Washington Post personal finance columnist Michelle Singletary recently wrote a column demonstrating how sales incentives can be damaging to customers. She cited a recent case in which the National Association of Securities Dealers fined investment firm Merrill Lynch $5 million for allegedly rewarding its call-center salespeople for switching customers to funds that would result in extra fees and charges.
These switches weren’t always made in the best interest of the customers, and at times customers weren’t told about non-fee options—something that Singletary describes as customers getting “punk'd,” a reference to MTV’s practical-joke show. Callers never knew that the folks in the call center typically had less than five years brokerage experience, were limited to recommending mutual funds, and in exchange for making a sale, received such rewards as dinners or concert tickets.
The case brings to surface a good question that managers should be asking themselves anytime they initiate an incentive program: Will these rewards result in sales at the expense of what is good for the customer? The type of sales that Merrill Lynch encouraged could blow up in a company’s face, and give customers the last laugh. Ultimately, you’ll lose business when customers uncover the real motivation behind a sale, and they'll choose to take their business to a company that has their best interest at heart—while spreading some bad PR for you along the way.
Are you “punking” customers to achieve short-term sales, or even putting pressure on your sales team to make their numbers in a dishonest way? How do you balance rewarding your team members in the short run with creating long-term, happy customers?
And here's some advice on how to rev up your salespeople, without asking them to cross the line.
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