Customer value impact of sales contests |
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Authors: | Jason Garrett Srinath Gopalakrishna |
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Institution: | (1) Foster College of Business Administration, Bradley University, 407 Baker Hall, Peoria, IL 61625, USA;(2) Robert J. Trulaske, Sr. College of Business, University of Missouri, 434 Cornell Hall, Columbia, MO 65211, USA |
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Abstract: | Although firms spend more than $26 billion annually on sales contests, no empirical research has investigated the effects
of contests on individual customers. While some short-term firm effects of contests have been documented, the impact on long-term
customer value has remained a matter of speculation. This research investigates the long-term customer impact of sales contests,
by applying the customer value framework. We add to previous research that has used customer value of marketing programs by
employing the acquired, retained, and add-on framework to segment customers based on their purchase history. We develop hypotheses
drawing on theories in the buyer behavior, customer loyalty, and sales management domains. By disaggregating the overall customer
value into initial and subsequent components, we demonstrate a greater long-term value per customer in the retained customer
cohort and lower short-term and long-term value per customer among the two other cohorts (acquired and add-on customers).
There is no adverse impact on other drivers of customer value such as customer churn and purchase frequency. While our study
focuses on individual customer effects, we note the significantly higher volume of customers during the contest leads to a
positive aggregate-level assessment. We conclude by discussing the implications of our findings for managers and researchers. |
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