Customer-oriented salespeople’s value creation and claiming in price negotiations

Abstract

Although customer orientation is widely endorsed as a crucial salesperson characteristic, little is known about its effect in price negotiations with customers. This study rectifies this omission and argues for its ambiguous effects. While customer-oriented salespeople create value for customers that enables them to reduce price concessions, they may overly focus on customers’ needs and, in doing so, hesitate to defend against such requests. Results of two quantitative studies and one preliminary qualitative study reveal that customer-oriented salespeople do not unconditionally benefit from their created value in price negotiations with customers. That is, salespeople effectively leverage their created value to negotiate prices with customers only if their sales managers instill confidence that high prices are justified. Furthermore, we find that profit-related incentives reduce undesired consequences of salespeople’s customer orientation in price negotiations.