Bottleneck in the Implementation of Direct Marketing in the Industrial Context: Paradoxical Behaviour of Salespeople?

Escalating sales costs have prompted organizations to explore avenues for improving salesperson productivity. This has led to a rapid growth of direct marketing in the industrial marketing context. Direct marketing in the industrial context is often intended to play a supporting role for salesperson efforts. In industrial marketing, frequently, the predominant measurable response intended to result from direct marketing is the generation of prospect leads. Leads are inquiries sent to the organization by potential customers in response to marketing communications aimed at them by the organization. Leads are turned over to the field for follow-up and closing the sale. Kotler depicts this coupling of multiple media direct marketing and personal selling as integrated direct marketing. This paper confronts a major bottleneck currently facing many industrial organizations in the successful implementation of integrated direct marketing, namely apathetic reaction on the part of many salespeople to the follow-up of management leads. The indifferent reaction of salespeople to management leads which are intended to aid salespeople is a paradox. The sales lead paradox (zealous management, apathetic salespeople) is examined in this paper by conducting a cross-industry field study. The paper addresses: 1) which salespeople follow-up on leads; and 2) critical determinants of lead follow-up. Data was obtained from 788 salespeople from a variety of firms across industries. The proposed model of lead follow-up was analyzed using Tobit. The analysis disputes traditional thinking on part of management and trade press that failure to follow-up on management leads by many salespeople is the result of irrational behavior on the part of salespeople making it extremely difficult for management to take steps to enhance the extent of lead follow-up by salespeople. In fact, it is found that salespeople predominantly act logically in their behavior with regard to follow-up of management leads. Hence, as far as increasing the extent of lead follow-up by salespeople is concerned, the ball is in the management’s court. “Business-to-business is almost certainly the fastest growing area of direct marketing” (KTP 1988, p. 10). Direct marketing has been defined by Direct Marketing Association as, “an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location,” (Kotler 1991, p, 622). In industrial marketing, frequently, the predominant measurable response intended to result from direct marketing is the generation of prospect leads. Leads are defined as, For the industrial marketer, “direct marketing primarily means lead generation, using a media vehicle to identify and qualify prospects being turned over to the field for follow-up and closing the sale” (Okun 1987, p. Product and service related inquiries/responses, directed to specific entities in the organization by potential customers, as a result of exposure to different marketing communications focused at them by the organization through advertisements, promotion, public relations, direct mail, telemarketing, sales seminars/product demonstrations, and trade shows, among others. 142). Thus, direct marketing in the industrial context is often intended to play a supporting role for salesperson efforts. Kotler (1991, p. 626) depicts this coupling of multiple media direct marketing and personal selling as integrated direct marketing. This paper confronts a major bottleneck currently facing many organizations in the successful implementation of integrated direct marketing, namely apathetic reaction on the part of many salespeople to management-generated leads. Since management regards leads as sales facilitators, the failure to respond to leads by many salespeople, is viewed as illogical behavior on the part of salespeople, in turn thwarting management efforts to enhance the extent to which leads are pursued by salespeople. To address the above issue, this paper develops a conceptual model for the extent of lead follow-up undertaken by sales people. The conceptual model is tested by conducting a cross-industry field study, and analyzed using tobit. It is investigated whether salespeople depict logical behavior with respect to factors that are proposed to be related to lead pursuit in the conceptual model. The aim is to unravel consistent directional relationships between factors proposed in the conceptual model and the pursuit of management-generated leads by salespeople. Deciphering these relationships would equip management with the ability to take positive steps to enhance the extent to which leads’ are followed up by salespeople. The paper is organized into five sections. Section I motivates the research problem. Section II presents the conceptual framework for the lead follow-up model, and elaborates on factors hypothesized to show a relationship with follow-up. Section III describes the field study and the method of analysis used in the study. Results, discussion of findings, and managerial implications are presented in section IV. Finally, contributions and directions for future research are outlined in section V. I. DEVELOPMENT OF THE RESEARCH PROBLEM Spiralling costs of personal selling, have made it imperative to improve salesperson productivity, motivating researchers to investigate several determinants of salesperson performance in past years. In addition, conceptual frameworks of salesperson performance have been advanced (eg. Walker, Churchill, and Ford 1977; Weitz 198 1). Theoretical pieces trying to gain insight into several sales management issues such as salesperson’s allocation of effort (eg. Lodish 197 1; Zoltners and Sinha 1980), salesperson compensation (Basu et al. 1985; Berger and Jaffe 199 1; Farley 1964; La1 and Staelin 1986; Rao 1990), and salesforce restructuring (Rangaswamy, Sinha, and Zoltners 1990), with the objective of maximizing returns have been put forth. Finally, a more recent stream called the cognitive sales paradigm focuses on understanding differences in knowledge structures between more effective and less effective salespeople (Leong, Busch, and John 1989; Sujan, Sujan and Bettman 1988; Szymanski 1988; Szymanski and Churchill 1990). However, our understanding of the determinants of sales performance remains deficient, as indicated by Churchill et al. (1985) and Ford et al. (1987). Review of research confronting the issue of salesperson performance, indicates that the goal of being able to advance a global theory of predictors of sales performance will have to remain unfulfilled. This is because sales performance is too complex a phenomenon to be understood and captured by means of a few universal dimensions. It is now understood that determinants of effective performance vary from situation to situation giving rise to a contingent view of salesperson performance (e.g., Anderson and Oliver 1987; Churchill et al. 1985; Weitz 1981). Hence, it appears beneficial to turn our attention to external instruments (sales facilitators) that would help salespeople improve their efficiency, and this is where management-generated leads fit in. ROLE OF MANAGEMENT-GENERATED LEADS: Leads are sales aids. It is believed that valid leads should free sales reps from some of the tasks of prospecting, help sales reps target their sales effort, in turn yielding more time to contact new prospects and/or service existing accounts. Thus leads are presumed to