The Effect of Incentive Disclosure on Salespeople’s Performance with Customers

Sales incentives are omnipresent in sales organizations. Numerous studies have thus analyzed the effect of sales incentives on sales force motivation and performance. At the same time, extant research portrays customer knowledge of sales incentives predominantly as a burden for the customer-firm relationship. In contrast, the authors of this paper propose that customer knowledge of sales incentives is positive for the firm, when the salesperson actively creates this knowledge by disclosing their incentives to the customer. The authors argue that such incentive disclosure signals the salesperson’s benevolence, which increases customer trust and purchase intention, and helps to build more profitable, long-term customer-firm relationships. In turn, these positive effects make customers more receptive to other sales techniques, such as upselling. One field experiment and three follow-up experiments with almost 3,000 participants provide support for these predictions. The authors also document that most practitioners systematically underestimate the beneficial effects of incentive disclosure