Targeting sales incentives

Last registered on February 07, 2023

Pre-Trial

Trial Information

General Information

Title
Targeting sales incentives
RCT ID
AEARCTR-0010883
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

Region

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 whether there is a difference between giving top-up payments (made for bookings to specific target destination) to the agency owner or the team of agents (through travel vouchers).
External Link(s)

Registration Citation

Citation
Gürtler, Oliver et al. 2023. "Targeting sales incentives." AEA RCT Registry. February 07. https://doi.org/10.1257/rct.10883-1.0
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, various survey measures (e.g., sales agents‘ perception, transfer of voucher and commission payments to sales agents), gross margin
Secondary Outcomes (explanation)
In treatment (ii) (to be described below), a travel voucher is sent to the agency owner and the owner is strongly encouraged to transfer it to the sales agents. 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). We also measure in the survey whether the owner kept the voucher/commission for herself or shared the voucher with some or all sales agents in her agency.

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 whether top-up payments made for bookings to specific target destinations increase respective sales. We vary whether the top-up payment is paid to the agency owner or the team of sales agents (through travel vouchers).

More concretely, we compare the performance (as measured by revenue and the number of bookings) in a control group of unaffected agencies to two treatment groups where
(i) a top-up payment of 6 Euros for each passenger is paid to the agency owner (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 team of sales agents through a travel voucher (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. In treatment (ii), the travel voucher is sent to the agency owner and the owner is strongly encouraged to transfer it to the sales agents. We conduct surveys, in which we ask, among other things, whether the voucher was passed on to the sales agents.

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) and agencies' team characteristics (e.g., number of employees).

We conduct two other RCTs in collaboration with the travel company in 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 different sizes of top-up payments to the agency owners. The control group that we use in the current RCT will also be used in the two other RCTs. Furthermore, treatment group (i) will be used in the other RCT on top-up payments.
Experimental Design Details
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 1008 observations and the remaining 759 are allocated to treatment groups of other trials.
Sample size (or number of clusters) by treatment arms
252 sales agencies in treatment (i), 250 in treatment (ii), 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

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials