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  • 2020
  • Article
  • Foundations and Trends® in Marketing

A Practical Approach to Sales Compensation: What Do We Know Now? What Should We Know in the Future?

By: Doug J. Chung, Byungyeon Kim and Niladri B. Syam
  • Format:Print
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Abstract

Personal selling represents one of the most important elements in the marketing mix, and appropriate management of the sales force is vital to achieving the organization’s objectives. Among the various instruments of sales management, compensation plays a pivotal role in motivating and incentivizing sales agents. This monograph reviews the evolution of research in sales compensation and discusses future trends and opportunities. Specifically, it examines the managerial relevance of the theoretical foundations, discussing the underlying reasons for their applicability (or lack thereof) in practice. Furthermore, the monograph surveys recent empirical methods—including field experiments and structural econometrics—that are practical for analyzing sales agents’ behavior under various compensation systems. It also discusses prominent areas of future research in the midst of a changing sales environment. In particular, this monograph sheds light on how the use of big data, machine learning, and artificial intelligence can affect sales strategy formulation and, thus, sales compensation systems to better motivate and incentivize an organization’s sales force.

Keywords

Sales Compensation; Sales Management; Sales Strategy; Principal-agent Theory; Structural Econometrics; Field Experiments; Machine Learning; Artificial Intelligence; Salesforce Management; Compensation And Benefits; Motivation And Incentives

Citation

Chung, Doug J., Byungyeon Kim, and Niladri B. Syam. "A Practical Approach to Sales Compensation: What Do We Know Now? What Should We Know in the Future?" Foundations and Trends® in Marketing 14, no. 1 (2020): 1–52.
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About The Author

Doug J. Chung

Marketing
→More Publications

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    The Air War Versus the Ground Game: An Analysis of Multi-Channel Marketing in U.S. Presidential Elections

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    Price Bargaining and Competition in Online Platforms: An Empirical Analysis of the Daily Deal Market

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    • March 2020 (Revised October 2020)
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More from the Authors
  • The Air War Versus the Ground Game: An Analysis of Multi-Channel Marketing in U.S. Presidential Elections By: Lingling Zhang and Doug J. Chung
  • Price Bargaining and Competition in Online Platforms: An Empirical Analysis of the Daily Deal Market By: Lingling Zhang and Doug J. Chung
  • Sales Force Compensation By: Doug J. Chung
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