tracking). The average variance extracted for both constructs to nonacquisition activities is f(AinlAis, Ajm). As the number
exceeded .50 (.61 for prequalification, .58 for managerial of time allocation decisions increases, the proportion of total
tracking), in support of discriminant validity (Fomell and time the sales rep allocates to the three tasks follows a
Larcker 1981); discriminant validity through average variance Dirichlet distribution (e.g.. Blackwell and MacQueen 1973):
extracted also signals that multicollinearity in the presence If a sales rep decides to allocate every hour of time as noted,
of measurement error is not a threat to statistical inference the proportion of time allocated to the three tasks in a
(Grewal, Cote, and Baumgartner 2004). Furthermore, the month is Dirichlet distributed.'^ Thus, the sum-constrained
multicollinearity diagnostics for the explanatory variables proportions support the use of Dirichlet component regres-
showed that the condition indexes were well below 30 sion (Gueorguieva, Rosenheck, and Zelterman 2008).
(highest = 13.25), the variance inflation factors were lower If the proportions of total time allocated to marketing
than 10 (highest = 1.19), and the variance proportions for leads and self-generated leads by a sales rep i working in
all the variables on the dimensions with the highest condi- firm[i] are Yj^, and Yj,, respectively, and Y¡n = 1 - Yj^ - Yjg
tion indexes were lower than .50. Thus, we conclude that is the proportion of time allocated to nonacquisition, we can
multicollinearity did not pose a major concern. specify Yjm, Yj^, and Y¡n as distributed Dirichlet, such that
To address common method bias concerns, we used dif-
ferent formats to collect the variables of interest and (1) ~ Dirichlet(Ai
ensured temporal separation, with a time lag between the where Ajn,, Ai^, Ain ^re the positive real parameters of the
relevant questions in the survey instrument (Podsakoff et al. distribution that represent the attractiveness of each option.
2003). We measured the motivation variables using multi- If Ai = Aim + Ais + Ain, according to the properties of the
item Likert scales; we measured opportunity and ability Dirichlet distribution, the means for Yi^,, Yi^, and Yi^ are
variables directly, using objective, self-reported responses Ain,IAi, AjglAi, and AÍRIAÍ, respectively, and the variances
from sales reps. We achieved temporal separation by sepa- are Ain,(Ai - Aim)/A?(Ai +1), Ais(Ai - Ais)/A?(Ai -i- 1), and
rating the criterion and predictor variables by at least 40 Ain(Ai - A¡n)/A?(A¡ -^• 1). The covariance terms
items in the survey instrument. To examine the possibility A A / A I A ^L 1 I A A / A I A I \ \ orii^ A A. / A . f A .
of common method bias, we used Harman's single-factor -1-1) account for interdependence among the three time pro-
test. With an exploratory factor analysis, we also estimated portions (e.g., Evans, Hastings, and Peacock 2000, chap.
a model that consisted of all predictor variables and both 10).
As is typical in Dirichlet regression models (e.g., Con-
also measured experience in the current job; the effect of nor and Mosimann 1969; Hijazi and Jemigan 2009), the
current job experience was of the same sign and statistical signifi-
cance as that of total sales experience.
'^On the basis of the modification indexes, we dropped one '•'Most firms, including those in our sample, evaluate and
item for each construct. reward sales reps on a monthly basis.

60 / Journal of Marketing, January 2013


relationships between the explanatory variables and the pro- rior confidence intervals contained 0 (as recommended for
portions of time allocated to marketing and self-generated Bayesian estimation; Rossi, Allenby, and McCulloch 2005).
leads can be specified as follows:

(2) Results
Our estimation reveals firm-level coefficients for the inter-
cept term and all explanatory variables. Because the signifi-
(3) cant firm-level coefficients are consistent with the aggregate-
level coefficients (in the hierarchical Bayesian specification),
where we report only the aggregate-level coefficients in Table 2.
Among the main effects, we find support for Hi^ (b =
^firm[i] and <l>firm[i] are firm-specific intercepts, .64,;? < .05), which suggests that as the perceived quality of
ßfirm[i] and Yfjrni[i] are firm-specific vectors of coeffi- prequalification increases, the proportion of time spent on
cients, and marketing leads increases. We also find that as the per-
Xj is the vector of explanatory variables for sales rep i. ceived quality of prequalification increases, the proportion
of time spent on self-generated leads decreases (b = -.38,
Because Y¡n = 1 - Yj^, - Yj^, the Dirichlet parameter corre- p < .05).
sponding to nonacquisition for each sales rep Aj^ is defined We had argued that managerial tracking of sales reps'
as a sales rep-specific unknown constant (accounting for follow-up of marketing leads would signal the importance
heterogeneity) for identification purposes, drawn from a that the managers place on lead follow-up and thus increase
vague prior uniform distribution U(0, 100). We specify that follow-up of marketing leads; however, our results show an
the firm-specific intercepts Qfirm[i] and <I>f,rm[i] each come opposite effect (Un,: b = -.89, p < .05; note that the effect
from aggregate-level normal distributions, whereas the firm- of managerial tracking on self-generated leads is statisti-
specific coefficients in the vectors ßfirm[i] and Yf,nn[i] are cally nonsignificant: b = .28, n.s.). As we discussed previ-
drawn from aggregate-level, multivariate normal distribu- ously, as a behavioral control mechanism, managerial track-
tions. With the ßfirn,[i] coefficients, we can test our hypothe- ing may not be welcomed by "an excellent salesperson who
ses related to marketing lead follow-up; with the Yfinn[i] refuses to accept behavior control" (Oliver and Anderson
coefficients, we test hypotheses related to self-generated 1994, p. 63) and thus prompt reactance (Joshi 2010) from
lead follow-up. sales reps and a reduction in follow-up of marketing leads.
Anderson and Oliver (1987) theorize that firms should
Modei Estimation benefit from behavior-based controls, but they find in prac-
We estimate the model using standard Markov chain Monte tice (Oliver and Anderson 1994) that outcome-based con-
Carlo procedures; we provide details about the prior trols are more effective for driving performance (confirmed
specification, posterior distribution, and our sampling pro- by Heide 1994). Because of the result-driven nature of their
cedure in Appendix B. For the estimation, we used three jobs and achievement-based compensation schemes, sales
concurrent chains (Bolstad 2007), such that for each chain, reps likely are even more focused on outcomes than other
the first 5000 iterations are the bum-in sample and the next employees. Thus, managerial tracking is not just ineffective
50,000 iterations provide the sample for parameter estima- but could even lead to negative consequences relative to the
tion. To assess model convergence, we used the Gelman- intended objective of increasing marketing lead follow-up.
Rubin statistics. To test for the statistical significance of the We argued that as marketing lead volume increases,
coefficients, we checked whether the 95% Bayesian poste- sales reps' opportunities to pursue marketing leads increases.

TABLE 2
Results for the Dirichlet Component Regression Model
Marketing Lead Self-Generated
Time Proportior1 Lead Time Proportion
Variable Parameter 2.5% 97.5% Parameter 2.5% 97.5%
Prequalification .64* .39 .85 -.38* -.59 -.18
Managerial tracking (H.ib, +) -.89* -.96 -.68 .28 -.05 .58
Marketing leads volume (H2, +) .44 -.28 .73 .41 -.36 .92
Experience (H3a, -) -.19 -.34 .16 .24* .12 .37
Past performance (H3t,, -) -.31* -.46 -.12 .29* .16 .38
Experience x prequalification (H^^, +) .71* .48 .96 -.36* -.51 -.24
Past performance x prequalification (H4b, +) .04 -.21 .23 .09 -.11 .23
Experience x managerial tracking (Hsg, -) -.55* -.74 -.39 -.44* -.49 -.28
Past performance x managerial tracking {H^t, -.21* -.31 -.14 .29* .17 .41
Experience x marketing lead volume (Hga, -) -.11* -.16 -.11 .21* .11 .34
Past performance x marketing lead volume .15* .09 .24 -.19* -.30 -.08
*p< .05.

The Sales Lead Black Hole / 61


which should increase follow-up of marketing leads; how- Robustness Checks
ever, our results do not support this assertion (H2: b = .44, The Bayesian shrinkage specification we use provides coef-
n.s.); also, marketing lead volume does not have a statisti- ficients for all explanatory variables (including the intercept
cally significant effect on the follow-up of self-generated term) at the firm level. In terms of direction and statistical
leads (b = .41, n.s.). significance, these firm-level effects mimic aggregate
We find that sales reps' experience has no impact on effects. (In the model specification, the firm-level effects
follow up of marketing leads iU^¡^: b = -.19, n.s.) but does shrink to the aggregate effects.) Therefore, the effects are
positively infiuence the follow-up of self-generated leads consistent across the four firms from which we collected
increases (b = .24, p < .05). Finally, consistent with our data. These four firms represent four different industries; this
expectations, as past performance increases, sales reps' consistency in results suggests our findings are fairly robust.
follow-up of marketing leads decreases (H3b: h --.3l,p < We also estimated an alternative model that divided
.05); however, the follow-up of self-generated leads sales reps' time allocation process into two stages: (1) allo-
increases (b = .29,p < .05). cating time between customer acquisition and nonacquisi-
tion and (2) allocating customer acquisition time between
Abiiity as a Moderator of the Effect of Motivation marketing and self-generated leads. The results for the
We find support for H^^, ih - .71, p < .05), in which we interaction hypotheses with this alternative model specifica-
argued that experience enhances the positive effect of the tion, in which marketing lead time proportion is the depen-
perceived quality of prequalification on the proportion of dent variable,'^ are consistent with the results from the
time spent following up marketing leads. This finding Dirichlet component regression model.
extends Hunter and Perreault's (2007) work, in which they
find that sales reps consider information systems and pro- Predictive Vaiidity
cesses useful only if they help those reps build and To validate the model, we followed Neelamegham and
strengthen their relationships with customers and make sales. Chintagunta's (1999) Bayesian approach. We randomly
For self-generated leads, we find that experience negatively chose 150 observations to create a holdout sample, esti-
moderates the negative effect of perceived prequalification mated the model using the remaining observations, and then
quality on the proportion of time spent following up self- arrived at an estimate of the dependent variables (i.e., pro-
generated leads (b = -.36, p < .05). However, the parame- portion of time spent on follow-up of marketing and self-
ters for the interaction effect of past performance and pre- generated leads). We conducted this exercise five times and
qualification on the proportion of time allocated to following used root mean square errors (RMSEs) to compare the
up on marketing leads (H4b: b = .04, n.s.) and self-generated hypothesized model (RMSE - .072) with several alterna-
leads (b = .09, n.s.) are not statistically significant. tives: (1) the Dirichlet component regression model with no
In support of Hs^, the effect of managerial tracking on explanatory variables (RMSE = .892), (2) a Dirichlet com-
the follow-up of marketing leads decreases as sales reps' ponent regression model with only main effects (RMSE =
experience increases (b - -.55, p < .05). We also find that .347), (3) a normal regression model with hypothesized
the positive effect of managerial tracking on the follow-up effects (RMSE = .423), (4) a beta model for marketing lead
of self-generated leads decreases as sales reps' experience time proportion and the rest of the time (RMSE = .184), and
increases (b = -.44, p < .05). The results for marketing and (5) a bivariate regression with marketing lead time and self-
self-generated leads suggest that sales reps' experience generated lead time as dependent variables (RMSE = .173).
negatively moderates the effect of managerial tracking on The RMSE for each alternative specification is consider-
the follow-up of both leads. Finally, we find support for H51;, ably higher (i.e., has poorer predictive fit) than for our
such that the positive effect of marketing lead volume on model, in further support of our hypothesized Dirichlet
the follow-up of marketing leads decreases as sales reps' component regression model.
experience increases (b = -.21, /> < .05); in contrast, the
positive effect of marketing lead volume on the follow-up of
self-generated leads increases with greater experience (b -
Discussion
.29,p<.05). Sales reps' follow-up of leads (both marketing and self-
generated) is a crucial part of the customer acquisition
Ability as a Moderator of the Effect of Opportunity process in B2B firms. We build on the MOA framework to
suggest how firm-level processes (lead prequalification,
In support of Hg^, experience negatively moderates the managerial tracking, and marketing lead volume) and sales
positive effect of marketing lead volume on the proportion reps' ability (experience and past performance) determine
of time spent on marketing leads (b = - . 11, /?< .05). In con- this follow-up of marketing and self-generated leads. The
trast, we find that experience positively moderates the posi- results from our analysis of data obtained from sales reps in
tive effect of marketing lead volume on the proportion of four firms support our hypotheses; we now draw several
time spent on self-generated leads (b = .21, p < .05). In sup- theoretical and managerial implications.
port of Hg),, the parameter for the interaction of past perfor-
mance and marketing lead volume on the proportion of time I sin the alternate specification, we used marketing and self-
spent on marketing leads is positive (b = .15, p < .05); this generated lead time allocations as proportions of customer acquisi-
parameter for the proportion of time spent on self-generated tion time in Stage 2, which summed to 1 and thus provided only
leads is negative (b = -.19,p < .05). one dependent variable in Stage 2.

62 / Journal of Marketing, January 2013


Theoretical Implications not only on the objective quality of sales-enabling pro-
Our primary contribution is to provide insights into the fol- cesses but also on sales reps' perceptions of that quality.
low-up of leads as a means to acquire customers in B2B We contribute to literature on sales reps' abilities (Szy-
firms—a critical domain in which B2B firms spend approx- manski 1988). Although experience and past performance
imately 65% of their marketing budgets (SiriusDecisions are both indicators of sales reps' ability, we show that their
Inc. 2006). By building our conceptual framework on the effects differ and should be examined separately. With more
well-established MOA framework, we demonstrate its util- experience, greater marketing lead volume exerts a negative
ity for the further study of the sales reps' pursuit of market- effect on marketing lead follow-up; conversely, better past
ing leads. We also report results on the effect of MOA performance positively moderates the effect of marketing
variables on the pursuit of self-generated leads—a focus lead volume on marketing lead follow-up. These findings
that, to best of our knowledge, has received no scholarly support previous researchers' efforts to differentiate among
scrutiny. sales reps' respective abilities (e.g., Leong, Busch, and John
To implement the MOA framework in the context of 1989; Sujan, Sujan, and Bettman 1988).
lead follow-up by B2B firms, we identified critical sales
rep-specific factors (ability) and organizational factors Managerial Implications
(motivation and opportunity). In turn, we built on the clas- Our study is useful for managers aiming to improve sales
sic person-situation framework (Dickson 1982) to theorize reps' follow-up of marketing leads. To illustrate the mana-
that individual (ability) variables moderate the infiuence of gerial value of our results and how they vary by firm, we
organizational (motivation and opportunity) variables. We calculate the elasticity of marketing lead follow-up time
theorize and find evidence for critical interactions between proportions with respect to the perceived quality of prequal-
motivation and opportunity with ability variables. For ification, level of managerial tracking, and marketing lead
example, the interaction effect of experience and manage- volume (Table 3).
rial tracking on marketing lead follow-up is negative; as
The elasticity of marketing lead follow-up time as a
experience increases, managerial tracking deters not only
proportion of the perceived quality of the prequalification is
marketing but also self-generated lead follow-up. Thus,
1.12 for the sample as a whole; that is, a 1% increase in per-
managerial tracking, when combined with greater sales rep
ceived prequalification quality produces a 1.12% increase
experience, is likely to induce sales reps to respond by
in marketing lead follow-up time allocation. The elasticity
focusing attention away from customer acquisition in gen-
is positive across all four firms but varies considerably (from
eral and toward customer retention.
.58 to 1.64). Even in our sample, we find a 3:1 ratio for the
The interaction results also show that experience and
elasticity of the perceived prequalification quality for the
past performance moderate the impact of firm-level factors
on lead follow-up, underscoring the importance of consid- least and most responsive firms. The low mean and high
ering heterogeneity in sales reps' abilities when studying standard deviations (\i = 2.87 on a seven-point scale, a :=
the usefulness of behavior-based controls for various sales 1.25; Table 1) for perceptions of prequalification quality
tasks. Behavior-based controls may motivate underperform- suggest considerable room for overall improvement in this
ing or inexperienced sales reps to engage in behaviors that key driver of marketing lead follow-up.
the firm desires, but as sales reps' experience and past per- Because managerial tracking is primarily behavioral,
formance increases, these controls become counterproduc- with little bearing on sales reps' quota-based compensation
tive. The insights from our MOA framework suggest that and bonuses, the elasticity of marketing lead follow-up time
scholars who employ this framework should consider context- allocations for managerial tracking is -.14 for the aggregate
dependent interactions further. sample; thus, managerial tracking is counterproductive, on
We contribute to prior literature by highlighting how average, for follow-up of marketing leads. However, this
perceptual measures of organizational processes can be elasticity also varies across firms: It is negative for Firms 1
used appropriately to capture the heterogeneity in their (scientific instruments) and 2 (chemicals) but positive for
actual implementation and impact. For example, the extent Firms 3 (copiers, for which the elasticity is highest at .33)
of prequalification quality is not an objective, füm-level and 4 (computers). As we show in Table 1, Panel B, the
measure but rather is based on individual sales reps' percep- average experience (8.83 years) in Firm 3 is the lowest
tions. Considerable variance in these perceptions, coupled among all firms (11.92 years overall); these less experi-
with the significant interaction effect with experience, sug- enced sales reps may respond better to managerial tracking
gest that research in sales force management should focus than their experienced counterparts in other firms.

TABLE 3
Elasticity of Marketing Lead Time Proportion
Controllable Factor Aggregate Firm1 Firm 2 Firm 3 Firm 4
Quality of prequalification 1.12 1.24 .58 1.64 1.43
Managerial tracking -.14 -.08 -.27 .33 .02
Marketing lead volume -.07 .05 -.14 -.16 .21
Notes: Elasticities refer to the effect of controllable factors on marketing lead follow-up time, at the aggregate level and for each of the four
firms.

The Sales Lead Black Hole / 63


The elasticity of lead follow-up time to the volume of Appendix A
leads is only -.07 on average across the four firms. The
Survey Items Used to Measure
results pertaining to the volume of sales leads, though sta-
tistically significant, are thus of little managerial concern.
Constructs
Better prequalification and appropriate uses of managerial independent Variabies
tracking are the areas in which managers should focus their Motivation
attention to fill their sales lead black hole. Perceived Quality of Prequalification (a = .80)
Limitations and Further Research 1. My company screens leads effectively.
2. My company does a terrible job of filtering out cold leads
Our study uses data from firms that are major players in (reverse coded).
their industries and have been so for several decades; they 3. My company is competent at throwing out low return gen-
likely have sales processes and systems in place that incor- erating leads.
porate their organizational learning about sales force man- 4. My company is very good at giving only hot leads to sales-
agement and lead generation. Consequently, our conclu- people.
sions might not apply to smaller or younger firms whose 5. My company does a wonderful job of screening leads.
sales processes are still evolving. The relationships we Managerial Tracking of Lead Follow-Up (a = .82)
hypothesize also might vary in industries other than the four
included in our study. 1. Call reports are used extensively by management to track
the follow-up of company leads by salespeople.
Our study does not take into account heterogeneity in 2. My organization uses lead tracking software system to
sales reps' stated customer acquisition responsibilities. monitor follow-up of company leads by salespeople.
Some may focus on maintaining relationships with existing 3. Tracking the follow-up of company leads by salespeople is
key accounts, while others may focus on acquiring new cus- not done formally in our organization (reverse coded).
tomers. The sales reps'job descriptions and stated responsi- 4. My supervisor is very involved in monitoring the follow-up
bilities could provide alternative explanations for their allo- of company leads by salespeople.
cations of time between marketing and self-generated leads. 5. Management emphasizes sales managers tracking the fol-
low-up of company leads by their salespeople.
We used perceptual measures for two explanatory
variables: managerial tracking and quality of prequalifica- Opportunity
tion. Lead prequalification quality could vary across geo- Marketing Lead Volume
graphies and industrial sectors, depending on the expertise 1. About how many company leads do you get per year?
of the marketing personnel who conduct it. The extent of
Ability
managerial tracking also could vary across managers, Past Performance
depending on their individual working style. Perceptual
measures of managerial tracking and prequalification 1. Approximately what percentage of your sales quota did you
obtain last year?
helped us capture within-firm heterogeneity, but they inher-
ently suffer from measurement error and perhaps some psy- Experience
chological bias, which makes their use a limitation. 1. How many years of selling experience do you have in total?
Our dependent variables indicate the proportions of
time that sales reps allocate to two avenues for customer Dependent Variables
acquisition. Thus, the managerial implications we draw are 1. About how many hours do you work on average per month?
limited to proportional allocations of time; they may not 2. We count follow-up as starting when you contact a prospect
extend fully to related constructs such as actual time spent in any way at all and ending when you know what the
on marketing leads (in hours) or the number of leads fol- prospect will do (you get the order, somebody else gets the
order, or you write them off as hopeless). About how many
lowed. Similar analyses with other measures could add to hours typically per month do you spend following up on:
and enrich our findings. Lead-level data from firms' cus-
tomer relationship management systems might make such •Company leads?. hrs/month
analyses possible. •Prospects you find yourself? . hrs/month

Conclusion
For too long, sales and marketing have blamed each other Appendix B
for the sales lead black hole. There is more than enough Priors arid Full Conditional
blame to go around. We hope our results demonstrate that Distributions
the solution requires not just more general cooperation but In this Appendix, we provide details on the priors and full
rather forms of cooperation that are attuned to individual conditional densities used in the Bayesian estimation of our
sales reps' abilities and the firm's specific marketing and Dirichlet regression model. Our dependent variables are the
sales processes. proportions of total time allocated to marketing leads and

64 / Journal of Marketing, January 2013


self-generated leads by sales rep i, or Yj^, and Yjg, respec- coefficients related to marketing and self-generated lead
tively, and the proportion of time allocated to nonacquisi- time proportion, we specify parameters as firm specific
tion, Yjn = 1 - Yin, - Y¡s. We specify ,, Y,,, and Y;„ as dis- (firm[i] = 1,..., 4) with aggregate-level multivariate normal
tributed Dirichlet, such that distributions; that is, ßfin„[i] ~ MVN(ß^, V^,) and Yfirm[i[ ~
MVN(YS, V J . We then specify the means of these aggregate
(Bl) (Yi„, Y¡,, YJ ~ Dirichlet(Ai„, A^,, AJ,
mean parameters to have vague but common multivariate
where Aj^,, Ajg, Aj^ are the positive real parameters of the normal distributions, such that ß^, - MVN(ßo, Vom) and Ys ~
distribution that represent the attractiveness of each option. MVN(YO, VQS). The variance-covariance matrices for the
The relationships between the explanatory variables parameters are specified as inverse Wishart distributions, or
and the proportions of time allocated to marketing and self- (V J - i ~ Wishart(Vm, u„), (V,)-i ~ Wishart(v,, u,), (Von,)"' -
generated leads can then be specified by the following: Wishart(von,, UQ^), and (VQS)-! ~ Wishart(vos, UQS). TO
refiect our lack of knowledge about the population means
(B2) log(Ata) = Qfi^[¡] + [^^{j (Xl), and of the parameters, we specify ßo = 0 and Yo = 0» aiid the
variance-covariance matrices u^,, u^, UQ^,, and UQ^ as diagonal
with large values (1000) for variances. The known dimen-
(B3) sions of the Wishart distributions are specified by v^, = 11,
Vs =11, Vom =11, and VQS =11, for the number of parameters.
where We specify the firm-specific intercepts as distributed nor-
mal with vague parameters, such that Í2f,rm[i] ~ N(|a,Q, ÖQ)
^finti[i] and 4)finTi[i] are firm-specific intercepts, and Ofirm[i] ~ N(|J.4,, G<j>). The means [IQ and \i^ are distrib-
ßfirm[i] and Yf,rn,[i] are firm-specific vectors of uted vague normal N(0,1000). The inverse variance parame-
coefficients, and ters (OQ)-! and (a<i,)-i are distributed gamma(.OOl, .001).
Xj is the vector of explanatory variables for sales rep i.
Fuil Conditional Distributions
We define the Dirichlet parameter A¡n as a sales rep-
specific unknown constant (accounting for heterogeneity) To construct the Markov chain by updating samples itera-
for identification purposes, drawn from a vague prior uni- tively, we derived full conditional densities for all the
form distribution U(0, 100). parameters. First, the full conditional density of ßfirm[i] does
not have a known parametric distribution. The likelihood
Likelihood Function funcfion of ßf,rni[i] is as follows:
The likelihood of observing the data, given unknown
parameters, or the probability density for Yjj^, Yj^, and Yj^,
is as follows:
(B4) pdf(Yi„,Yi„Yi„)
= pdf(Yi„, Yi3, Yjjpfi^[¡], Yf™[i])ip(ßfinn[i])9(Yfimi[i])-

Following the properties of the Dirichlet distribution, the


likelihood function of the unknown parameters, given the
observed data, is of the following form:
(B5) . Yis, Yi3, X¡)

nIN
,-1

Because this likelihood function cannot be solved in


closed form and we model firm-specific heterogeneity, we
use Markov chain Monte Carlo methods. We draw samples
for the parameters from a Markov chain that was con- The prior is not conjugate with the likelihood, and the resul-
structed using the full conditional densities. We then sample tant conditional density does not have a known parametric
each of the full conditional densities using a Gibbs sampler distribution. Thus, we use a Metropolis-Hastings algorithm,
(in case of a known distribution) or the Metropolis-Hast- with a multivariate normal distribution for the proposal
ings method if the full conditionals are not from a known density with previous draws of ßfirm[i] as the location
family of distributions. parameters and the inverse Hessian of the log likelihood as
the covariance matrix. We use a similar procedure for the
Prior Distributions full conditionals of Yf,rm[i]-
To estimate the model in Equations B1-B5 using Markov Second, the full conditional of aggregate parameters ß^
chain Monte Carlo methods, we place diffuse but appropri- is multivariate normal, a known parametric distribution.
ate prior distributions for all unknown parameters. For the Because there are 11 parameters and 4 firms in our data set,

The Saies Lead Black Hole / 65


we sample ß^, using a Gibbs sampler from the conditional We use a similar procedure to sample for the full condition-
distribution: als of Ys-
Third, the full conditional of (Vm)"', which is the
(B7) inverse variance-covariance of ßfinn[i]' 's Wishart, given by
( V J - l ~ W{(V„ + 4), [u;,' + ZUlihrmia - ßm)(ßf,rm[i) "
ßm)']}' which is a known parametric distribution, so we can
use a Gibbs sampler. We use a similar procedure to sample
for the full conditional of (Vj)-'.

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