Optimal Sales Force Compensation

Kräkel, Matthias; Schöttner, Anja

Optimal Sales Force Compensation

Dateien

Kraekel_0-275945.pdfGröße: 562.9 KBDownloads: 1052

Datum

2014

Autor:innen

Kräkel, Matthias

Schöttner, Anja

Open Access-Veröffentlichung

Open Access Green

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Working Paper/Technical Report

Publikationsstatus

Published

Zusammenfassung

We analyze a dynamic moral-hazard model to derive optimal sales force compensation plans without imposing any ad hoc restrictions on the class of feasible incentive contracts. We explain when the compensation plans that are most common in practice - fixed salaries, quota-based bonuses, commissions, or a combination thereof - are optimal. Fixed salaries are optimal for small revenue-cost ratios. Quota-based bonuses (commissions) should be used if the revenue-cost ratio takes intermediate (large) values. If firms face demand uncertainty, markets are rather thin, and the revenue-cost ratio large, firms should combine a commission with a quota-based bonus. If word-of-mouth advertising affects sales, a dynamic commission that increases over time can be optimal. When entering a new market or launching a new product, firms should install long-term bonus plans.

Fachgebiet (DDC)

330 Wirtschaft

Schlagwörter

sales force compensation, commissions, quota-based bonuses

Zitieren

ISO 690

KRÄKEL, Matthias, Anja SCHÖTTNER, 2014. Optimal Sales Force Compensation

BibTex

@techreport{Krakel2014Optim-30051,
  year={2014},
  series={Working Paper Series / Department of Economics},
  title={Optimal Sales Force Compensation},
  number={2014-09},
  author={Kräkel, Matthias and Schöttner, Anja}
}

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Universitätsbibliographie

Ja