Value Added of Customer- and Operations-Focused Sales Reps in Business Markets: A Human Capital Perspective

33 Pages Posted: 14 Nov 2023

See all articles by Huanhuan Shi

Huanhuan Shi

Texas A&M University

Shrihari Sridhar

Texas A&M University - Department of Marketing

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: October 1, 2023

Abstract

In the sales process in business markets, customers often are assisted by two types of sales reps: customer-focused reps (CSRs) and operations-focused reps (OSRs), who work together to ensure smooth buying experiences. Because these reps work jointly, selling firms often evaluate reps’ performance according to overall output, without assessing or quantifying their respective individual contributions to customer buying decisions. The authors of this study propose using value-added metrics that pertain to three drivers of value: (1) CSRs, (2) OSRs, and (3) the interface between CSRs and OSRs. This approach leverages variations in CSR–OSR combinations and produces both individual CSR–OSR and dyadic or interface value-added metrics. To address the empirical challenges (i.e., limited variations in CSR–OSR combinations), they use empirical Bayes random effect estimation to produce best linear unbiased prediction. An application, using data from a Fortune 500 firm operating in business markets, reveals that all three value-added drivers have large and differential effects on customer sales. Specifically, an increase of one standard deviation in the effect of CSR, OSR, or interface synergy improves customer sales by 17.8%, 11.6%, or 14.3%, respectively. The authors further demonstrate the validity of the value-added metrics based on their predictive power related to future customer sales and customer churn. This research provides initial estimates of the value added by customer- and operations-focused roles, and their interfaces, to business markets. The results also help justify firms’ investments in sales operations and suggest ways to improve incentive schemes and facilitate better-informed resource allocations.

Keywords: Business markets, empirical Bayes, human capital, marketing and operations interface, sales operations, sales reps, unobserved effects

JEL Classification: M54, M31

Suggested Citation

Shi, Huanhuan and Sridhar, Shrihari and Grewal, Rajdeep, Value Added of Customer- and Operations-Focused Sales Reps in Business Markets: A Human Capital Perspective (October 1, 2023). Kenan Institute of Private Enterprise Research Paper No. 4618860, Available at SSRN: https://ssrn.com/abstract=4618860 or http://dx.doi.org/10.2139/ssrn.4618860

Huanhuan Shi (Contact Author)

Texas A&M University ( email )

Langford Building A
798 Ross St.
College Station, TX 77843-3137
United States

Shrihari Sridhar

Texas A&M University - Department of Marketing ( email )

430 Wehner
College Station, TX 77843-4218
United States

HOME PAGE: http://mays.tamu.edu/directory/shriharisridhar/

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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