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Working Paper

A Meta-analysis of Personal Selling Elasticities

Sönke Albers, Murali Mantrala, and Shrihari Sridhar, 2008 [08-100]

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Personal selling (PS) is an important element in the marketing mix for many companies across various industries and sectors. There are currently an estimated 20 million full-time salespeople working for U.S. businesses, and personal selling is prevalent in noncommercial settings, such as U.S. military recruitment.

Despite the critical role and expenditures associated with this activity in numerous industries, there are few quantitative generalizations about personal selling’s effects. To fill this gap, the authors analyzed estimates from 46 empirical studies published during the past four decades. The authors find the weighted mean of PS elasticities from these studies to be about .32, a number significantly larger than the mean estimates of advertising elasticity, which fall in the range of .1 to .2 in earlier analyses of advertising-sales effects.

The authors find that personal selling elasticity is higher when the products are in the early rather than late stages of their lifecycles and in European rather than U.S. markets. They also find that PS elasticity estimates from more recent studies are smaller than those from older studies. In addition, methodological features of past studies, such as the form of sales response function, the temporal data intervals used, and the omission of promotions or lagged effects, significantly bias elasticity estimates. After correcting for these methodology-induced biases, the weighted mean corrected PS elasticity is .352.

These results suggest that companies should deploy direct salesforce resources for launching and establishing new products while shifting to other means of communications as products mature. Similarly, personal selling efforts in European markets seem to be more effective than in the U.S., suggesting potential redeployment strategies for multinational firms.

The authors suggest that the efficient ratio of personal selling expenditures to total revenues is about 12.5%. Managers can use this ratio as a decision-making benchmark while setting PS expenditure levels.

About the authors
Sönke Albers is Professor of Innovation, New Media and Marketing, Christian-Albrechts-University at Kiel, Germany. Murali K. Mantrala is Sam M. Walton Distinguished Professor of Marketing, and Shrihari Sridhar is a Ph.D. student in marketing, both at the Robert J. Trulaske, Sr., College of Business, University of Missouri, Columbia. The authors contributed equally to this research and their names are listed in alphabetical order.

Included in the following collections:
MSI Reports 2008
Executive Director's Letter 08-001

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