This paper evaluates the short- and long-term value of sales representatives’ detailing visits to different types of physicians. By understanding the dynamic effect of sales calls across heterogeneous physicians, we provide guidance on the design of optimal call patterns for route sales. The findings reveal that the long-term persistence effect of detailing is more pronounced for specialist physicians, whereas the contemporaneous marginal effect is higher for generalists. The paper also provides a key methodological insight to the marketing and economics literature. In the Nerlove-Arrow framework, moment conditions that are typically used in conventional dynamic panel data methods become vulnerable to serial correlation in the error structure. We discuss the associated biases and present a robust set of moment conditions for both lagged dependent and predetermined explanatory variables. Furthermore, we show that conventional tests to detect serial correlation have weak power, resulting in the misuse of moment conditions that leads to incorrect inference. Theoretical illustrations and Monte Carlo simulations are provided for validation.

This paper provides a comprehensive model of an agent’s behavior in response to multiple sales management instruments, including compensation, recruiting/termination, and training. The model takes into account many of the key elements that constitute a realistic sales force setting: allocation of continuous effort, forward-looking behavior, present bias, effectiveness of training, and employee selection and attrition. The paper provides insights into the way that employee training, recruiting policies, and various compensation components affect both the selection and performance of heterogeneous sales agents. In addition, the paper provides two key methodological contributions. First, we provide identification results for dynamic models with continuous and unobserved choice variables, which arise in many empirical applications but are often ruled out due to theoretical intractability. Second, we consider a hyperbolic discounting model as well as an exponential discounting model and provide conditions under which each model is identified. The key to identification is that, under a multi-period nonlinear incentive scheme, an agent’s proximity to a goal affects only future payoffs in non-pecuniary periods, providing exclusion restrictions on the current payoff.