The Antecedents Of Double Compensation In Concurrent Channel Systems In Business-To-Business Markets

We look at a channel compensation strategy frequently adopted by business-to-business manufacturers that use their own channels and independent entities simultaneously to sell their products in a given territory: compensating both channels (double compensation) for a sale when both channels interacted with the customer in that sale (independently of who gets the order). Using original data from prominent manufacturers operating in competitive markets worldwide, we present an exploratory investigation into the determinants of usage of double compensation. We show that manufacturers sacrifice short-term profits (by double compensation) when the expected costs associated with failing to compensate a channel that has responsibility for a sale increase. We identify such circumstances.