Sales Representative Departures and Customer Reassignment Strategies in Business-to-Business Markets

Abstract

When a sales representative (rep) leaves a business-to-business firm, a crucial link with the rep's customers becomes severed. The firm reassigns those customers to different sales reps (either existing reps or new hires) in a manner that mitigates potential sales losses. What causal effect do sales rep departures have on customer-level revenue, and which sales rep replacement strategies are more effective? Using data from a Fortune 500 firm and a difference-in-differences analysis with correction for selection bias, the authors show that sales rep transitions lead to 13.2%–17.6% losses in annual sales. New hires are less effective than existing sales reps in mitigating sales losses. Existing sales reps who are similar (vs. dissimilar) to the departing reps (in terms of past industry experience) are more effective in mitigating sales losses; however, reps with high past performance do not exhibit greater efficacy for mitigating sales losses than reps with average or low past performance. The analysis presents means to quantify the economic consequences of losing a sales rep and to determine how to reassign customers to sales reps according to the resulting economic impact.