U02: Are Client Incentives “Good for Business?”

Recently my company has decided to restructure their client facing teams. The sales and servicing departments now operate at a regional level. Before, there was not as organized of an approach. In order to do this, every person from both teams has had to review the accounts they are responsible for. In this review, people are asked to look at all accounts not in one’s territory anymore and give notes to help out whoever is to receive the account.

All of the situation above is commonplace for companies that want to keep a competitive spot in the market. Unfortunately for the management team reviewing the accounts for the transition process, there has been a glaring red flag that repeatedly arises. It appears that clients that create larger amounts of business have been receiving a surprising amount of “special treatment.” This includes free consultations, extra reports that go unpaid for, and even separate trainings that have been slipped under the radar of paid engagements. While this practice of incentives and displays of gratitude for business is not at all uncommon, it can be very detrimental and even displays a lack of ethical behavior. Industry blogs, such as Kissmetrics and Turf Magazine to name a few, have posted discussions on the potential opportunities and threats of such behaviors. In a Kissmetrics blog post, Can You Buy Loyalty? The Downside of Discounts, wrote that “a low or discounted price implies you have a lack of faith in your own product or service – particularly if it is ‘high-end’ – and if you don’t believe in your product, why should anyone else” (Noble, 2013).  In the post on Turf Magazine, Danielle Pesta wrote that “if you offer clients a discount, you have to make up the costs in another way” (Pesta, 2016). This is always difficult to do, but even harder when the sales and service teams are not sharing that information with management or the rest of their team. This presents the problems that the managers are facing today. With the restructuring of accounts, there are many clients that have “special instructions” which will be complicated to maintain and will eventually put the company at risk.

In looking at this from a different perspective, the American Psychological Association has their main general principles. The first of which is Beneficence is there to benefit the other parties of professional relationships (American Psychological Association, 2010). In this situation, team members are doing whatever they possibly can to benefit clients, at the expense of the company. On the other hand, the sly method of keeping this secret is showing a lack of responsibility and integrity, which are both principles of the ethics code (American Psychological Association, 2010). Finally, with the process of giving “higher profile” clients more privileges and free services, the team members are going against a sense of justice. Justice, as the APA looks at it, requires equal quality of service to everyone (APA, 2010). Obviously, with the lack of compliance to the principles, the managers need to take action.

The best way to take action will be in accordance to the ethical standards of the APA. Some of the members of management are affiliated with the APA, and can bring it to the rest of the managers. First, in looking at the standards, this presents the code 1.03 Conflicts between Ethics and Organizational Demands (APA, 2010). This code would show the expectation of people to clarify the nature of the conflict, preferably to management, show that they are going to act in a way that would comply with the Ethics Code, and then show steps taken (APA, 2010).

If management were to look at this from a different perspective, they could show that the team members are exhibiting the part of the code 3.05 Multiple Relationships (APA, 2010). This code shows that psychologists, or those complying with this code of ethics, should take steps to avoid relationships that stop them from being objective or as effective as they could be (APA, 2010). This plays into 3.06 Conflict of Interest, as it puts the organization at risk, and again, prevents the team members from being completely objective and effective (APA 2010).

For management, they need to show their employees how this practice puts the company at risk.  I completely agree with the desire to help out clients and give the best possible service, and that may even mean at times giving something away for the sense of “goodwill.” I also agree that we want to ensure that we keep loyalty from competitors. Yet, as referenced from Kissmetrics’ blog post, we are only showing that we believe less in our own product by constantly devaluing it and giving so much away for free (Noble, 2013). Management will be reviewing soon on how much we can realistically give away before it becomes a detriment to the company and set a standard for situations and clients that cannot be planned for.

 

References

American Psychological Association. (2010, June 1). Ethical principles of psychologists and code of conduct: Including 2010 and 2016 amendments. Retrieved from http://www.apa.org/ethics/code/

Noble, J. (2012, May). Kissmetrics. Retrieved from Can You Buy Loyalty: The Downside of Discounts: https://blog.kissmetrics.com/downside-of-discounts/

Pesta, D. (2016, June). Turf Magazine. Retrieved from Pros and Cons of Client Incentives: https://www.turfmagazine.com/business-management/landscape-client-incentives/

 

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