Landing that major account often comes with a fat paycheck and esteem around the workplace.
But is taking a chance on catching the big fish worth blowing off many easy-to-catch,
smaller deals, and potentially coming up empty-handed?
Jeremy Wolter, associate professor in marketing at the Harbert College of Business, believes that many sales people “over-invest in their pursuit of the (big) account.”
“If a salesperson is trying to optimize their resource allocation, they are well-served
by going after smaller accounts because it will be easier to accurately assess the
opportunity,” said Wolter, who is co-authoring the paper, “I think I can … I think I can: The impact of perceived selling efficacy and deal
disclosure on salesperson escalation of commitment.”
“Typically, sales people are not good at allocating resources to maximize account
profitability,” Wolter said. “Instead, sales people often focus on winning accounts
and allocate resources past a point of diminishing returns because of an escalation
of commitment (tendency to try harder if signals suggest the odds of winning the account
Whereas major accounts could allow sales people to make their monthly quota in one
deal and reaching sales goals, heavy-hitting deals come with a price. More time. More
energy. More everything at the risk of losing smaller deals. A sales person has only
so many resources to allocate toward prospects. Choose wisely.
“There are many ways a sales person can talk his or her self into devoting resources
towards a bad deal,” Wolter added. “Also, seek an outsider’s perspective (i.e., their
sales manager) to obtain a more objective assessment of the situation. Interestingly,
sales people who are very self-confident are the ones least likely to rely on the
advice of their sales manager but are also the ones most likely to fall victim to
escalation of commitment.
“It is very hard for a salesperson to make the decision to give up on a potential
client,” said Wolter, who believes big accounts should still be pursued. “But sales
people should be open with their manager and seek their advice on calculating the
odds of winning.”