Sales contests versus quotas with imbalanced territories
This paper studies the consequences of sales contests versus quota systems when territories have imbalanced sales potential. How do the optimal sales, efforts of salespeople, and profits vary with territory imbalance in a sales contest and how do these change if compensation is based upon quotas? Ou...
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| Veröffentlicht in: | Marketing letters 2013-09, Vol.24 (3), p.229-244 |
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| container_end_page | 244 |
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| container_title | Marketing letters |
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| creator | Syam, Niladri B. Hess, James D. Yang, Ying |
| description | This paper studies the consequences of sales contests versus quota systems when territories have imbalanced sales potential. How do the optimal sales, efforts of salespeople, and profits vary with territory imbalance in a sales contest and how do these change if compensation is based upon quotas? Our major result is that territory imbalance has a differential effect: it hurts a contest more than a quota. In a sales contest, the salesperson in the stronger territory only need to mimic the effort of the salesperson in the other territory to maximize compensation, but this implies that the salesperson in the weaker territory will shirk relative to a quota system. Handicapping the contest to correct for territory imbalance overcomes its disadvantage vis-à-vis the quota plan, but this is seldom incorporated into sales contests. |
| doi_str_mv | 10.1007/s11002-012-9211-4 |
| format | Article |
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How do the optimal sales, efforts of salespeople, and profits vary with territory imbalance in a sales contest and how do these change if compensation is based upon quotas? Our major result is that territory imbalance has a differential effect: it hurts a contest more than a quota. In a sales contest, the salesperson in the stronger territory only need to mimic the effort of the salesperson in the other territory to maximize compensation, but this implies that the salesperson in the weaker territory will shirk relative to a quota system. Handicapping the contest to correct for territory imbalance overcomes its disadvantage vis-à-vis the quota plan, but this is seldom incorporated into sales contests.</description><subject>Business and Management</subject><subject>Compensation</subject><subject>Compensation plans</subject><subject>Expected utility</subject><subject>Marketing</subject><subject>Payment systems</subject><subject>Personal selling</subject><subject>Profit</subject><subject>Profit planning</subject><subject>Quota systems</subject><subject>Quotas</subject><subject>Risk aversion</subject><subject>Sales management</subject><subject>Sales personnel</subject><subject>Sales quotas</subject><subject>Sales territories</subject><subject>Sales territory</subject><subject>Salespeople</subject><subject>Studies</subject><subject>Territories</subject><subject>Territory</subject><issn>0923-0645</issn><issn>1573-059X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2013</creationdate><recordtype>article</recordtype><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><recordid>eNp9kEtLxDAUhYMoOD5-gAuh4MZN9ebdLGXwBQMuVHAXMmmqHTrtTG6r-O9NqYi4cHWz-M7J4SPkhMIFBdCXSNNhOVCWG0ZpLnbIjErNc5DmZZfMwLD0VkLukwPEFQAUCuiMFI-uCZj5ru0D9pi9h4gDZtuh6x1mH3X_ltXrpWtc60OZ9SHGuu9iHfCI7FWuwXD8fQ_J88310_wuXzzc3s-vFrkXwPq8os5BqY2AquRC8mCMXgrwBTMFGDDUF7ySBS-WkkoApbQoU8SAklx7D_yQnE-9m9hth7TRrmv0oUmLQjegpYIpxrhWIqFnf9BVN8Q2rUsUVYprzsZCOlE-dogxVHYT67WLn5aCHV3ayaVNLu3o0o7NbMpgYtvXEH81_xM6nUIrTMp-fmFC6sQW_AvS7n3r</recordid><startdate>20130901</startdate><enddate>20130901</enddate><creator>Syam, Niladri B.</creator><creator>Hess, James D.</creator><creator>Yang, Ying</creator><general>Springer Science + Business Media</general><general>Springer US</general><general>Springer Nature B.V</general><scope>AAYXX</scope><scope>CITATION</scope><scope>0U~</scope><scope>1-H</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>8AO</scope><scope>8BJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRNLG</scope><scope>F~G</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>PYYUZ</scope><scope>Q9U</scope></search><sort><creationdate>20130901</creationdate><title>Sales contests versus quotas with imbalanced territories</title><author>Syam, Niladri B. ; 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How do the optimal sales, efforts of salespeople, and profits vary with territory imbalance in a sales contest and how do these change if compensation is based upon quotas? Our major result is that territory imbalance has a differential effect: it hurts a contest more than a quota. In a sales contest, the salesperson in the stronger territory only need to mimic the effort of the salesperson in the other territory to maximize compensation, but this implies that the salesperson in the weaker territory will shirk relative to a quota system. Handicapping the contest to correct for territory imbalance overcomes its disadvantage vis-à-vis the quota plan, but this is seldom incorporated into sales contests.</abstract><cop>Boston</cop><pub>Springer Science + Business Media</pub><doi>10.1007/s11002-012-9211-4</doi><tpages>16</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0923-0645 |
| ispartof | Marketing letters, 2013-09, Vol.24 (3), p.229-244 |
| issn | 0923-0645 1573-059X |
| language | eng |
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| source | EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; SpringerLink Journals - AutoHoldings |
| subjects | Business and Management Compensation Compensation plans Expected utility Marketing Payment systems Personal selling Profit Profit planning Quota systems Quotas Risk aversion Sales management Sales personnel Sales quotas Sales territories Sales territory Salespeople Studies Territories Territory |
| title | Sales contests versus quotas with imbalanced territories |
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