Recently I called my satellite radio service provider to change my ongoing service. I had signed up to automatically renew the three units I had active at the time, but was no longer using one of the radios. I wanted to continue the service on two radios and cancel the third. Sounds simple, right?
The first time I called (about a month before my subscription would renew) I was told that I should call back a month later. The representative at the service center was clearly reading from a script, and no matter what I said including, “I’d like to speak a manager,” I couldn’t get her to assure me that it had been canceled. In fact, I was pretty sure it wasn’t.
So I called back a few days before the renewal date. This time the service rep understood my request, and said she would need to send me to a special center. (Okay, we’re getting somewhere.) The special center turned out to be a sales rep. Our conversation went something like this:
Sales rep: “I understand you’d like to cancel your service.”
Me: “No, I just want to cancel one of the three radios. I’d like to keep the other two active.”
Sales rep: “Why do you want to cancel?”
Me: “I’m not using it anymore.”
Sales rep: “I can offer you a 50% discount for one year.”
Me: “No thanks, I’m not using it.”
Sales rep: “Okay, I can give you a 50% discount on your other two radios for a year.”
Me (surprised): “Really? What’s the hook? Am I signing up for anything more than one year?”
Sales rep: “No, just something I can offer you today.”
I take the offer and run. Good for me. Bad for the service provider's bottom line.
So, what happened here? I was fully prepared to pay full price for service to the remaining two radios. It’s pretty clear to me that the sales rep was incented to keep customers. If I just canceled the one radio she would have been dinged for a ‘loss’. Instead, she was able to log this as a ‘save’, and was most likely compensated for that.
Ahhh… a perfect example of how to incent the wrong behavior.
Déjà vu, I’ve seen this before. I’ve seen sales reps sell a competitor’s product instead of their own company’s product because one unit (not the one who was responsible for that product’s P&L) decided to compensate the sales team more for it. I’ve seen sales reps offer a discount on pricing because a discretionary promotion was in place (that the rep was incented for), even when they could have sold it at the higher price.
It is truly amazing how an incentive can affect behavior. And it can get really messy when different stakeholders are competing to incent the sales teams.
Have you witnessed this too? What’s your story? Share your examples of incenting the wrong behavior with a comment here.