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Article
Publication date: 13 February 2017

Said Echchakoui

This paper aims to examine the roles of both aggregate and specific commission rates to control the sales force in relationship marketing with a customer portfolio.

Abstract

Purpose

This paper aims to examine the roles of both aggregate and specific commission rates to control the sales force in relationship marketing with a customer portfolio.

Design/methodology/approach

Drawn on the concept of customer lifetime value and agency theory, the author calculated both specific and aggregate sales force commission rates in a relationship marketing perspective. Contrary to the prior researchers, the author assumes that, at any period, both the gross margins and retention rate of each customer are a stochastic function of the salesperson’s effort.

Findings

The results indicated that when there is symmetric information between a sales manager and salesperson, both aggregate and specific commissions can be used to monitor the sales force. Under asymmetric information, however, each type of commission rate can only be used under certain conditions. In addition, conditions in which the aggregate commission is equivalent to the specific commission for each customer were derived.

Research limitations/implications

Hypothetical data were used to explain the model. It would be more appropriate to use real data to see its managerial relevance.

Originality/value

In the author’s knowledge, this study is the first that specifically links scholastic customer’s retention and salesperson commission rate to monitor salesperson effort in relationship marketing. It is also the first that shows in which conditions aggregate and specific commission rates are equal for a salesperson’s customer portfolio management.

Details

Journal of Modelling in Management, vol. 12 no. 1
Type: Research Article
ISSN: 1746-5664

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Article
Publication date: 6 March 2017

Pablo Farías, Eduardo Torres and Roberto Mora Cortez

The purpose of this paper is to propose a new salesperson valuation model. This paper presents a calculation method for estimating both the individual lifetime value of a…

Abstract

Purpose

The purpose of this paper is to propose a new salesperson valuation model. This paper presents a calculation method for estimating both the individual lifetime value of a salesperson and the sales force equity.

Design/methodology/approach

This is a conceptual paper supported by a case study.

Findings

The authors contribute to the literature by operationalizing the salesperson lifetime value concept and introducing new important aspects in comparison with previous discussions, including peer effect, recruitment/hiring cost and termination costs.

Originality/value

This manuscript theoretically and practically contributes to personnel value management in the organization and sales force financial control. The authors introduce peer effects, hiring/recruitment costs and termination costs, which are missing as a set in previous research. In addition, this paper offers a simple but robust model to practitioners’ use.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 2
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 11 November 2014

Said Echchakoui

This paper aims to answer a prominent question that arises for the manager who wishes to recruit a salesperson to maintain and develop a portfolio–customer relationship…

Abstract

Purpose

This paper aims to answer a prominent question that arises for the manager who wishes to recruit a salesperson to maintain and develop a portfolio–customer relationship: Under which condition is this decision profitable for the firm? Though several authors have underscored the importance of the salesperson's role in the creation of purchaser–salesperson relationships, in the author's knowledge, no study has focused on the salesperson's profitability in the relationship approach. This issue is significant for sales managers because the investment in sales force is greater, and the relationship profitability with customers is not guaranteed.

Design/methodology/approach

Econometric model based on transaction cost economics theory and dynamic exchange between firm, salesperson and a customer. Specifically, this model links between customer life value, firm financial value, salesperson cost and relationship time.

Findings

Three zones are identified that can characterize the dynamic salesperson profitability. It was shown that only one zone can be profitable to the firm.

Research limitations/implications

This result is important because it can solve the equivocal posit between scholars with regard to the success or the failure of relationship marketing. This study also specifies the critical retention rate, the critical duration time in which a salesperson begins to be profitable.

Originality/value

In the author's knowledge, this study is the first to use an exchange model to show in which conditions the salesperson will be profitable in relationship marketing.

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Article
Publication date: 31 July 2007

Tom Nagle and John Hogan

The article seeks to discuss how and why it is possible to motivate a sales force to follow the guidelines of a consistent pricing policy that promotes profitability and…

Abstract

Purpose

The article seeks to discuss how and why it is possible to motivate a sales force to follow the guidelines of a consistent pricing policy that promotes profitability and increases margin, and which is beneficial to both providers and consumers of products and services.

Design/methodology/approach

Theories and examples stemming from the authors' research and experience with the subject matter are stated. The sales incentive theory in particular is supported by a specific formula that determines the sales credit someone would earn for making a sale based on profit contribution rather than price.

Findings

While employing flexible pricing policies in competitive markets is enticing for suppliers, it can ultimately lead to price erosion and falling margins. A sound pricing policy lets customers know that the price they are paying is related to the value they receive, and keeps salespeople from dealing with long, complicated negotiation processes. While many managers worry that their sales force won't accept such a change, most salespeople will adopt it if the new policy is implemented well. The key is to recompense salespeople for driving profitability instead of just revenue and sales volume.

Originality/value

This article addresses an ongoing problem that many companies face as they try to win and maintain business using flexible pricing policies to cut customer‐specific deals. It discusses how and why it is possible to change this behavior using sales incentives that reward profitable sales rather than just sales volume.

Details

Business Strategy Series, vol. 8 no. 5
Type: Research Article
ISSN: 1751-5637

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Article
Publication date: 6 April 2010

Charles E. Pettijohn, Elizabeth J. Rozell and Andrew Newman

The purpose of this paper is to examine the relationships between salesperson emotional intelligence, dispositional affectivity, and customer‐orientation levels in…

Abstract

Purpose

The purpose of this paper is to examine the relationships between salesperson emotional intelligence, dispositional affectivity, and customer‐orientation levels in pharmaceutical marketing.

Design/methodology/approach

A total of 71 pharmaceutical salespeople working in the UK provided responses to scales designed to assess emotional intelligence, dispositional affectivity (positive affect (PA) and negative affect (NA) and customer orientation). The emotional intelligence and dispositional affectivity scores provided by the salespeople were then analyzed to determine the degree to which they related to customer‐orientation levels.

Findings

The findings indicate that salesperson emotional intelligence levels are positively correlated with their customer‐orientation scores. Positive dispositional affectivity levels are also significantly correlated with salesperson customer‐orientation levels. This result suggests that UK pharmaceutical salespeople who possessed more PA tended to also be more positively oriented to the customer. However, NA levels are not significantly correlated with salesperson customer‐orientation levels.

Research limitations/implications

From a theoretical perspective, these findings provide a venue for future research in professional sales which could focus on the relationships existing between salesperson behaviors/characteristics that relate to salesperson customer‐orientation, skills, social desirability, and performance.

Practical implications

From a practical basis, the findings suggest that pharmaceutical firms in the UK who are focused on increasing the customer‐orientation levels of their sales force would be well advised to assess the emotional intelligence and dispositional affectivity levels of both their potential and current salespeople and use this information in their selection and training activities.

Originality/value

The research reported provides an initial assessment of the relationship between these variables in a pharmaceutical sales situation in the UK.

Details

International Journal of Pharmaceutical and Healthcare Marketing, vol. 4 no. 1
Type: Research Article
ISSN: 1750-6123

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Book part
Publication date: 19 November 2012

Chuck Davenport, John Norkus and Michael Simonetto

When linked to human behavior and executed effectively, value-based pricing represents the most effective lever that a company has at its disposal to maximize profitability

Abstract

When linked to human behavior and executed effectively, value-based pricing represents the most effective lever that a company has at its disposal to maximize profitability. The ability to integrate sophisticated analytics and market research in order to sell a customer the right product (and value) at the right price will drive profitability far more effectively and sustainably than other business initiatives (Marn & Rosiello, 1992, p. 84). This chapter addresses the use of analytics to determine where value resides and how to turn that analysis into an effective platform for pricing decisions. Organization-wide involvement in pricing is essential. A company must provide those persons responsible for pricing – including finance and sales persons – with information regarding the levers they can pull in the product transaction execution. Statistical business analytical software enables companies to apply microeconometrics (analytical and statistical capabilities) for the pricing and selling of products. The pricing waterfall helps companies understand where they can increase profits by using the pocket price and pocket margin to gain insights into which customer relationships can be more profitable than others. By examining the transaction structure, behavioral segmentation, and price optimization (three dimensions of the Analytics Triad), a company can conceive the full value proposition for groups of customers. An effective process and technology infrastructure that enables granular data development and analysis will help enable accurate and timely pricing decisions.

Details

Visionary Pricing: Reflections and Advances in Honor of Dan Nimer
Type: Book
ISBN: 978-1-78052-996-7

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Article
Publication date: 1 June 1998

Michael R. Williams

This article reports the results of a theoretically‐based, empirical study which incorporates the paradigm of relationship marketing. Using a sample of organizational…

Abstract

This article reports the results of a theoretically‐based, empirical study which incorporates the paradigm of relationship marketing. Using a sample of organizational buyers, this study examines the influence of salesperson customer‐oriented behavior on the development of buyer‐seller relationships. Integral to this investigation, a measure of buyer‐seller relationship development is generated and evaluated for its reliability and validity. Findings from this study indicate a strong and significant influence between the customer‐oriented behavior of salespeople and the development of customer relationships. The results of this study and the discussion of the implications begin to provide valuable understanding into the antecedents of relationship development and relationship management. The results of this study and their implications for salespeople, managers, and researchers are discussed along with limitations and recommendations for future research.

Details

Journal of Business & Industrial Marketing, vol. 13 no. 3
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 8 June 2020

Megan C. Good and Michael R. Hyman

The purpose of this paper is to apply protection motivation theory (PMT) to brick-and-mortar salespeople's responses to customers' fear appeals.

Abstract

Purpose

The purpose of this paper is to apply protection motivation theory (PMT) to brick-and-mortar salespeople's responses to customers' fear appeals.

Design/methodology/approach

The approach is to develop a conceptual model for the effect of customers' fear appeals on brick-and-mortar salespeople.

Findings

PMT relates to the influence of customers' fear appeals on brick-and-mortar salespeople's behaviours. The salesperson's decision whether to follow a retail manager's suggestion about ways to mitigate a customer's fear appeal depends on believed threat severity, believed threat susceptibility, response efficacy, self-efficacy and response costs.

Research limitations/implications

PMT is applied to a new domain: brick-and-mortar salespeople. Although a powerful yet universal emotion, only limited research has examined fear within this group.

Practical implications

Understanding salespeople's fears will help retail managers identify strategies for encouraging adaptive behaviours and deterring maladaptive behaviours by salespeople.

Originality/value

A model relating customers' fear appeals to salespeople's behaviours is introduced.

Details

International Journal of Retail & Distribution Management, vol. 48 no. 8
Type: Research Article
ISSN: 0959-0552

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Book part
Publication date: 7 December 2016

Arch G. Woodside and James L. Taylor

This chapter describes how to do variable-based analysis of cases of two-person conversations. The chapter makes use of the same data that Chapter 9 describes. Here, the…

Abstract

Synopsis

This chapter describes how to do variable-based analysis of cases of two-person conversations. The chapter makes use of the same data that Chapter 9 describes. Here, the study examines 40 transactions between actual insurance salespersons (n = 3) and prospective clients (n = 57) interacting in field settings. The study describes conversations among purchase behavior and the frequency of key orientation and bargaining statements made by the salespersons and customers. The findings support the high value in studying social factors, influence attempts, and situation variables in constructing a general conceptualization of exchange relationships.

Details

Case Study Research
Type: Book
ISBN: 978-1-78560-461-4

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Article
Publication date: 31 January 2020

Yonggui Wang, Daniel Peter Hampson and Myat Su Han

This study aims to examine the positive and negative consequences of relationship closeness between salespersons and their business customers in a B2B sales context: sales…

Abstract

Purpose

This study aims to examine the positive and negative consequences of relationship closeness between salespersons and their business customers in a B2B sales context: sales performance and salesperson passive opportunism.

Design/methodology/approach

Drawing on the social exchange theory, the authors develop a conceptual model of positive and negative consequences of relationship closeness. The authors empirically test the model using matched survey data from 269 salesperson-sales supervisor dyads and individual sales performance ratings from one of the largest distribution and market expansion companies in Myanmar.

Findings

Results provide evidence of positive (i.e. sales performance) and negative (i.e. salesperson passive opportunism) consequences of salesperson’s perceived relationship closeness. These relationships are, however, contingent on organization-level and employee-level factors. High extent of supervision enhances the effects of salesperson’s perceived relationship closeness on sales performance but attenuates its influence on salesperson passive opportunism. The effect of salesperson’s perceived relationship closeness on salesperson’s passive opportunism is stronger for salespersons with a promotion (vs prevention) focus.

Research limitations/implications

The results offer guidelines to firms seeking to optimize the efficacy of close relationships between their salespersons and customers. For example, higher levels of supervision could increase the likelihood of positive outcomes of relationship closeness while minimizing its negative consequences.

Originality/value

To the best of the authors’ knowledge, this study is the first to demonstrate not only the benefits of relationship closeness between salespersons and customers but also its dark side: the relationship closeness paradox.

Details

Journal of Business & Industrial Marketing, vol. 35 no. 6
Type: Research Article
ISSN: 0885-8624

Keywords

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