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When do we need higher educated salespeople? The role of work experience

Review of Managerial Science volume 15, pages 1391–1429 (2021)Cite this article

Abstract

Practitioners are currently engaged in a debate over the impact of salespersons’ education and experience on sales outcomes. This study provides empirical evidence that contributes to this discussion by examining whether and how higher education background and work experience are associated with salesperson on-the-job capability, sales performance, and salespeople turnover. Using a sample that consists of 282 salespeople from the Chinese life insurance industry, we obtain several interesting findings. While college graduates tend to have lower on-the-job capability and poorer performance than non-college graduates, their capability and sales performance improve more rapidly with job tenure. Interestingly, college graduates are less likely to quit during the initial stage of their tenure, after which their turnover likelihood increases sharply. In general, work experience (job tenure and prior experience with another employer) is significantly associated with capability and performance enhancement. However, job tenure and prior experience are substitutes for each other in the production of sales. Furthermore, long-tenured salespeople with extensive prior experience are less likely to quit. The results also show that salespeople with a college degree have lower customer attrition. Overall, this study has important implications for sales force recruitment and management.

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Notes

  1. Several major recruiting platforms have recently published articles questioning the value of higher education in the sales profession (Kosinski 2015; Usher 2015). News channels (e.g., CNBC) have also suggested that a college degree is not necessary to build a well-compensated career in several job categories, most notably as an insurance sales agent or as a manufacturing sales representative (Ward 2017).

  2. However, it should be acknowledged that less resiliency is only one of several factors that could play a role in driving the inverse relationship between education and sales performance.

  3. We note that a third possibility is prior, but irrelevant, experience. Data limitations prevent us from fully assessing the effects of this type of work experience. However, as presented later, our empirical model controls for salesperson age, which partially reflects salespeople’s irrelevant prior experience.

  4. Potentially, we could divide salespeople’s education background into three instead of two sub-groups, namely, bachelor’s degree holders, junior/technical college graduates, and secondary/high school graduates. However, secondary/high school graduates represent less than 2% of all observations. We also conduct additional empirical analysis to access whether our current classification of using two groups (i.e., college and non-college graduates) is appropriate and do not find any evidence in support of further classification. Specifically, when adding an indicator variable for secondary school graduates, our main findings remain unchanged (i.e., the coefficients of both College and College × Tenure are still significant under this new specification), but there is no statistical difference between the remaining two groups (as indicated by the insignificant coefficients of both Secondary and Secondary × Tenure). Results are presented in Table 5. Thus, we use the two-group classification system (i.e., college graduates and non-college graduates) for our main analysis.

  5. During our communications with industrial practitioners and students in the U.S., we also observed that job turnover has become a major problem for U.S. companies of various sizes in different industries and that many millennials tend to switch jobs on a regular basis. Foreman (2019) reports that up to 74 percent of millennial workers plan to quit their current jobs within the next three years.

  6. Results of the stochastic frontier estimation are available from the authors upon request.

  7. In Appendix 1: Table 6 and Appendix 2, we explore a series of permutations of our sales performance model to ensure the robustness of our results. Our empirical results remain unchanged in each of these robustness tests. Further, to visualize the interaction effects documented in this study, we present simple slope plots in Figs. 4, 5, 6, 7, 8 and 9.

  8. According to Blackwell et al. (2009, page 524), this is “a new method for improving the estimation of causal effects by reducing imbalance in covariates between treated and control groups.”.

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Acknowledgements

We would like to thank the editor and the anonymous reviewers for their constructive suggestions and comments. We want to express special gratitude to the anonymous life insurance company that provided the data set used in this study.

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  1. All authors contributed equally to this work.

Authors and Affiliations

  1. Department of Marketing, School of Business Administration, University of Mississippi, 234 Holman Hall, University, MS, 38677, USA

    Cong Feng

  2. Department of Marketing, Whitman School of Management, Syracuse University, 721 University Avenue, Syracuse, NY, 13244, USA

    Scott Fay

  3. Department of Marketing, School of Business Administration, University of Mississippi, 131 Holman Hall, University, MS, 38677, USA

    Kexin Xiang

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Appendices

Appendix 1

See Tables 5, 6 and Figs. 4, 5, 6, 7, 8, 9.

Table 5 Classification of education into three standalone groups
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Table 6 Model of sales performance (robustness checks)
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Fig. 4
figure 4

Plot of interaction effect between College and Salespeople Tenure on sales performance

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Fig. 5
figure 5

Plot of interaction effect between Salespeople prior experience and Salespeople Tenure on sales performance

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Fig. 6
figure 6

Plot of interaction effect between College and Salespeople Tenure on salesperson on-the-job capability

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Fig. 7
figure 7

Plot of interaction effect between Salespeople prior experience and Salespeople Tenure on salesperson on-the-job capability

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Fig. 8
figure 8

Plot of interaction effect between College and Salespeople Tenure on salespeople turnover likelihood

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Fig. 9
figure 9

Plot of interaction effect between Salespeople prior experience and Salespeople Tenure on salespeople turnover likelihood

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Appendix 2

This appendix provides details regarding the robustness tests reported in Table 6 (Appendix 1). First, we use the original premium sales per customer instead of using finalized premium sales per customer as the dependent variable. Results are presented in Column 1 of Table 6.

Second, we exclude inactive salespeople who sell no more than 50 life insurance products within the data period. Results are presented in Column 2 of Table 6.

Third, we exclude secondary/high school graduates from our sample and re-estimate the model. Results are presented in Column 3 of Table 6.

Fourth, performance may decline for salespeople who plan to quit their job, regardless of their education level (Liu and Chiu 2018). We exclude salespeople who quit their job within the data period and re-run the analysis. Results are presented in Column 4 of Table 6.

Fifth, we also construct a matched sample to ensure balance between the group of college and non-college graduates. We employ the coarsened exact matching algorithmFootnote 8 that Blackwell et al. (2009) propose and use salesperson age, application year, and application month as matching criteria. Column 5 of Table 6 reports the results.

Lastly, to mitigate concerns that our measure of prior experience misrepresents the actual amount of prior experience, we reconstruct this variable by adopting three more conservative calculations. In particular, we recalculate a salesperson’s prior experience by using the number of days between when a salesperson obtained her/his sales certificate and when s/he joined the firm minus 90 days (i.e., 3 months), 183 days (i.e., half a year), and 365 days (i.e., 1 year), respectively. Results using the newly measured prior experience are presented in Columns 6, 7, and 8, respectively.

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Feng, C., Fay, S. & Xiang, K. When do we need higher educated salespeople? The role of work experience. Rev Manag Sci 15, 1391–1429 (2021). https://doi.org/10.1007/s11846-020-00388-y

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Keywords

  • Education
  • Work experience
  • Tenure
  • On-the-job capability
  • Sales performance
  • Turnover

JEL

  • M31