MU study suggests best practices for attracting new customers
Article courtesy of MU News Bureau
Study shows the key to attracting new customers is to know how to leverage new and veteran salespeople.
The holiday shopping season can make or break some businesses. A new study from the University of Missouri has found 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.
Srinath Gopalakrishna, professor and chair of the Department of Marketing in the MU 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 said. “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 said.
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 said.
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 said. The MU 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 said.
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 said, 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 said. “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”
In the study, Gopalakrishna collaborated with Andrew Crecelius, an assistant professor in marketing at Iowa State University, and Ashutosh Patil an assistant professor in marketing at Cleveland State. “Hunting for new customers: Assessing the drivers of effective salesperson prospecting and conversion” was published in the Journal of Business Research.