Sales Ethics

The Importance of and Challenges to Sales Ethics

Perhaps not enough is made of sales ethics when salespeople are being trained.  This may have a lot to do with the fairly poor reputation that this profession carries in the professional world.  Only lawyers and bankers seem to have poorer reputation these days.

You can see it in the comparisons that are made between sales and prostitution.

That’s why sales ethics are so important.  A business that gets and maintains a positive reputation for living up to its promises on the salesroom floor is a company that will achieve steady and long-term success.  Becoming this kind of company is not easy, of course.  The very nature of sales is in tension with ethical conduct.

The problem largely arises from the nature of the sales pitch.  Because sales people are rewarded for delivering customers and for getting them to spend more than they would otherwise have done, it creates a tension for the salesperson between ethical conduct and personal success.  Sales people who are too upfront with customers about what they can get inevitably will drive some customers away or allow the customer to get more for less.

The classic example of this scenario happens in automobile showrooms.  The customer comes in for a test drive and gets quoted a certain price.  When the negotiation begins, however the customer finds that a series of extra costs are attached to the sale and that suddenly they are trying to fight their way down from a much higher price.

The negotiations usually involve a series of stall tactics while the salesperson tries to wear down the customer and to get him or her to purchase the car at a higher rate than they would normally have settled for.  The customer on the other hand tries to wait out the salesperson.  The savvy shopper will understand the nature of this game and bid far lower than the store is willing to allow and then pretend to be losing interest, suggest that she is going to leave to go check on one of the businesses competitors.

In short, this creates an adversarial situation in which businesses are trying to squeeze every last dime out of customer while customers are trying to get what they want for as little as possible.  Companies that manage this will tend to get short-term gain over their competitors.

The main problem for businesses comes when customers come to feel that the company has cheated them.  Businesses that acquire the reputation for being unscrupulous, for overselling their product, cheating their customers, or outright lying soon find that they lose on return customers because one of the most important predictors of success is personal endorsements.  Customers who feel cheated not only don’t come back themselves but persuade their friends not to go either.  If enough customers turn away, a company’s long-term success will be put in jeopardy.

Part of the problem in the current environment is that companies tend to turnover their sales force at far greater rate than they used to do.  A salesperson is not looking to allow the company to have success in ten years since the salesperson knows he is unlikely to be there at that time.  The salesperson also knows she is working for herself, so she is only really concerned with the short term.  If she can move product— regardless of the sales ethics— then she will get the bonuses, be promoted, and can then trade that in for a higher position at their next position— perhaps with another company.

This mobility extends all the way up the chain of command since turnover at the top of most companies is just as great as in the sales force.  There are thus only two ways to ensure that sales ethics flourish within a company.  One is to carefully monitor the sales force (or to take away their commission so the incentive is not there for unethical practices) or to create a company culture that retains the sales force while carefully training them in a more ethical form of sales.