1. Sell, sell, sell, whatever it takes..... SELL IT.
We all know that when a company is a profit driven business, it wants to make money. If the company offers goods and/or services, it obviously wants to sell them.
However, there are times said companies will sell a product or service even when it knows full well that A) the product it's selling is not going to fit the customer's needs, or B) when they sell a service that they simply cannot adequately provide to the customer.
Many times these companies have a high amount of returns or cancelations, or they constantly get bad reviews on many consumer reporting websites.
What begs the question: What is so bad about turning away a customer when you know that the product or service that you're selling will either not meet their needs, or you know that you will not be able to adequately provide it?
The biggest example I have is a high-speed landline ISP that mainly services people in rural areas. If you go into websites like DSL Reports, you'll notice that the number one complaint is that once peak times hit, the speeds drop to near dial-up levels. Reason?
Because instead of saying to prospective new customers:
"We can sell you phone service, but we can't sell you internet because it will slow our current customers down. We'll notify you when a slot opens up."
This company will say:
"Yeah sure high-speed internet is available! We'll be glad to take you on and give you internet service right away. Would you like me to sign you up?"
This in turn causes the equipment to become "oversold" and that's what causes the speed issues. Also, they are known to not want to spend money to upgrade their equipment, so unless a customer moves or changes providers (If there is even one, this provider has no competition in many of their service footprints) there is basically no relief for this issue. All because the company is greedy and cheap.... the worst things combined into one.
That is the biggest example. I'll list something that happened to me....
Back in 2002/2003, I used to work for a computer store that is no longer in business. A customer was looking at a color laser printer. Now back then, even a "low end" color laser cost upwards of a grand or more. I asked him what he was going to be printing, and he said photos.
Now keep in mind, back then color lasers were great for printing out things like pie charts in mass quantities, but were not exactly great for photos (Maybe they're better now, I haven't done enough research to check). The lack of any sort of glossy photo paper for laser printers at the time was evidence enough.
So I told him that, and steered him turns a very nice wide-format inkjet printer that would better suit his needs. He wanted to know why, so I began with, "At the risk of boring you with the tech talk...." then I told him the reasons why.
You know what he told me? "There is always a compelling reason why a salesperson would want to sell me a cheaper solution rather than the most expensive thing. I'm sold." He bought the printer, extra ink, some photo paper, and the service contract. After the sale, he told my sales manager of my accomplishment. I really wish he hadn't....
....Because the sales manager wrote me up for "costing the store over 600 dollars."
I told him, "Yeah but the moment he would print out photos on that color laser and they sucked, he would return it! Not only would it make me look bad, but my commission would get taken away!"
He responded with, and I kid you not, "If he is that dumb enough to look at a color laser for photos then he is certainly not going to be smart enough to notice the quality difference."
I refused to sign it, mainly because I knew I was correct. Oh, and that customer? He was so impressed with my honesty that he came back a week later to buy a black-and-white laser printer for his main office work. That still didn't faze my manager, who insisted that despite the extra sale, I was still responsible for "losing out on over 600 dollars."
Maybe that's why the store eventually went out of business and was bought be another company? Makes you wonder.
Being that I used to work sales, here is what can solve this mess, and it might surprise you:
Make the sales team commissioned based, BUT with three important aspects:
1. Do not give them a minimum quota that they have to meet in order to stay employed. Employees who are in fear of losing their job will get desperate and sale anything, and that increases the risk of "inappropriate" selling.
2. Have the sales team connected to the returns/cancellations department, so if someone sells a product or service that is not right for the customer and they return or cancel it within, say, 30 days, their commission gets taken away.
3. Properly train the employees and encourage them to do research so that they can sell a proper solution to the customer, not just the most expensive shiniest thing on the shelf. Remember, every product has a purpose. If a customer sees that a salesperson is willing to make less money on a sale because he knows that is the better solution, that will make the customer keep coming back.
For internet services, to prevent overselling an area or possibly selling the wrong service to the customer for what they are going to use it for, there are some very simple solutions to that:
1. Develop a feature in the database where if the area reaches capacity, it disables the sign up button so the sales team cannot sign up new customers at the expensive of slowing the current customers down. However, have a feature where as soon as a slot opens up, that customer can be contacted.
2. Disable options for certain speeds that are going to be too low for a customer to perform a certain task, and I'm not talking about download speed either. If a customer, for example, wants to sign up for a high speed service to upload to his cloud account don't sell him a service with only a 1 meg upload speed just because the download speed may be 10 megs!
3. For DSL services, I wish that these ISPs would stop selling "best effort" services. For those not in the field, DSL only works up to a certain distance away from the central office (That distance is usually referred to as a loop length). Too far away - typically over 16,000 feet - and the connection starts getting crappy. "Best effort" is when the ISP sees that the loop length from CO to the residence is too long but will sell DSL service anyway and hope the customer never notices the crappy connection. I believe the sales reps are supposed to tell prospective new clients that due to the long loop length on a best effort service line stability is not 100 percent guaranteed but don't because they're afraid they'll lose a sale. Gotta make that money, right?
Anyway, let's move on to another business practice....
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2. Dealer markups: legalized price gouging.
Price gouging is illegal in most industry. Yet, for some odd reason, it's still perfectly legal for cars.
One of the reasons why this is allowed to happen is because nearly all states force carmakers to sell through franchised dealerships, you cannot "buy direct" from the manufacturer through a company storefront.
Now I know that some people who love to read the auto news sites will tell me, "But Tesla does it!"
Yeah, and if you read the auto news site you'll see that Tesla has been barred from selling their cars in some states because of their "direct to customer" sales model.
There is a reason why states think that carmakers selling their cars directly should be outlawed, and it has to do with....
....A myth of "getting a better price."
The reason why most states have the direct-sales ban on cars is because the dealership shills say that having to buy a car through a franchised dealer affords the consumer purchasing power that simply would not be there if you were to buy a car directly from the manufacturer.
I'll paraphrase an article covering Michigan's tesla ban said:
"If you are looking to buy, say, a Fusion from your friendly neighborhood Ford dealer, if you don't like the price that one dealer is charging you, you can take a drive to the next one a few miles away and see if you can haggle down for a better price. With Tesla, no matter how many times you refresh the website, the price is never going to go down. It's to give fairness to the consumer."
BUT.... that might be true if it's a common car like a Fusion. What if you are looking to buy something like, say, a Challenger SRT hellcat, the new Mustang, or a Corvette Z06? It's a little different, and that's why I am going to refer to dealerships that gouge as "stealerships" from now on.
Stealerships engage in extorting the customer on the "cool cars".... because they can.
Yes, seriously.
Right now, my favorite car is the Dodge Challenger SRT Hellcat. If I was going to get one, with the options that I want, the MSRP would be $65,475 before tax, tag and title.
A quick look on Autotrader shows that just about every dealer is charging close to $90,000 for one, some are even charging close to the $100K mark. So why are they doing this?
Most dealers call the extra 20-35K a "Market Adjustment." On a forum I checked out, one member said that the salesman told him that since these cars are not going to be around long because of the impending fuel economy regulations, they are essentially collector's items and the 20 grand they tacked on was a "collectability fee."
Even though this is price gouging and to be honest is extortion, it's completely one of those things that is totally legal. Sucks, but it's true.
Just to give you an example of how ridiculous this is, there was a member on one of those LX-car focused forums who tried to buy a Hellcat straight up outright, with a "suitcase full of money," with enough for the car, tax and plates. He told the dealer, "I am willing to give you straight up cash money for the car but I am not paying a penny over MSRP plus tax, plates and title. I am not paying a markup so let me know right now if you are going to refuse to remove the markup so I can walk out and take my business elsewhere...."
He ended up walking out of 3 local stealerships before finding out that there was a dealership (See the difference?) 3 states away that is well known and respected in the Mopar world. He flew out there, told the dealer what he wanted, and the dealer not only sold him the car for MSRP but also reimbursed him for the plan tickets and gave him free delivery to his house!
The moral of that story? Three local dealers could have made an easy 70 grand. But because of their greed and stupidity, they lost out.
However....
Even though markups should be illegal, it's not, and there are actually people (idiots) that defend the practice as just another part of the free market.
Quite often you'll hear lines like, "If you don't like the price that one dealership is charging you, go somewhere else!"
Or...
"The S in MSRP stands for suggested, meaning that dealers do not have to abide by it. Don't like it? Go somewhere else."
Or even this:
"If you're too cheap to pay a little bit over sticker on a new, hot car, then don't buy it. Someone else will be willing to pay extra to be an early adopter if you won't."
Gotta love these lines from stealership employees:
"We know that you guys want a good deal, but we need to eat!"
My response: Are you telling me that you don't make enough commission if you were to selling a nearly $70,000 dollar car for straight up MSRP?
Or....
"Profit is almost non-existent on cars like a Hellcat or Z06, so those markups exist so we can stay in business."
My response: What a load of bovine excrement! Want to know why? Dealers make money on lower-end cars and make tons of money on trucks and SUVs, which Dodge and Chevy dealers have tons of. Selling their inventory of HC's and Z06's at MSRP is not going to kill them!
I actually saw a stealership salesperson write this on facebook to another dealer rep:
"If your dealership is selling hellcats at MSPR then your sales department is weak. It's a limited production vehicle, why not try to squeeze as much money out of the sale as possible if they're willing to pay it?"
My response, which I actually did say to this idiot: "Please let me know what the name of your dealership is, so I know to avoid it if I get into position to buy a Hellcat. You're the reason why many dealerships are known as 'stealerships' in the Mopar communities."
Did he respond? Of course not!
Now, here's a question for anyone who does support this legal price gouging:
Let's say you wanted to buy one of those new OLED TVs. You find that despite their high price, are selling for hot cakes and find it tough to get one. You finally find a place that sells them, and they have the one you want. Only problem is, when you go to the store, cash in hand, you see the MSRP then an additional charge that is called a "early adopter charge" of a grand on top of the MSRP. You ask the sales staff to remove the charge, and they tell you, "Sorry, if you really want to own this TV you'll pay the markup."
I am willing to bet my lunch money on it that you'll have a shit fit and walk out of there. Not to mention a call to the BBB is in order, as it's illegal. Plus the maker of those TV's have what's known as a "unilateral pricing policy" (UPP), meaning stores have to sell for MSRP, otherwise they could lose their ability to sell that brand. So let me ask you another question which brings this full circle....
If it sounds ridiculous to do it to a TV set and is illegal, why should it be perfectly OK for stealerships to do it on cars?
I hate to get political, but here's probably what I can imagine the biggest reason: Lawmakers have probably tried in the past to introduce bills that would make it illegal to sell vehicles over MSRP. Sort of like a government-mandated UPP. I surmise that the dealership lobbying groups bribed enough politicians (most likely republicans) to kill these bills before it gets a chance to get off the ground. Don't you love it when you elect politicians that decide to help corporations and not the people they voted for?
To end this part:
I'll tell you what, if I get a Challenger Hellcat, and have to walk out of a stealership because they wanted to charge me a markup, I'll buy the car from a dealer that is honest and will sell me the car at MSRP. I'll then drive the car to the original stealership, and yell out through a megaphone in the parking lot (So that all their customers can hear) that they could have made a nearly 70,000 dollar sale but lost out because they were greedy and stupid, and let people know to shop at the dealership I went to instead. Oh, and I'll make sure to record it and put it on Youtube. Can anyone say, "viral gold?"
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In conclusion:
"Sell, sell sell" and legal markups only make short term money for the companies that practice them. In the long term, it eats away at their reputation and eventually, people go elsewhere. I wish that they were to think long term instead of short term, but alas, that isn't the case.
End of.
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