The Effects of Quota Frequency : Sales Performance and Product Focus

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

2 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)2151-2170
Journal / PublicationManagement Science
Volume67
Issue number4
Online published16 Sep 2020
Publication statusPublished - Apr 2021

Abstract

This study investigates the comprehensive and multidimensional effects of quota (goal) frequency on sales force performance. The study provides a theory of salespeople’s behavior—aggregate effort and the product-type focus—in response to the temporal length of a sales quota cycle. The theory includes many realistic elements, such as salespeople’s multidimensional effort, heterogeneity in ability, product focus, and forward-looking behavior. We test the theory through a field experiment, varying the sales compensation structure of a major retail chain in Sweden. Consistent with the developed theory, shifting to a temporally frequent quota structure leads to an increase in sales performance for low-performing salespeople by preventing them from giving up in later periods within a quota-evaluation cycle, but to a decrease in sales performance for high-performing salespeople. With quotas set over short time horizons, the high-performing salespeople focus mainly on low-ticket products, resulting in a decrease in both sales volume and the sale of high-ticket products, thus reducing the firm’s profits.

Research Area(s)

  • Field experiment, Goal, Product focus, Quota, Sales force compensation

Citation Format(s)

The Effects of Quota Frequency : Sales Performance and Product Focus. / Chung, Doug J.; Narayandas, Das; Chang, Dongkyu.

In: Management Science, Vol. 67, No. 4, 04.2021, p. 2151-2170.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review