Salesperson Dual Agency In Price Negotiations

Link: https://doi.org/10.1177%2F0022242920974611

Business-to-business (B2B) sellers offer two types of discounts:

• those publicly available to all customers, and
• those offered exclusively and privately to a specific customer.

A B2B salesperson’s fundamental role is to represent the seller’s interests to customers. Yet, a salesperson must also represent a customer’s interests to others within the seller, as when negotiating customer-specific discounts––i.e., non-advertised price reductions on specific products for a specific customer.

The customer-specific discount process arises owing to a customer’s concern regarding a product’s price. The salesperson responds by
offering the seller’s point of view, which can sometimes allay the customer’s concern. In some cases, however, the customer proceeds to formally request a discount, and the salesperson relays that request to seller decision-makers while making the case for granting a discount. Finally, the seller decides whether to approve the requested discount, after which the customer decides what and how much to purchase from the seller.

Customer-specific discounts have received scant research attention. Prior studies have not established how the salesperson should balance customer advocacy and seller advocacy in discount negotiations, nor how and when advocacy actions affect outcomes of this
process.

A working paper helps chief sales officers understand:

• how salesperson-customer advocacy and seller advocacy influence a customer’s decision to request a discount and the seller’s decision to approve or deny that request,
• how customer and seller advocacy influence a customer’s purchase decision after a discount is received, and specifically how this affects the seller’s customer-level profit.

The researchers employ a perspective that casts the salesperson as both an explicit agent of the seller and an implicit agent of the customer. They develop a conceptual model where a salesperson’s customer advocacy and seller advocacy influence the attitudes of both principals, ultimately driving (1) the likelihood of the customer requesting a discount, (2) the likelihood that the seller will approve the discount, and (3) the seller’s subsequent profit.

The results of the study offer the following implications for sellers and customers:

1.  Salespeople who communicate the seller’s view to the customer while also transmitting customer concerns to seller management are more successful at achieving desired responses from both the customer and seller while also enhancing seller profit,
2. When high seller advocacy is coupled with low customer advocacy, implemented discounts have a negative effect on seller profit,
3. Advocating for both principals leads to better outcomes for both the customer and the seller, and can reduce role stress,
4. When not accompanied by customer advocacy, seller advocacy actually backfires.