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In the Eye of the Beholder: An Analysis of the Relative Value of a Top Sales Rep Across Firms and Products

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  • David Godes

    (Graduate School of Business Administration, Harvard University, Morgan Hall 165, Soldiers Field, Boston, Massachusetts 02163)

Abstract

We ask the question, “when should the most highly skilled salespeople sell the best products?” Our main result is that the highly skilled reps should sell better products when the task is very complex and worse products when the task is very simple. This is shown using a general analytical model of selling in which sales are a joint function of the salesperson's skill and the complexity of the selling task. Complexity varies across products and industries. Intuitively, when the selling task is complex, few salespeople oflevel of ability will be successful with a low-quality product. Therefore, the high-skill rep's value is higher on the better product. Conversely, when the task is simple, salespeople ofability can sell the better product fairly easily so the high-skill rep's impact is more pronounced on the worse product. This general result offers insight into many key problems: Which salespeople should we hire? How should we organize our salespeople? How should we allocate training funds? We show that the insights hold for salespeople that eithervalue or simplythe customer about the product's value. Finally, we contrast this set of questions with the question ofsalespeople the firm should hire. We find that the firm that has the biggest sales force does not always have the best.

Suggested Citation

  • David Godes, 2003. "In the Eye of the Beholder: An Analysis of the Relative Value of a Top Sales Rep Across Firms and Products," Marketing Science, INFORMS, vol. 22(2), pages 161-187, May.
    • Handle: RePEc:inm:ormksc:v:22:y:2003:i:2:p:161-187
    DOI: 10.1287/mksc.22.2.161.16040
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    References listed on IDEAS

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    Cited by:

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    3. Sanjog Misra & Harikesh Nair, 2011. "A structural model of sales-force compensation dynamics: Estimation and field implementation," Quantitative Marketing and Economics (QME), Springer, vol. 9(3), pages 211-257, September.
    4. Ian Larkin, 2014. "The Cost of High-Powered Incentives: Employee Gaming in Enterprise Software Sales," Journal of Labor Economics, University of Chicago Press, vol. 32(2), pages 199-227.
    5. Fabio Caldieraro & Anne T. Coughlan, 2009. "Optimal Sales Force Diversification and Group Incentive Payments," Marketing Science, INFORMS, vol. 28(6), pages 1009-1026, 11-12.
    6. Fabio Caldieraro & Anne T. Coughlan, 2007. "Spiffed-Up Channels: The Role of Spiffs in Hierarchical Selling Organizations," Marketing Science, INFORMS, vol. 26(1), pages 31-51, 01-02.
    7. Jiwoong Shin, 2007. "How Does Free Riding on Customer Service Affect Competition?," Marketing Science, INFORMS, vol. 26(4), pages 488-503, 07-08.
    8. Tat Y. Chan & Jia Li & Lamar Pierce, 2014. "Compensation and Peer Effects in Competing Sales Teams," Management Science, INFORMS, vol. 60(8), pages 1965-1984, August.
    9. Steven M. Shugan, 2003. "Editorial: Compartmentalized Reviews and Other Initiatives: Should Marketing Scientists Review Manuscripts in Consumer Behavior?," Marketing Science, INFORMS, vol. 22(2), pages 151-160.
    10. Tat Y. Chan & Jia Li & Lamar Pierce, 2014. "Learning from Peers: Knowledge Transfer and Sales Force Productivity Growth," Marketing Science, INFORMS, vol. 33(4), pages 463-484, July.
    11. Yubo Chen & Jinhong Xie, 2008. "Online Consumer Review: Word-of-Mouth as a New Element of Marketing Communication Mix," Management Science, INFORMS, vol. 54(3), pages 477-491, March.
    12. Birendra K. Mishra & Ashutosh Prasad, 2005. "Delegating Pricing Decisions in Competitive Markets with Symmetric and Asymmetric Information," Marketing Science, INFORMS, vol. 24(3), pages 490-497, March.
    13. Steven M. Shugan, 2005. "Marketing and Designing Transaction Games," Marketing Science, INFORMS, vol. 24(4), pages 525-530.
    14. Steven Lu & Andre Bonfrer & Ranjit Voola, 2015. "Retaining Talented Salespeople," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 2(2), pages 148-164, June.

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