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    The Effects of Quota Frequency on Sales Force Performance: Evidence from a Field Experiment
    25 Jan 2017Working Paper Summaries

    The Effects of Quota Frequency on Sales Force Performance: Evidence from a Field Experiment

    by Doug J. Chung and Das Narayandas
    This study of different sales quotas and their effect on sales performance at a major retail chain in Sweden finds that changing from a monthly to a daily quota plan increases performance mainly for low-performing salespeople.
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    Author Abstract

    We collaborate with a Swedish retail chain to conduct a field experiment in which we change the sales force compensation scheme from a monthly to a daily quota plan. This intervention, along with a control group that did not encounter a change in compensation structure, allows us to analyze the effect of quota frequency on sales force performance. Over a given time frame (i.e., a month), we find that shifting to a temporally more frequent quota plan—the daily quota plan as compared to the monthly quota plan—leads to an increase in sales performance, mainly for low-performing salespeople, by preventing them from giving up in the latter days of a month. However, we find high-performing salespeople to give up more frequently in earlier days of a month under the daily quota plan. With more frequent quotas, salespeople sell more quantities of low-ticket items, which benefit the firm through a decrease in returned merchandise. However, with quotas set over shorter time horizons, even the highest-performing salespeople focus mainly on incremental sales, resulting in a decrease in sales of higher-value-added and higher-margin products, thereby hurting firm profits.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: January 2017
    • HBS Working Paper Number: HBS Working Paper #17-059
    • Faculty Unit(s): Marketing
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    Das Narayandas
    Das Narayandas
    Edsel Bryant Ford Professor of Business Administration
    Senior Associate Dean for HBS Publishing
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