Putting trust up for sale.

• Author: Hall, Robert
• Position: Marketing Solutions

In most industries, including financial services, there has been a steady march toward increased use of sales incentives. The idea is simple and powerful: Use variable pay to reward those who produce more sales. Feed the producers and starve the non-producers. This approach unleashes the powerful market forces of self-interest to motivate, direct and manage sales behavior. For customers who always have had a healthy skepticism of salespeople, this practice has reinforced a concern that salespeople might try to get them to buy something they don't want or need.

In recent years we have seen a new twist on incentive comp: Figure out which products or services are most profitable to the enterprise and provide additional incentive for selling these products.

This approach has raised a new concern among customers. "Not only might I end up with a product I don't need, but now they might get me to select the product that is best for them, but not for me. In fact, I might end up paying a lot more for helping them move their doggy products."

What if the product being pushed ks the very one that least fits the customer's needs or preferences? What if the sales organization has been given additional incentive to sell that product? What if the needs of the sales organization are in fact driving the recommendations to the customer?

This is exactly what a lot of the brokerage industry has been changed with--not only in the sales area but in the research area as well.

Incentives vs. bribes

But this disconnect is not confined to financial services. I was recently working with a wholesaler to retailers. The wholesaler's salespeople were concerned that as certain of its product manufacturers placed more pressure and incentives to move their products, the salespeople were increasingly driven to do what was good for the wholesaler and its manufacturers. As a result, customers were growing skeptical of the salespeople's advice and recommendations.

It has been said that loyalty is what's left when the bribes are gone. For many organizations, the incentive plans increasingly seem to operate as bribes. Incentives should reward behavior that is mutually beneficial. Bribes are rewards for doing things that are only good for one party--often at the expense of another--while incentives get people to do things viewed as positive and productive.

The big risk is that, as customers find themselves on the receiving end of an increasingly incentivized sales force, their...