Why are Some Salespeople More Aggressive Than Others?

By Wan-Ju Iris Franz–Whether you are going to a car dealer or a luxury boutique, you are likely to be greeted by a salesperson. However, your experience with the salesperson at each location was probably quite different. In particular, you might find the car salesperson to be much more aggressive than his counterpart in a luxury boutique. While a typical car salesperson pushes a customer to make a purchase “today,” his counterpart in a luxury boutique seldom does so. Why are their sales tactics so different?

Commission-Based Compensation

Many attribute the disparate behaviors of salespeople to their reward system; specifically, commission-based compensation. Indeed, sales commission rates for cars salespeople are usually higher than those for retail salespeople (Lisse 2013). Therefore, the former has a greater incentive to pressure their customers into a purchase than the latter. However, Eisenherdt (1988) hypothesizes that expensive items are harder to sell, so that purchase size should be positively associated with commission-based rewards but negatively associated with salary-based rewards. Since luxury boutiques carry big-tag items such as expensive purses and watches, one should observe luxury boutiques to base their compensation on sales commission to motivate their salespeople to sell hard. However, one seldom encounters a pushy salesperson in a luxury boutique, such as Chanel.

Attitudes of Salespeople

In her recent publication “Why are some salespeople more aggressive than others?” at the Atlantic Economic Journal, Dr. Wan-Ju Iris Franz explained that two main factors determine the attitude of the salespeople: 1. the proportion of consumers with a higher “willingness to pay,” in the industry, and 2. repeat customers. Willingness to pay is defined as the highest price a customer is willing and able to pay for a product. In an industry with a large proportion of high willingness-to-pay consumers, the salespeople only need to exert moderate effort to sell an item to a medium customer. However, in an industry of low proportion of high willingness-to-pay customers, the salespeople need to exert high effort to sell an item to a medium customer.

The effort of a salesperson is a double-edged sword. On the one hand, the effort provides the information and attributes of the product to the customers, and they appreciate that. On the other hand, too much effort could irritate the customers. For instance, if the salesperson bombards the customers with the details of the product, or pushes the customers to make a purchase today, then the customers could be vexed.

Willingness to Pay

A car industry is an example of low proportion of high willingness-to-pay customers. A car is not considered a luxury in the United States. Many American families have at least one car in the household. Therefore, the medium customer is relatively price-sensitive, and it requires more effort from the salesperson to close the deal. By contrast, the medium customer that patronizes a luxury boutique typically has a higher willingness to pay. Hence, it requires relatively less effort from the salesperson to close the deal. As a result, salespeople in car industry appear more aggressive than boutique salespeople.

Repeat Costumers

Furthermore, compared to car dealers, luxury boutiques rely more on repeat customers. For instance, a customer who is happy with her Gucci bag is likely to return to the same boutique to purchase a pair of Gucci shoes. Therefore, it is important for the salesperson to leave a good impression to the customer. In contrast, the probability that a customer will return to the same car dealer to buy another car from the same salesperson is very slim. Therefore, a car salesperson only needs to close the sale, rather than maintaining a good relationship with the customer. The same principle applies to mattress salespeople. Typically, a customer purchases a mattress and uses it for a long period of time without a repeat purchase. Therefore, one expects a mattress salesperson to be relatively aggressive in his or her sales tactics.

If you would like to avoid aggressive salespeople, before entering a store, ask yourself these two questions: are people who shop here generally wealthy? Are repeat customers important to this shop? If the answer is no to both questions, then you might want to think twice before you enter.

Wan-Ju Iris Franz, Ph.D.
Visiting Assistant Professor of Economics, Cameron School of Business