The size of sales incentives

Last registered on February 07, 2023

Pre-Trial

Trial Information

General Information

Title
The size of sales incentives
RCT ID
AEARCTR-0010863
Initial registration date
February 01, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 07, 2023, 11:31 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

Primary Investigator

Affiliation
University of Cologne

Other Primary Investigator(s)

PI Affiliation
University of Cologne
PI Affiliation
University of Cologne
PI Affiliation
University of Cologne
PI Affiliation
University of Cologne

Additional Trial Information

Status
In development
Start date
2023-02-01
End date
2023-04-30
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
The experiment 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.

We study the effects of top-up payments made for bookings to specific target destinations. More importantly, we vary the size of the top-up payment that the agency owner receives.
External Link(s)

Registration Citation

Citation
Gürtler, Oliver et al. 2023. "The size of sales incentives." AEA RCT Registry. February 07. https://doi.org/10.1257/rct.10863-1.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2023-02-01
Intervention End Date
2023-04-30

Primary Outcomes

Primary Outcomes (end points)
Number of relevant bookings (i.e., bookings for the specific target destinations), revenue
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Number of passengers per booking, gross margin
Secondary Outcomes (explanation)
We measure in a survey 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).

Experimental Design

Experimental Design
The experiment 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 (where typically percentages increase in the overall sales volume of an agency).

We study the effects of top-up payments made for bookings to specific target destinations. More importantly, we vary the size of the top-up payment that the agency owner receives.

More concretely, we compare the performance (as measured by revenue and the number of bookings) in a control group of unaffected agencies to three treatment groups where
(i) a top-up payment of 3 Euros for each passenger is paid to the agency (for every booking of at least 1,000 Euros to Egypt, Greece, Spain, or UAE),
(ii) a top-up payment of 6 Euros for each passenger is paid to the agency (for every booking of at least 1,000 Euros to Egypt, Greece, Spain, or UAE),
(iii) a top-up payment of 9 Euros for each passenger is paid to the agency (for every booking of at least 1,000 Euros to Egypt, Greece, Spain, or UAE).

We further study whether the top-up payments have an impact on the number of passengers per booking. Moreover, we conduct surveys within the agencies to measure, among other things, 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).

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). One of these RCTs studies whether better service quality affects the agencies' performance. The other one studies whether there is a difference between giving top-up payments to the agency owner or the team of agents (through travel vouchers). The control group that we use in the current RCT will also be used in the two other RCTs. Furthermore, treatment group (ii) will be used in the other RCT on top-up payments.
Experimental Design Details
Not available
Randomization Method
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.
Randomization Unit
Store/Agency
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
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.
Sample size: planned number of observations
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 1262 observations and the remaining 505 are allocated to treatment groups of other trials.
Sample size (or number of clusters) by treatment arms
254 sales agencies in treatment (i), 252 in treatment (ii), 250 in treatment (iii), 506 in control
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Ethics committee of the Faculty of Management, Economics and Social Sciences at University of Cologne
IRB Approval Date
2023-01-12
IRB Approval Number
230001DS