Working Smarter, Not Harder: The Value of Prospect Information in Enterprise Selling (Work-in-progress)
What is the value of providing prospect information to enterprise salespeople? To what extent can providing prospect information change which customers salespeople try to sell to and, ultimately, how much salespeople can sell? I ask this question in the context of a new technology that allows salespeople to directly observe when potential customers (“prospects”) visit the selling firm’s website. I analyze a novel dataset of micro-data that includes one year of selling activities from a sample of salespeople from an enterprise technology firm. I find evidence consistent with (a) website visits being informative of a prospect’s probability of becoming a selling opportunity and (b) salespeople re-allocating efforts towards prospects that visit the website. To quantify the overall value of this information, I propose a structural model that explains how salespeople allocate their communication efforts under uncertainty. In this model, prospect information can reduce uncertainty and allows the salesperson to allocate more effectively. I estimate this model and will quantify the value of information by simulating the counter-factual setting where information about prospect’s website visits is not available to salespeople.
Are Consumers Averse to Sponsored Messages? The Role of Search Advertising in Information Discovery with Navdeep Sahni (Link)
We analyze a large-scale randomized field experiment in which a search engine varied the prominence of search ads for 3.3 million US users: one group of users saw the status quo, while the other saw a lower level of advertising (with prominence of search ads decreased). Revealed preference data reject that users are, overall, averse to search advertising targeted to them across a diverse set of searches. At the margin, users prefer the search engine with the higher level of advertising. On the supply side, newer websites are more likely to advertise. Going from the lower to the higher level of advertising increases traffic to newer websites, with the newest decile of websites gaining traffic by 10%. Users also respond more positively to advertising when local businesses in their state create new websites. Taken together, patterns in our data are consistent with an equilibrium in which advertising compensates for important information gaps in organic listings: it conveys relevant new information, which is hard for the search engine to gather, and therefore missed by the organic listings algorithm. Viewing search ads, at the margin we study, makes consumers better off on average.