Leveraging Customer-Sales Force Interactions To Create Future Value for the Firm
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The salesperson-customer interaction is paramount, not only to the immediate transaction, but also to customer’s future value for the firm. Despite this importance, meager research explicitly explores the effect of salespeople on customer’s future visits. In this dissertation I examine the role of salespeople not only in bringing customers back for repeat purchases, but also in developing other revenue streams such as service from the same customers. Essay 1 examines how using successful customer relationship strategies can spill over among salespeople. I report a unique quasi-experiment in which an upscale apparel retailer trains its salespeople to adopt B2B account management and relationship-building strategies and apply them to their customers hoping to bring them back to the store. I studied more than 1,400 salespeople at about 200 stores measuring the degree to which they engage in the specific relationship-building behavior, their pre- and post-training performances, and more than 30 individual- and store-level covariates over the years before and after the training. Moreover the stores fell into three categories: a) full stores wherein the entire sales force are trained to adopt the relationship building strategy, b) partial stores wherein only a subset of the salesforce are trained, and c) control stores in which no one is trained. I employed recently-developed matching methods to obviate selection bias from store- and individual-level analyses. Drawing from literature on information dissemination in competitive contexts as well as demographic diversity I hypothesized and found that (1) partial training can be as effective as full-training in stores with low performance diversity, (2) tenure homogeneity of the trained salespeople helps their individual outcomes but hurts the spillover of the relationship-building behavior to the untrained salespeople, and (3) untrained individuals with similar performances to the group of trained salespeople are more likely to adopt the relationship building behavior. Essay 2 investigates whether what happens between salespeople and customers during a sales negotiation can affect customer’s future value. In particular, I explored whether open negotiation, manifested by information disclosure by the seller, can affect customers’ immediate future (e.g. cross-selling revenues, finance and insurance, etc.) and distant future (e.g. service encounters, repeat purchase) value. Utilizing three sets of data, a primary data set with records of actual sales negotiations between salespeople and customers in more than 400 auto purchase transactions, a secondary data set with all the sales transactions of the same dealerships, and a dataset obtained from the service departments of those dealerships, I explored the role of open negotiation strategy on the backend gross profits and the likelihood of customers returning for service. I found that when salespeople disclose the invoice price of the customer’s desired car, the frontend gross profits would predictably be significantly lower than when they did not disclose the invoice price. However, disclosing the invoice early in the negotiation significantly helped both the backend gross and service likelihood, compared to not disclosing or middle/late disclosure. I hypothesized that because the internet informs customers about invoice prices, early invoice disclosure in the frontend helps build customer trust, which firms manipulate in the backend of the deal for which far less information exists for customers. I also found that early disclosure significantly predicts service come-back, even after controlling for customer distance to the dealership. I also explored the moderating role of channel (internet vs. dealership) on the effect of open negotiation on customer future value.