The Effects of Quota Frequency: Sales Performance and Product Focus

• 成果类型: Article
• 署名作者: Chung, Doug J.; Narayandas, Das; Chang, Dongkyu
• 署名单位: Harvard University; City University of Hong Kong
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3648
• 发表日期: 2021
• 页码: 2151-2170
• 关键词: sales force compensation; field experiment; quota; goal; product focus

摘要

This study investigates the comprehensive and multidimensional effects of quota (goal) frequency on sales force performance. The study provides a theory of salespeople's behavior-aggregate effort and the product-type focus-in response to the temporal length of a sales quota cycle. The theory includes many realistic elements, such as salespeople's multidimensional effort, heterogeneity in ability, product focus, and forward-looking behavior. We test the theory through a field experiment, varying the sales compensation structure of a major retail chain in Sweden. Consistent with the developed theory, shifting to a temporally frequent quota structure leads to an increase in sales performance for low-performing salespeople by preventing them from giving up in later periods within a quota-evaluation cycle, but to a decrease in sales performance for high-performing salespeople. With quotas set over short time horizons, the high-performing salespeople focus mainly on low-ticket products, resulting in a decrease in both sales volume and the sale of high-ticket products, thus reducing the firm's profits.