Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 1 of 10




   Product Knowledge as...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 2 of 10




1994). Noting that skil...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 3 of 10




study is to assess impa...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 4 of 10




economic conditions. Wa...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 5 of 10




interaction performance...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 6 of 10




Exploratory factor anal...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 7 of 10




         Table 2. Analy...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 8 of 10




such as adaptive sellin...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 9 of 10




so the possible differe...
Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales ... Page 10 of 10




Szymanski, David M., Dete...
Upcoming SlideShare
Loading in …5
×

Product Knowledge as a Behavioral Outcome Variable and Its ...

1,016 views
933 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,016
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
10
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Product Knowledge as a Behavioral Outcome Variable and Its ...

  1. 1. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 1 of 10 Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Effectiveness Michael L. Boorom, California State University - San Bernardino Product knowledge is explicated within the Plank and Reid (1994) Performance Framework as a customer interaction behavioral variable wherein the relative quality of salesperson performance in possessing and utilizing product knowledge impacts sales effectiveness. Using a sample of 225 salespeople, MANOVA analysis indicates that salespeople with "above average" product knowledge report significantly higher levels of sales effectiveness. Background The received view of sales performance incorporates possession of product knowledge as an antecedent to customer interactions, assuming that acquisition of knowledge occurs prior to salespeople engaging in any sales presentations (Walker, Churchill and Ford 1979). Also, product knowledge is depicted as a skill variable that impacts sales effectiveness (Walker, Churchill and Ford 1979) because varying levels of product knowledge possessed by salespeople will partially account for differing levels of sales effectiveness. While the portrayal of product knowledge in this manner is quite common sensical, the theorized relationship between product knowledge and sales effectiveness has not been demonstrated in empirical studies: Moore Business Forms and Forum Corporation report studies revealing weak correlations between classroom test scores on product knowledge and sales performance (Hequet 1988): a meta-analysis found that skill variables account for less than 10% of the variation in sales performance (Churchill et. al. 1985). A partial explanation of these insignificant findings may result from range restriction in salesperson product knowledge. in that, purchasers expect and demand salespeople to exhibit sufficient product knowledge, and salespeople generally meet this requirement (93% of industrial purchasers thought supplier salespeople possess adequate product knowledge. Forbes 1993). Additionally, those salespeople lacking adequate knowledge may be eventually separated, voluntarily or involuntarily, from the sales force (insufficient product knowledge is viewed as a major cause of salesperson failure. Ingram. Schwepker and Hutson 1992). A more convincing explanation of the perplexing knowledge-effectiveness relationship has been offered in a recent framework (see Figure 1) re- conceptualizing various components of salesperson performance (Plank and Reid file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  2. 2. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 2 of 10 1994). Noting that skill level is defined as "learned proficiency at performing the necessary tasks" (Walker, Churchill and Ford 1979. p. 23), skill variables are posited to be related to specific sales behaviors (Plank and Reid 1994), and in this case, salespeople acquire expertise in product knowledge in order to understand customer problems and offer solutions. Sales behaviors are defined as "what people do (the tasks they expend effort on) in the course of working" (Walker, Churchill and Ford 1979, p. 35) and previous studies have demonstrated several salesperson behaviors related to product knowledge: "keeping abreast of market conditions" (Lamont and Lundstrom 1974), and "possessing technical knowledge" (Behrman and Perreault 1982). Additionally, sales behaviors can be classified into two categories: customer interaction, e.g., product knowledge discussed during a sales presentation, or noncustomer interaction, e.g., preparing a proposal involving product specifications prior to a sales meeting (Plank and Reid 1994). Last, each sales behavior can be evaluated by how well salespeople execute the necessary tasks, so behavior implies a relative performance component (Plank and Reid 1994), and product knowledge has been measured as a performance outcome in the Behrman and Perreault (1982) study. The skill - behavior - performance linkage provides clarity to the inconclusive results concerning product knowledge and sales effectiveness by demonstrating that mere possession (skill level) may not impact sales effectiveness. Possession of knowledge in isolation from customer interactions contributes little to sales outcomes, as reflected in the weak associations between classroom scores and sales effectiveness. More explanatory power exists in studying actual use (behavior) of product knowledge that dynamically impacts customer interactions by harmonizing customer needs to available products. However, the quality level of knowledge usage (performance) may range from useful to detrimental, so behavioral performance (on product knowledge) mediates any impact of knowledge upon sales outcomes. Knowledgeable salespeople, who speak in "technical jargon" and bore or offend prospects, discover that product knowledge alone does not facilitate completed sales. Conversely, salespeople, who can explain complex products in simple, understandable terms and can provide unique solutions for unusual customer dilemmas, find that product knowledge facilitates sales effectiveness. While this conceptualization adds clarity, confusion also arises because a variable such as product knowledge can be characterized as an antecedent, a process behavior, or a performance outcome within the framework. Rather than use a generic label such as "product knowledge," each framework variable must be identified by its position within a specific linkage or path and by its specific interrelationships with other variables. Given the new conceptualization of salesperson performance, the purpose of this file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  3. 3. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 3 of 10 study is to assess impact of product knowledge, using a performance outcome measure of the quality of salesperson product knowledge, upon sales effectiveness. This study is organized into five parts: (1) explication of study variables. (2) proposition tested, (3) methodology, (4) results and (5) discussion. Figure 1 Annotated Framework of Salesperson Performance and Effectiveness Plank and Reid 1994 Antecedents of Sales Process Outcomes of Sales Sales Process Process Customer Interaction or Noncustomer Interaction Behavior --- > Performance --- > Sales Skill --- > Effectiveness Possession of Use of Quality Quota Achieved Product Product Knowledge of Behavior Knowledge Study Variables Product Knowledge Typically, product knowledge is defined as possession and understanding of information about a company's economic offering (including tangible goods, intangibles such as services, and systems combining goods and services), competing products, and their company's policies and procedures relevant to selling. In this study, salesperson behavior to attain product knowledge is addressed and the quality of the behavior is specifically used as a performance (outcome) measure. The measure attempts to identify how well salespeople attain and retain product knowledge for use in sales presentations. Sales Effectiveness Conceptually, some confusion has resulted in the study of sales effectiveness because work behavior (performance) has been used interchangeably with work outcomes (effectiveness). Performance is limited to criterion variables controllable by salespeople, e.g., effort expended, and sales effectiveness measures include uncontrollable factors such as market potential, competitors, and national file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  4. 4. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 4 of 10 economic conditions. Walker. Churchill and Ford ( 1979, p. 35) describe effectiveness as, "some summary index of organizational outcomes in which an individual is at least partially responsible." In this study, sales effectiveness is defined as accomplishing sales objectives, i.e., meeting quotas. Proposition Tested Many times, selling is a mini-marketing research project wherein salespeople ask questions and listen in order to identify customer importance weights on various products attributes, then, salespeople provide adequate product information about valued attributes. Expansive product knowledge is used to activate adaptation of sales presentations that provide customers with offerings that meet their product- specific needs (Alessandra, Wexler and Barrera 1988). Knowledgeable salespeople can provide more information to customers about a variety of products allowing increased flexibility in presentations and customization of problem solutions. Although studies have not found differences in product knowledge, by itself, to impact sales effectiveness (Sujan, Sujan and Bettman 1988, Szymanski and Churchill 1990), range restriction related to salesperson background and experience may account for the lack of divergence in sales effectiveness. Szymanski and Churchill (1990) suggest that sales differences may be discovered when salespeople vary more widely in their levels of product knowledge, and variation may result from a combination of training and preparation and from the number and complexity of products sold. As the number of and complexity of offerings expand, the product knowledge of salespeople becomes more widely distributed and knowledge differences may affect sales effectiveness. In this study, salespeople, due to insurance industry circumstances, must possess knowledge of many, complex company products, and salesperson knowledge levels may be sufficiently dispersed to detect sales differences related to product knowledge performance outcomes. Using a sample of salespeople manifesting a wide range of knowledge allows investigation of range effects. Additionally, customizing product solutions to unique customer situations can increase potential sales through cross-selling and upselling (Weisberg 1994). Therefore, product knowledge is more likely to demonstrate significant impact upon sales effectiveness. In summary, the preceding discussion justifies the testing of a proposition offered by Plank and Reid (1994. p. 54). Proposition 7: A combination of customer interaction performance and noncustomer file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  5. 5. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 5 of 10 interaction performance affects success or failure in a single transaction. Since performance aspects of both product knowledge behaviors related to customer interactions and/or noncustomer interactions are predicted to impact sales effectiveness, no categorization was attempted to differentiate the impact of the two similar behaviors. Such categorization of product knowledge behaviors can occur in future studies, if the current analysis is useful. Methodology Sample A convenience sample of 225 (47 female, 178 male) salespeople, selling insurance in Florida and California, was generated through their participation in sales training seminars. Salesperson characteristics indicate their average age was 39.6 and average selling experience with their current company was 5.6 years with a range of 6 months to 30 years. About 18% of the salespeople earned below $ 30,000, 47% earned between $ 30,000 - $ 60,000, and the remaining 35% earned above $ 60,000. Also, salespeople indicated they sold a "wide variety of products" with an average response of 3.72 out of a possible 5.00. Measures. Product Knowledge (PK): Product knowledge is measured by four self-report items reflecting salesperson behaviors associated with attaining product knowledge used to support customer interactions. The outcome component of these behaviors is captured by asking salespeople to compare their actions to other salespeople and report their relative performance using a five-point ("outstanding" "above average" "average" "below average" "needs substantial improvement") scale that has displayed internal consistency reliability of .81 (Behrman and Perreault 1982, Lagace and Howe 1988). Items cover content such as: "knowing product specifications," "knowing product applications." and "keeping abreast of technological change." Sales Effectiveness. This variable is measured by a single, self-report item that asked salespeople to report their percentage of quota attained. Insurance companies utilized in the study set total point quotas based on the type (life, disability income, etc.) of policy sold and the dollar amount of coverage. Salespeople sell a variety of policies that earn points toward fulfilling their quotas, and the percentage of quota attained is a direct measure of sales effectiveness. Analyses file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  6. 6. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 6 of 10 Exploratory factor analysis and internal consistency reliability will be generated to assess the unidimensionality of the product knowledge performance outcome variable. The proposition will be tested by computing a product moment correlation between a summate of product knowledge and the sales effectiveness item. Also, the proposition is tested by categorizing salespeople into three groups based on their summated product knowledge ratings ["above average" ( 16-20), "average" (12-15), and "below average" (below 12)], and using MANOVA to investigate if significant differences exist among group means on the single item of sales effectiveness. Results Viewing Table 1, the product knowledge dimension exhibits acceptable psychometric properties with all factor loadings above .60, high variance explained (92.8%), and a coefficient alpha of .86. Since the measure is unidimensional, adding items to form summate totals is appropriate. The sales effectiveness item, a single measure of percentage of quota attained, produced a sample average of 71.8 %, standard deviation of 22%, and a range of 20% to 100%. Table 1. Exploratory Factor Analysis of Product Knowledge Factor Loadings PK1 0.84599 Eigenvalue 2.35 PK2 0.93064 Variance Explained 92.8% PK3 0.67110 Coefficient Alpha: .86 PK4 0.69929 Method: Iterated Principal Factor Analysis In the first test of the proposition, a significant correlation of .40 is exhibited between product knowledge and sales effectiveness. In the next test the MANOVA results (Table 2) reveal that salespeople attaining "above average'' product knowledge report significantly higher levels percentage of quota attained than do salespeople categorized as "average" and "below average" on product knowledge. These results would partially support the proposition that higher reported product knowledge performance is associated with greater levels sales effectiveness: however, significant effects are revealed only for the "above average" group. file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  7. 7. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 7 of 10 Table 2. Analysis of Variance by Levels of Product Knowledge Quota(%) Means by Level of Product Knowledge Product Knowledge N Mean SD Below Average 22 55.5 25.4 Average 110 66.4 25.4 Above Average 93 80.8 21.1 Quota(%) Mean Differences by Level of Product Knowledge Product Knowledge Quota (%) Below Average- Average 10.9 Below Average - Above Average 25.3* Average - Above Average 14.4* variance explained by 12.2% product knowledge * significant at p < .05 Discussion These study results demonstrate that salesperson product knowledge, when measured as a behavioral outcome. does impact sales effectiveness. Interestingly, a knowledge threshold may exist to obscure and limit the significant effects of product knowledge. No differences are detected between salespeople realizing "below average" and "average" levels of product knowledge, but when salespeople attain "above average" knowledge significant differences become discernible in sales effectiveness. Salespeople, who exceed the "normal" knowledge levels for a company or industry by incrementally adding to their product knowledge, through various modes of learning, e.g. company training, conversations with customers, etc., may gain a competitive advantage over other, less knowledgeable salespeople. Pragmatically, the real questions become, "how much product knowledge is enough?" and "what types of information are most useful?" Obviously, these questions can not be considered in isolation because other behavioral variables file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  8. 8. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 8 of 10 such as adaptive selling impinge on the effectiveness of product knowledge. Research findings have implications for both academicians and practitioners. First, reinforcing conventional wisdom, sales managers must realize that novice salespeople need as much product training and education as possible to boost their knowledge to a level that can satisfactorily support selling activities (behaviors). Next and most difficult, sales managers must convince veteran salespeople that additional time and effort invested in attaining extra product knowledge is worthwhile and will be rewarded with additional sales. Many veterans think they have sufficient product knowledge to succeed and will not pursue additional learning activities. Last, managers must address situations wherein product knowledge is multiplying and changing so quickly that salespeople really cannot stay current with all products within a line. To help novice and veteran salespeople access product knowledge, many companies are providing salespeople with laptop computers and software designed to explain numerous products in extensive depth. In multimedia format, computer hardware and software facilitate both noncustomer interactions, e.g., learning and presentation preparation, and customer interactions, e.g., actually making presentations to customers (Trumfio 1994). Academicians should recognize the usefulness of the alternative framework of salesperson performance, especially the mediating power of sales behaviors and their respective performance outcomes on sales effectiveness (Plank, and Reid 1994). Obviously, further study of sales behaviors, the activities salespeople actually render, and performance outcomes, the relative success of effecting sales behaviors, may potentially increase understanding of the sales process. Sales researchers are encouraged to investigate propositions encompassed in the Plank and Reid (1994) alternative framework, and determine if the relationships are viable and provide explanatory power. Importantly, future study of the alternative framework will require development of a taxonomy of sales behaviors and appropriate measurement items. As Plank and Reid (1994) note, the taxonomy of sales behaviors for specific sales positions needs to be expanded and made more inclusive of a variety of activities actually performed by salespeople. Coincidentally, measurement items must be created to accurately describe specific sales behaviors to categorize behaviors as customer or noncustomer interactions, and to measure the relative success or outcomes of performing the sales behaviors. In the current study, the product knowledge measurement items (Behrman and Perreault 1982) did not categorize sales behavioral performance into noncustomer interactions and customer interactions, file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  9. 9. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales Eff... Page 9 of 10 so the possible differential effects of customer versus noncustomer behaviors cannot be discerned. In order to properly assess variable relationships, suitable measurement items must be crafted. References Alessandra, Tony, Wexler, Phil and Barrera, Rick, Non- Manipulative Selling, New York, Prentice Hall. 1987. Behrman, Douglas N. and Perreault Jr., William D., Measuring the Performance of Industrial Salespersons. J. of Business Research 10 (1982): pp. 355-370. Churchill, Gilbert A., Ford, Neil M., Hartley, Steven W. and Walker. Jr., Orville C., The Determinants of Salesperson Performance: A Meta-Analysis. J. of Marketing Research, 22 (May 1985): pp. 103-118. Hequet, Marc, Product Knowledge: Knowing What They're Selling May Be the Key to How Well They Sell It. Training (Sales Training Supplement). 25 (February 1988): pp. 18-22. Ingram, Thomas, Schwepker Jr., Charles H. and Hutson, Don, Why Salespeople Fail. Industrial Marketing Management. 21 (1992): pp. 225-230. Lagace, Rosemary R. and Howe, Vince, An Evaluation of the Behrman and Perreault Salesperson Performance Scale, in Summer Educators' Conference Proceedings. Ingene and Frazier, eds.. Chicago, American Marketing Association. 1988, pp.313. Lamont, Lawrence M. and Lundstrom, William J.. Defining Industrial Sales Behavior: A Factor Analytic Study in 1974 Combined Proceedings, Chicago. American Marketing Association, pp. 493-498. Merrill, David and Reid, Roger, Personal Styles and Effective Performance, New York, AMACOM, 1984. Plank, Richard E. and Reid, David A., The Mediating Role of Sales Behaviors: An Alternative Perspective of Sales Performance and Effectiveness. J. of Personal Selling & Sales Management. 14 (No. 3, Summer 1994): pp. 43-56. Sujan, Harish, Sujan, Mita and Bettman, James R.. Knowledge Structure Differences Between More Effective and Less Effective Salespeople. J. Marketing Research. 25 (February 1988): pp. 81-86. file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04
  10. 10. Product Knowledge as a Behavioral Outcome Variable and Its Impact on Sales ... Page 10 of 10 Szymanski, David M., Determinants of Selling Effectiveness: The Importance of Declarative Knowledge to Personal Selling Concept. J. of Marketing. 52 (January 1988): pp. 64-77. ------, Churchill Jr., Gilbert A., Client Evaluation Cues: A Comparison of Successful and Unsuccessful Salespeople. J. of Marketing Research. 27 (May 1990): pp. 163-174. Trumfio, Ginger, Multimedia: The Future is Now. Sales & Marketing Management. 146 (November 1994): pp. 74-80. Walker, Jr. Orville C., Churchill, Gilbert A. and Ford, Neil A., Where Do We Go From Here? Some Selected Conceptual and Critical Issues Concerning the Motivation and Performance of Industrial Salespeople. in Critical Issues in Sales Management, the State of the Art and Future Research Needs, Albaum and Churchill, eds., Eugene. OR, University of Oregon, 1979, pp. 10- 75. Weisberg, Jacob, 6 Principles to Promote Upselling and CrossSelling. Telemarketing Magazine. (September 1993): pp. 76-78. file://C:WINDOWSDesktop1995SMA95swa114.htm 5/21/04

×