Why are Some Salespeople More Aggressive than Others?

Abstract

Why are salespeople in certain industries (such as cars and mattresses) aggressive, while their counterparts in other industries (such as luxury boutiques) relatively customer-oriented? Using a principal-agent-customer model, this paper demonstrates that the level of salesperson aggressiveness depends on: (1) the proportion of customers with a high willingness to pay; (2) whether or not customers are well-informed and (3) repeat customers. If the proportion of customers with a high willingness to pay is relatively large, then salespeople tend to be customer-oriented. By contrast, if the proportion of customers with a high willingness to pay is relatively small, then salespeople tend to be aggressive toward uninformed customers while well-informed customers shun the store. Finally, if the proportion of customers with a high willingness to pay is relatively small, then in an infinitely repeated game, the agent can close sales with well-informed customers without being aggressive, provided that the principal is patient enough about future profit.