How should salespeople represent both the seller and the customer when their interests diverge, as in pricing negotiations? Our research team addresses this question in a new study in the Journal of Marketing by extending a dual agency framework to the sales domain. We examine the salesperson’s role throughout the three stages of the discount process: (a) the customer’s discount request, (b) the seller’s approval, and (c) the seller’s post-approval profit. We test this framework across three multimethod studies and provide the first empirical investigation that deconstructs the sequential B2B customer-specific discount process.
We find that the most favorable outcomes result when the salesperson engages in high levels of both customer advocacy and seller advocacy. Traditional agency theory research focuses on the salesperson as an agent of the seller. In contrast, we emphasize that the customer also considers the salesperson as its agent; as a result, the salesperson is unlikely to succeed as a seller advocate without also engaging in customer advocacy. For salespeople, our research offers guidance on a classic dilemma: the tension between the customer’s desire for a lower price and the seller’s insistence on demonstrating the value of its offering rather than compromising on price.
Salespeople who communicate the seller’s view to the customer while also transmitting customer concerns to seller management are more successful at achieving desired responses from both the customer and seller, while also enhancing seller profit. Because advocating for both principals leads to better outcomes for both the customer and the seller, it stands to reason that doing so can also reduce role stress.
Our findings are liberating for salespeople; they need not choose a side in discount negotiations. Instead, they can compartmentalize their duties. When dealing with the customer, they act as a fierce advocate for the seller; when dealing with seller personnel, they are a strong customer advocate. This compartmentalization, somewhat paradoxically, enables the synergistic relationship between the two forms of advocacy and drives superior outcomes for both firms.
Although a salesperson’s forceful advocacy on a customer’s behalf may appear to threaten the seller’s bottom line, sellers should consider that salesperson customer advocacy may be vital to a profitable relationship with the customer. Sellers are advised to encourage salespeople to serve as agents of their customers while also effectively acting as agents of the seller. Sales training programs, can emphasize the importance of taking concrete actions to develop deep understanding of the customer’s needs, effectively representing the customer’s interests, and advocating forcefully for discounts and other seller concessions and assistance when warranted to bolster the customer’s business and deepen the relationship. Customer–seller ties allow both firms to sufficiently monitor the salesperson, acting as a boundary condition; more extensive ties enable the synergy between customer advocacy and seller advocacy.
One practical approach for sellers to leverage salesperson dual agency to their advantage is to encourage the development of multiple interfirm linkages with the customer, including cross-boundary interpersonal ties. Similarly, allowing a customer to learn more about the salesperson’s customer advocacy amplifies the effectiveness of seller advocacy toward that customer. Following the seller’s discount decision—even if the discount was denied—sales managers or pricing personnel can find ways to notify customers how the salesperson went to bat for them. In addition, we highlight the importance for customers of effective management of the salesperson relationship. In many customer–seller relationships, the salesperson is the critical conduit through which the customer seeks and obtains discounts, customized services, and other valued benefits from the seller. Through faithful representation of the seller, the salesperson allays seller suspicion, thus enabling the salesperson to effectively obtain desired customer benefits like discounts.
Customers should not hinder seller efforts to learn more about the salesperson’s seller advocacy. For example, the seller might send the customer a survey asking about the salesperson’s behaviors. Customers should view this as an opportunity to improve the seller’s certainty about the salesperson’s faithful representation. Our findings differ from the implications of extant sales theories and prior sales research, which suggest that the salesperson serving two masters whose objectives are opposed (as with discounts) can lead to role stress and reduced performance.
Salespeople, sales managers, and organizational buyers can find value in our research. Whereas sellers warn salespeople not to ‘be sold by the customer,’ our findings suggest that sellers should encourage salespeople to advance the customer’s agenda in discount negotiations. Engaging in seller advocacy, without customer advocacy, is likely to be ineffective or even lead to reduced seller profit. Customers and sellers can benefit from understanding that salesperson’s advocacy for the other party is mutually beneficial and an important part of the salesperson’s role.
From: Justin Lawrence, Lisa Scheer, Andrew Crecelius, and Son Lam, “Salesperson Dual Agency in Price Negotiations,” Journal of Marketing.
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Justin M. Lawrence is Assistant Professor of Marketing, Oklahoma State University, USA.
Lisa K. Scheer is Emma S. Hibbs Distinguished Professor & Professor of Marketing, University of Missouri, USA.
Andrew T. Crecelius is Assistant Professor of Marketing, Iowa State University, USA.
Son K. Lam is Professor of Marketing, University of Georgia, USA.