The impact of customer satisfaction based incentive systems on salespeople’s customer service response: An empirical study

There is increasing recognition that customer satisfaction should be an important objective of sales organizations. For example, 40 percent of the incentives of IBM’s salesforce are based on customer satisfaction ratings. In a series of three studies, this paper investigates the relationship between different bases of salespeople’s incentives and their customer service response behavior. The results provide evidence that incentive systems based on customer satisfaction increase salespeople’s customer service response compared to salespeople whose incentives are based on sales volume. An interesting and important result of the studies is that mixed incentives (incentives based on a combination of sales volume and customer satisfaction) reduce the customer service response of salespeople. Thus, firms that are introducing mixed customer satisfaction incentives need to study the impact of the incentive structure on salesperson behavior. Finally, training positively influences salespeople’s customer service behavior. Theoretical and methodological implications of these findings and directions for sales managers are discussed.