There’s a big story in the banking sector this week all about sales. Specifically, “serious failings” in sales practices.
These have led to more multi-million fines and a further plummeting of the industry’s reputation and public standing. If indeed, it could get any lower.
Two big banks received record fines for their staff bonus schemes.
The figures are startling. During a period of just over two years, more than 1m products sold (unnecessarily in the main) to 700,000 retail customers. Saving plans and insurance that they appear to have not needed yet were aggressively sold anyhow.
Here’s one particularly alarming example of the atrociously thought through incentives;
“…incentives were so skewed that in one instance a salesman sold protection products to himself, his wife and a colleague in order to hit his sales target and avoid being demoted”
Not hitting targets would lead to demotion and significant salary reductions.
At one bank, the ombudsman reported this eye-watering stat;
“229 [salespeople] … received a bonus even when all of their assessed sales were deemed unsuitable or potentially unsuitable”
It gets worse. As one commentator noted about the incentive names, ‘it would be funny if it wasn’t so depressing‘.
At parent Lloyds TSB it was called the “Champagne” bonus. At subsid Halifax Bank of Scotland, it was named “A Grand In The Hand“.
A fuller breakdown of the numbers involved also reveals how badly awry these incentives were;
The regulator said the bank’s incentive schemes led to a serious risk that sales staff were put under pressure to hit targets to get a bonus or avoid being demoted, rather than focus on what consumers may need or want.
As an interesting development, a recent rival into the marketplace also commented. Tesco’s bank chief exec makes great play of their “advisors” having no incentives at all. He even claims such rewards are “corrosive”. Echoes of the live debate about whether incentives really do work for salespeople or, as social scientists have taken to saying lately, they actually have the reverse affect. (I’ve blogged on this a few times before). Anyway…
When could your incentives foist unsuitable products onto customers that do not need them?
Are salespeople around you not in the slightest concerned in the well being of their customers?
Is both carrot and stick totally in keeping with the level of award and censure?
How does your chosen name for your incentive stack up against sustainable selling messages?
What would your prospects make of your bonus plan?
Who measures whether or not your deals are indeed “suitable” for both parties?