For the reasons stated above, it's not wrong for the leaders of your company to want to transform your culture into a sales machine. The problem happens when people who weren't hired to sell suddenly find themselves with quotas, but no idea of what to do next.
I was reminded of the perils of leaders trying to transform a decent culture into one that is purely revenue-focused by two things over the holiday weekend. First, this from Fast Company on the Tesla acquisition of one-time solar energy darling SolarCity:
If there was one sign that the company was flying too close to the sun, it was, many felt, an extravagant sales-team huddle in Las Vegas around March 2015. In a scene straight out of HBO’s Silicon Valley, Barnard, then SolarCity’s chief revenue officer, burst onto the stage in front of Lyndon, Peter, and 1,300 employees (Musk would arrive later) at Hakkasan nightclub, rapping over Nicki Minaj and Drake’s hit “Truffle Butter” while surrounded by provocatively dressed dancers. At another point, he appeared dressed as Helios, the Greek sun god, wearing a green suit of armor designed by the same people who created the Iron Man costume for that movie. “The party was cool,” recalls hip-hop artist Chingy, who also performed. “Lots of energy, a beautiful crowd. We shined like the sun.” There was, after all, much for them to celebrate. SolarCity was by then the clear industry leader, owning a third of the residential market and handling more installations than its next 50 competitors combined. (Barnard explains that he was only trying to rally his troops, and strongly denies that the culture became bro-y. “I don’t tolerate that bull****,” he says.)
OK - that's fun, but what follows shows how the grind to create revenue and keep growth rolling quarter/quarter and year/year can result in less than stellar sales practices:
The company’s growth rate—it was hiring 100 sales reps a week to help hit aggressive targets—led to some dubious tactics when it came to marketing SolarCity’s zero-money-down concept. Many sources felt that the drive to hook customers often eclipsed any concerns about whether they would follow through with the lease purchase. “You had all these poorly trained reps basically going, ‘Just sign here! Don’t worry, you can cancel any time!’ ” says a former sales director. “People were treating it like signing off on iTunes’ terms and conditions.
The company’s average cancellation rate increased to 45% or higher; its door-to-door sales team saw rates of 70%, multiple sources say. (The SEC is reportedly probing the lack of public disclosures around cancellation rates in the solar industry. A spokesperson for SolarCity says that rates have improved, and that the company reports on “installed assets,” rather than “preinstallation cancellation rates.”) With competition in the solar space increasing, SolarCity engaged in a pricing war with many of its rivals, a race to the bottom that hurt deal profitability.
The company’s average cancellation rate increased to 45% or higher; its door-to-door sales team saw rates of 70%, multiple sources say. (The SEC is reportedly probing the lack of public disclosures around cancellation rates in the solar industry. A spokesperson for SolarCity says that rates have improved, and that the company reports on “installed assets,” rather than “preinstallation cancellation rates.”) With competition in the solar space increasing, SolarCity engaged in a pricing war with many of its rivals, a race to the bottom that hurt deal profitability.
If there's one thing that seemingly happens a lot when companies/employees are under incredible pressure to sell, it's the emergence of low quality/borderline fraudulent sales that might not ever generate revenue as outlined above at SolarCity.
I wrapped up the holiday week by listening to some former Wells Fargo employees talk about the account fraud that happened at the company, with over 2.1 million fake accounts created by associates at the giant retail bank. To hear my dinner companions tell it, everyone in the company knew it was going on. Find a good rundown of what happened at Wells Fargo here - and here's a great snapshot of what can go wrong when you say EVERYONE NEEDS TO BE IN SALES at your company:
“Cross-selling,” it’s called, and virtually all banks want to do more of it. Once a customer opens a checking or savings account, maybe he or she would also like an auto loan or overdraft protection or a credit card. The more products a customer has with a bank, the more money the bank makes and the less likely the customer is to leave. That’s why all banks cross-sell. But arguably no bank has ever done it with the fevered intensity of Wells Fargo.
Training in “questionable sales practices was required or you were to be fired,” a former employee tells Fortune. “We were constantly told we would end up working for McDonald’s” for not meeting quotas, a former branch manager told the Los Angeles Times in 2013; another former branch manager said employees “talked a homeless woman into opening six checking and savings accounts with fees totaling $39 a month.”
The message was clear to everyone in the retail bank: “The route to success was selling more than your peers,” the board’s investigation found—not profitability or customer satisfaction, but simply selling more products to each customer. Everyone knew the goals were sheer fantasy for many branches and employees. At some branches not enough customers walked in the door, or area residents were too poor to need more than a few banking products. Bank leaders called overall quotas “50/50 plans” because they figured only half the regions could meet them. Yet no excuses were tolerated. You met the quotas or paid a price. The predictable result: fake accounts.
Training in “questionable sales practices was required or you were to be fired,” a former employee tells Fortune. “We were constantly told we would end up working for McDonald’s” for not meeting quotas, a former branch manager told the Los Angeles Times in 2013; another former branch manager said employees “talked a homeless woman into opening six checking and savings accounts with fees totaling $39 a month.”
The message was clear to everyone in the retail bank: “The route to success was selling more than your peers,” the board’s investigation found—not profitability or customer satisfaction, but simply selling more products to each customer. Everyone knew the goals were sheer fantasy for many branches and employees. At some branches not enough customers walked in the door, or area residents were too poor to need more than a few banking products. Bank leaders called overall quotas “50/50 plans” because they figured only half the regions could meet them. Yet no excuses were tolerated. You met the quotas or paid a price. The predictable result: fake accounts.
Ugh. Companies can't succeed without sales. But leaders who are trying to transform from product/service cultures to become sales machines at all costs generally fail. More often than not with jail time being possible/likely for someone involved.