Do Hot Hands Exist in a Sales Environment?
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Do hot hands exist in a sales environment?
Most people would say no.
Most people would say hot hands are a misconception caused by natural bias.
But what if we told you most people are wrong?
We invited? Prof. dr. Nick Lee , Ph.D., Professor at Warwick Business School, on the podcast to talk?about his study of hot hands in sales.
He told us that not only do hot hands exist — but they could be used to?increase sales by up to 18%.???
Nick talks about his study in depth on our latest episode of?The Sales Compensation Show.?Listen to it?here.
Thinking Differently
“Hot hands” refers to the idea that a successful streak could influence a person's future success — you often hear it used to describe a basketball player performing above their average.
In sales, the idea is that when a salesperson makes a few sales in a row, their confidence and motivation increase, driving them to close even more deals.
Again, most people would say this can't be consistently true.
They would say we’re biased to see patterns in performance or any kind of data sequence.?And that any short-run performance increase is a coincidence and not influenced by luck or hot hands.
But they’re wrong.
Think of sales like a basketball game.
If a player has a long-run average field goal percentage of 50% but is shooting at 70% in their last three games, we say they've got hot hands.
Most people will say that you can’t use this data to predict the likelihood of their next shot going in.
But why not?
By that logic, their psychological state couldn’t influence their performance.?But we know that people who are more confident and motivated typically perform better.
If the player has hot hands, is it that outlandish to assume they are more likely to hit their next shot?
It’s the same in sales.
If your reps are on a successful sales streak, it's completely rational to assume they are more likely to have success on their next sales call.
Let's explore why:
The Hot Hand Phenomenon
Nick told us about an experiment he conducted to test if the hot hand phenomenon in sales was true.
His goal was to prove that hot hands do exist and that it was possible to induce a hot-selling state that increases sales.
He tested his hypothesis by conducting a three-month study at a call center with 100+ sales reps and two office locations.
One office was a purpose-built call center with spaces designed for social interactions. The other was a traditional office space where people primarily worked in isolation and had limited social interactions.
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Analyzing the data revealed that social interactions in a call center environment had a positive effect on workers’ productivity by breaking negative momentum (cold streaks).
It showed that integrating a social interaction variable into a sales environment could help break salespeople out of a cold state — and potentially help them get on a hot streak.
Even more interestingly, those same social interactions didn't cause the salespeople to break their hot streaks.?
Nick simulated the results of incorporating these?findings into a model of the call center and concluded it would have increased sales by 18% over those three months.
So, in theory, hot hands in sales do exist.
And it's even possible to influence your salespeople, helping them break their bad run and improve their chances of success in their next opportunity.
Nick outlines how to actualize that 18% increase in sales?22:45?into the podcast.
We started this podcast to have in-depth, data-driven conversations about our industry. This episode is definitely?one of those.
?? Upcoming Event: Experts on the Psychology of Successful Sales Incentives
Truth is — sales is both an art AND a science.
And if you don't consider that when building sales incentives plans, you're leaving revenue on the table.
Not sure if your sales incentives pass the test?
On?Thursday, May 4, we're hosting a panel, along with professors, Michael Ahearne , Ph.D. and Prof. dr. Nick Lee , Ph.D. for an expert conversation on:
The Behavioral Science Behind Sales Incentives ??
Save your spot?here.
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