The Effects of Quota Frequency on Sales Force Performance: Evidence from a Field Experiment
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Chung, Doug J., and Das Narayandas. "The Effects of Quota Frequency on Sales Force Performance: Evidence from a Field Experiment." Harvard Business School Working Paper, No. 17-059, January 2017.Abstract
We collaborate with a Swedish retail chain to conduct a field experiment in which we change the sales force compensation scheme from a monthly to a daily quota plan. This intervention, along with a control group that did not encounter a change in compensation structure, allows us to analyze the effect of quota frequency on sales force performance. Over a given time frame (i.e., a month), we find that shifting to a temporally more frequent quota plan—the daily quota plan as compared to the monthly quota plan—leads to an increase in sales performance, mainly for low-performing salespeople, by preventing them from giving up in the latter days of a month. However, we find high-performing salespeople to give up more frequently in earlier days of a month under the daily quota plan. With more frequent quotas, salespeople sell more quantities of low-ticket items, which benefit the firm through a decrease in returned merchandise. However, with quotas set over shorter time horizons, even the highest-performing salespeople focus mainly on incremental sales, resulting in a decrease in sales of higher-value-added and higher-margin products, thereby hurting firm profits.Terms of Use
This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAPCitable link to this page
http://nrs.harvard.edu/urn-3:HUL.InstRepos:30004131
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