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Summary

The sales lead “black hole”—the term used to describe the 70% of the leads generated by marketing departments that sales representatives do not pursue—may result from competing demands on the sales reps’ time, including the needs to nurture existing accounts, follow-up on self-generated leads, and deal with administrative tasks. We analyze data from 461 sales reps in four firms using a nested logit model of the sales representative time allocation decision process. We find that sales reps spend more time pursuing marketing leads if they perceive their firm has an effective sales lead prequalification process. We also find that as sales reps become more experienced, they are less likely to (1) pursue marketing-generated leads, (2) respond positively to managerial tracking of marketing lead follow-up, or (3) respond positively to greater marketing-generated lead volume. Our results also show thatthe better the sales reps’ past performance, the more likely they are to respond positively to an increase in volume of marketing-generated leads and respond negatively to managerial tracking of marketing lead follow-up. We discuss the implication s of these results for both the theory and the practice of motivating and compensating sales representatives.

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