ESSAYS ON SELLING AND SALES INCENTIVES

U.S. firms spend around $800 billion annually on sales force. This is four times the amount that is spent on advertising (Zoltners et al. 2012). However, research in the area of sales does not match these numbers. In this dissertation, first, I examine how the revolution in data availability has changed the salesperson-customer interaction. Then, I examine the framing of noncash incentives and how to maximize the effectiveness of noncash incentives. Essay 1 examines how the ready availability of information about purchase options has shifted the point at which customers make purchase decisions. Customers often come into the sales interaction knowing what they want (i.e., have higher preference certainty). Yet companies continue to base their selling strategies, spending billions of dollars, on a model of the customer decision process that is predicated on low preference certainty. Therefore, understanding the impact of customer preference certainty on the efficacy of the traditional selling paradigm is crucial. Through an extensive field study spanning four months across 15 different stores of a durable goods retailer and two experiments, I examine the consequences of this shift toward higher preference certainty for the practice of selling. Drawing on the theory of cognitive dissonance and adaptive selling, they find that a lack of consideration of the shift in customer decision making can hurt both salespeople and customers. Specifically, they find that ignoring customer preference certainty and unconditionally employing tactics that involve educating and challenging customers can have negative repercussions on purchase probability and sales revenue. Essay 2 investigates the framing of noncash incentives. Most firms have a points-based bonus system for incentivizing their sales force that enables salespeople to exchange earned points for prizes. These noncash incentive programs effectively frame their prizes as something to be gained. This practice of gain framing noncash incentives stands at odds with a core insight from prospect theory that framing an item as a loss should be more motivating than framing it as a gain, based on the asymmetry in expected utility of the related item under each type of frame. Despite the growing ubiquity of noncash incentives as a tool to motivate the sales force, little is known about their efficacy relative to cash incentives or whether the industry-dominant practice of gain framing noncash incentives is the right approach. Across three studies, I examine the relative efficacy of framing cash and noncash incentives as either gains or losses. Our multimethod approach, featuring a field experiment, a field study, and a lab experiment, provides evidence that loss framing noncash incentives is more effective than gain framing them and, counterintuitively, that noncash incentives can be as effective as cash incentives when loss framed. Of particular managerial importance, I find that an approach as simple as allowing a salesperson to add items to a wish list (a substantially less intrusive loss-framing strategy for noncash incentives than “clawing back” the related items) can be more effective than a traditional points-based system. Furthermore, my analysis suggests that the effectiveness of this wish list approach to loss framing does not noticeably diminish with repeat usage