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Thrill of victory and agony of defeat: Emotional rewards and sales force compensation

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  • Ying Yang
  • Niladri Syam
  • James Hess

Abstract

When sales territories are imbalanced, how do salespersons’ emotions-pride and disappointment in goal attainment-affect the choice between sales contests and sales quotas? First, profits in a quota system increase when pride in the weaker territory or disappointment in the stronger territory increase. In a sales contest, by contrast, feelings of disappointment reduce profits regardless of territory characteristics. Second, a simultaneous strengthening of pride and disappointment enhances the advantage of quota over contest created by territory imbalance. However, the interpersonal nature of the contest, pitting a salesperson against a known rival, may generate stronger emotions than a quota-system, with its impersonal sales targets. So, third, a contest may overcome the profit advantages of the quota-system. Fourth, if pride and disappointment are strongly felt because of territory imbalance, handicapping either contest or quota is unprofitable, and moreover, if pride and disappointment are greater in interpersonal situations, handicapping may be more detrimental to a contest than to a sales quota-system. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Ying Yang & Niladri Syam & James Hess, 2013. "Thrill of victory and agony of defeat: Emotional rewards and sales force compensation," Quantitative Marketing and Economics (QME), Springer, vol. 11(4), pages 379-402, December.
    • Handle: RePEc:kap:qmktec:v:11:y:2013:i:4:p:379-402
    DOI: 10.1007/s11129-013-9138-y
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    References listed on IDEAS

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    1. Jian Chen & He Huang & Liming Liu & Hongyan Xu, 2021. "Price Delegation or Not? The Effect of Heterogeneous Sales Agents," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1350-1364, May.

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    More about this item

    Keywords

    Sales; Compensation; Emotions; Quotas; Contests; D03; M31; M52;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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