Essays on Sales Management

Abstract

Sales management is one of the most important matters in marketing strategy. An effective sales management policy properly motivates and controls salespeople, thereby aligning their behaviors with the organization's objectives. This dissertation examines the implications of different sales management policies on salespeople's behaviors and, thus, their performance outcomes. The chapters consider two relevant topics on sales management: (i) the role of behavior-based vs. outcome-based sales force control measures and (ii) the effects of sales incentive design on customer relationship management. The first chapter provides a dynamic structural analysis of sales agents' behavior in response to behavior-based and outcome-based sales force control measures. The analysis accommodates both observable, quantifiable sales effort (e.g., number of sales calls) and unobservable, qualitative sales effort (e.g., attitude), as well as the dynamics in demand induced by customer goodwill. The results show a trade-off between increasing the number of sales calls (behavior-based control) and offering additional incentives (outcome-based control); heterogeneous responses to reducing the level of price promotions; and how an organization can minimize the negative impact of reducing price promotions by utilizing different control measures. The second chapter examines the role of incentive design as a lever to motivate customer-managing sales agents. The structural analysis considers four primary tasks associated with customer relationship management (CRM): acquisition, retention, cross-selling, and monetization. The findings demonstrate how providing additional incentives may create a negative spillover and decrease the performance of a substitute task; the long-term implications of incentive design; and how a multiplicative structure, a theoretically optimal contract for balancing effort, can serve as a double-edged sword.