Service quality and performance of sales agencies

2023-02-01

2023-10-31

Number of relevant bookings (i.e., bookings for the specific target destinations), revenue

Owners’ and sales agents’ satisfaction and perceptions, number of calls to the service hotline, gross margin

We conduct a survey, in which we ask owners and sales agents about their satisfaction with the priority access to the service hotline. We further measure the owners’ and sales agents’ beliefs and perceptions about our travel company and its products and their booking behavior and strategy (e.g., bookings at other tour operators).

The RCT will be conducted with a leading travel company and tour operator in Germany. The firm sells its products online but also through a large number of mostly independently owned travel agencies. These travel agencies work together with several tour operators and the respective tour operators pay the agencies through commissions typically set once a year. Common commission payments are defined as percentages of sales.

Presently, the travel company thus uses monetary incentives to motivate selling activities of the travel agencies. Our study asks whether the agencies' selling behavior can also be affected by providing them with a better service. We consider a treatment, in which the treated agencies receive priority access to a service hotline that they can consult in case of booking changes, inquiries, or customer complaints for specific target destinations (Egypt, Greece, Spain, and UAE). We compare the performance (as measured by revenue and the number of bookings) in the treatment group to that in a control group of unaffected agencies.

Moreover, we conduct surveys within the agencies to inquire, among other things, about owners' and sales agents' satisfaction with the priority access to the service hotline. We also document the number of calls to the hotline. This allows us to study whether the agencies made use of the better service opportunities.

To understand underlying behavioral mechanisms we consider potential heterogenous treatment effects in several dimensions such as the agencies’ total number of past bookings at the study firm, their baseline commission levels paid by the study firm, the prior total number of bookings to the targeted destinations, the "tightness" with which the agencies are linked to other tour operators (e.g. because of competitors’ incentive contracts, ownership, long-term cooperation, premium access to competitors' products and services). We will also study heterogeneous treatment effects with respect to the existing incentives systems within the agencies (i.e., the incentives for employees implemented by the agency owner).

We conduct two other RCTs in collaboration with the travel company during the same time frame (see the respective pre-registrations for details on the other experiments), and the control group used in this experiment will also serve as a control group in these other RCTs. The other RCTs introduce additional monetary incentives.

As described in the above, we run three RCTs with different research questions in the same time frame. As the three RCTs consist of altogether five different treatment arms (and the control group), we randomly assigned all target stores to one of six treatment groups. To do so, we ran a stratified randomization procedure using the randomize package in Stata. As the target group consists of agencies organized in six different chains, assignment was stratified by chain.

Store/Agency

No

We only include agencies with separate independent owners in the treatments (i.e., we do not include owners who own multiple agencies). Standard errors will therefore be clustered on the level of an agency which corresponds to clustering on the level of the owner.

In total, 1821 agencies were intended to participate in all trials we conduct in cooperation with the company. Although these travel agencies are mostly independent, they are part of larger buying syndicates. Our 1821 agencies belong to six different buying syndicates (e.g. chains). We drop in total 54 agencies from the trial, because they either have more than one owner (which would comprise non-independent observations) or the agencies are blocked for sales due to payment arrears. This leads us to a total number of 1767 valid observations for all trials. For this trial, we use 761 observations and the remaining 1006 are allocated to treatment groups of other trials.

255 sales agencies in treatment, 506 in control