Home
- - - - - - -
About David Batstone
Saving the Corporate Soul
Consulting Services
Speaking Events
- - - - - - -
WAG
Right Reality Blog
Articles
Press
- - - - - - -
Contact David Batstone
Store
- - - - - - -
RSS


Subscribe to the WAG
Email:
Zip:
 

 


Sales Strategies Must Change Print E-mail
Written by David Batstone   

A couple of weeks ago I expressed my disappointment with Geico. The auto insurance provider enticed my parents to leave the insurance provider they had used for nearly 15 years by offering them lower rates. Then, after one year of faultless driving, Geico substantially raised their premium. When my parents called into customer service for an exploration, they were told that their sales rep must have overlooked accidents on their driving record prior to joining Geico. It smelled like a bait and switch.

My column prompted a lively discussion on the Right Reality blog, including a frank letter from a Geico employee who understandably chose to withhold his or her name.

"[You] were the victim of a wily sales rep," the note began. An explanation follows: "Unfortunately, GEICO does not arm its sales departments to think, and act like an underwriter. The sales department is under pressure to make quota, and will sell a policy any way that they can, which unfortunately runs counter to the integrity and ethics that GEICO attempts to instill in all its associates. Instead of dutifully running the [motor vehicle report] to quote the correct rate the first time, they quote a rate based on no previous accident history."

I appreciate the candor, my friend. Sadly, Geico is not alone; such sales practices are altogether too common these days. Sales agents typically work on a commission basis, and do not expect to ever engage the customer again after completing a transaction. They literally move on to the next call. So they frequently make promises that the company will not be able to keep; whatever it takes to acquire the customer.

Certainly, very few companies actually encourage their sales reps to lie to potential customers. But aggressive sales strategies supplant nurturing real customer relationships. Most US companies focus on customer acquisition to fuel their revenues. Executives widely believe, on the other hand, that customer retention - keeping them satisfied so that they hang around for ongoing products and services - is too costly. For that reason, the customer engagement is framed as a transaction, not a long-term relationship.

This strategy, though followed across industries today, will create a backlash in the not too distant future. For that reason, the smart company will explore ways to deploy communications technology and effective job training to enable the building of customer relationships in a cost-effective way.

In essence, that was my message to a trade association gathering of call center and technology trainer professionals in Las Vegas earlier this week. They are being pushed constantly to innovate "transaction platforms" that cut operating expenses. The outsourced call center has emerged as the most popular solution. But hold on; it's obvious that creating a channel for communication between parties anywhere on the globe - say Bangalore to Omaha - does not nurture a relationship. What's the next step beyond a completed transaction, particularly if the product or service does not satisfy the customer?

In a globalized market, most every product or service can be commoditized. It is rare, in that regard, that a company can win on price differential. It needs to "own" the customer relationship. Technology development and sales strategy should make this goal its top priority.

Comments
Add NewSearch
C. - You Gotta Do What You Gotta Do
2005-09-28 23:56:17
I think the Geico employee is right. All this follow your dream is fine if you can afford it but for others of us who eat, buy gas, pay bills, pay taxes, maintain a family and home, it?s not about jotting down our dreams and whims?it?s about trying to stay sane when big business, big sports and big government seems riddled with corruption.
TJM - GEICO IS same-sex partner FRIE
2005-09-29 14:41:20
I have a good word to say about GEICO: They are same-sex partner friendly and saved us $350 annually by having a joint policy. Although I was relunctant to leave USAA, a company I was with for 20 years, I had to support a company that supports me! They did follow through on their promise on this one!
Tom Herbert - A Good Word for Geico
2005-09-29 14:58:03
I?ve used Geico auto insurance for about 15 years. They remain one of the very few companies that I trust (such an odd word to use in today?s business climate). In fact, when talked with a Geico phone rep on a trivial matter a year or so ago, she actually suggested (because of the age of my car) I discontinue the comprehensive coverage I?d been carrying. I took her up on it.

Possibly the good manners, short wait times, and informed staff are just a manifestation of the competitive business sector they?re in - I say this because friends of mine rave about USAA?s service as well. David Batstone?s parents may indeed have had that unfortunate experience, but I personally know Geico?s also capable of good value and honest service.
Kent Handelsman - Sales Strategies & Short-sight
2005-09-29 18:02:42
The insurance industry has been playing this game for years. Most painfully for many of us was the pre-dot-com meltdown days when insurance companies were making so much on investments that they were routinely buying-in at below cost to grab business. When their investments crashed, they started dropping coverage and/or raising rates like crazy. The impact in CA, for example, to the workman's comp insurance was horrific. Then it was all about evil lawyers and cheating injured employees, etc...

This, in my mind is another example of short-term results focus and "be careful what you ask for, you might get it!" The drive for shareholder value -- in the short term is partially due to the greed-factor from the investment community (retirement funds, etc), and businesses have responded by making truly bad decisions (from a long haul perspective) in order to get that bump right now.

The other down-side of this over-emphasis on profit is, to my way of thinking, a fundamental shift in the value of work. Even in highly capitalistic situations, it used to be that the focus was on doing incredible work and making money doing it smarter or better than the other guy. Now it is all about making money NOW and (hopefully) doing something worthwhile in the process. This is alot more serious than a simple turn of phrase. It drives everything. Pay me more, but I better be able to buy it for less. Close the deal now, figure out how to make it work on someone elses watch.

How about a piece on this big picture issue, David? It is the underlying force behind several of your other pieces!
Susan McGinnis - customer relationships
2005-09-30 09:49:17
Thanks for your work, David.
I appreciate your comments about businesses thinking in terms of transactions instead of relationships. The concept of business as a relationship died when the shareholder, not the consumer, became the customer. Now, as long as a business posts a profit to its shareholders, it is a success. It is hard for any individual problem to register.
As a (small, local) mortgage broker, one problematic result of this thinking is the "call center" of non-professional clerical workers, given a computer program and script. I don't think even the business itself thinks these people can and will appropriately handle the complexity of customer service in the world of mortgage servicing. I am concerned about the average person's ability to even be aware of problems concerning their accounts or devices, much less understand what happened, what it takes to fix the problem... especially as we age and our technology and business models get more complex. Maybe the future of work will be adding back in customer service!
Andr? Bucher - Sales Strategies Must Change
2005-10-01 02:27:29
I am very surprised to read that Managers of companies have such strange views as that retaining a customer would be more expensive compared with gaining a new one. What are these people measuring. Any measure I have seen, and that is true for Fundraising in non-profits and industry, shows that keeping a customer is much cheaper than to gain a new one. I have no experience in insurance, but would be very surprised if this did not show to be true there as well.
Valerie - Sales Strategies: Buyer Beware
2005-10-01 12:38:03
I hate to say this, but whenever I get an offer like your parents got, I immediately smell a rat. Often extremely low rates come with fine print (or even unspoken limits), like 2.95 (for the first six months then appears in microscopic print).

Nowadays, there are very few "bargains." The buyer has to have a whole list of questions prepared so that the one essential question which actually voids the "bargain" is not overlooked.

Another pet peeve relating to this is cell phone rates. You are promised a rate of 39.95 for a specific amount of minutes, but your bill ends up being closer to $55 because of all the various surcharges, fees and taxes. Of course, these fees, surcharges and taxes are completely known. They could just as easily tell you that the cost is 49.95 plus New York Sales tax. But they don't.

Another strategy is to offer new customers extremely lower rates that current customers. You would think that current customers would deserve some loyalty . . . but as a long-term customer you are treated more like a "sucker" than a valued source of income.

Valerie
Dr. Donna - Outsourcing sales calls
2005-10-01 21:12:56
You mention the global outsourcing phenomona- I recently applied for a credit card balance transfer and was sent to a woman in Delhi who spoke very poor English, could not respond to any of my questions ( or anything off the "script") was stilted in her communication and clearly strugling to read from a crib sheet. It was very time consuming, and aggrevating as well. Did not endear me to the company and very ineffective for selling - I finally hung up and did not complete the transaction.I wonder what the outsourcing is actually "saving" them? Didn't sell me at all!
Barbara Moffett - Sales tactics
2005-10-17 16:28:24
It seems to me that sales tactics and truth in advertising are linked. This made me wonder if we (the people) could regulate advertising by tieing it to each company's record of known tactics. They might fall into categories such as
1. Collaborative: the sales force, providers, and customers are collaborating to provide the best fit for the customer that is sustainable and reasonable for the company.
2. Negotiative(new word?): Creative and supportive of customer needs within company prescribed limits. Still - Buyer beware.
3. Competitive: Habits of thought and tricks springing from a set of lies we tell ourselves to justify betraying our personal values or formal/public company values.

These categories in their varying degrees of public service would dictate how much companies, large or small, would be allowed to spend - in money, time, and energy on advertising. One would assume that the content of the advertising should be reflected in the experience that customers have in general. If not, the company would slip down a category and be further restricted until they cleaned up their act.
To quote C. above, "It's about trying to stay sane when big business, big sports and big government seems riddled with corruption." When "Big Businesses etc. act like jealous children, it's time for "we, the people" to act like parents and impose limits.
Only registered users can write comments!
 
Web Design by Laryn Bakker