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Aggressive Sales Quotas or Unfair Business Practice?
By Jessica Silliman
"In the advertising industry, money is the bottom line-regardless," said Peter Allen, a customer service representative for a large-scale online directory. It was 1999 and the online business was booming. Everyone in the city wanted to get in on the Internet revolution, but many didn't really understand what that even involved.
Peter was new to the industry. He was given his territory, the city of San Francisco, and told to sell as much advertising as possible-at any cost-both to the company's existing clients and to new customers. For his first few months on the job, Peter focused on getting to know the existing customers and evaluating their current advertising packages with the company. Peter was surprised to find that many of his customers were small business owners-auto-body shops and family-owned restaurants that already had large advertising packages way beyond their needs. His boss, the director of customer service, had already set Peter's quota at a level that presumed that many more sales were possible. Yet, in Peter's judgment, the market was saturated.
"These small shops thought that the Internet was the next best thing," said Peter. "They didn't even understand what the Internet actually was."
Peter couldn't fathom how these small businesses got persuaded into spending so much money on advertising. "The businesses you would least think to look up online were the businesses with the most expensive advertising packages," said Peter.
Peter was getting daily phone calls from the home office, pressuring him to meet his numbers and sell the most in his territory. Peter complained to the sales manager, who said that Peter had to be honest. "It was my obligation to set things straight," said Peter.
With the support of his manager, Peter told the top executives of the company that the sales team in San Francisco needed to have some leeway in meeting the quota. Unlike other sales territories, San Francisco, as the hub of the high-tech world, was cluttered with competition and, with companies cropping up everywhere in Silicon Valley, Peter and his team didn't have the luxury to selectively pursue businesses. Instead, they had to go after any and every business possible because other online directories were quickly entering the San Francisco market. The executives feared that changing the quota for San Francisco would lead to other territories vying for lower quotas as well. But Peter's case proved strong enough: The executives decided to "look the other way" for the San Francisco territory.
Peter went to each business and gave them an honest evaluation of their advertising needs-often recommending they downgrade their packages with the company.
"We moved them into more appropriate packages and became number one in customer retention," said Peter. "We lost money in the short term, but in the long term we made money through referrals and retention."
Jessica Silliman was a 2006-07 Hackworth Fellow at The Markkula Center for Applied Ethics.