Have you ever gone into a telecommunications store with a plan of what you wanted, but came out with something different? Something more expensive?

ACCAN often hears stories of consumers who were sold more expensive plans or products than they had planned for and sometimes, more than they can afford. This results in difficulties keeping up with payments, and kicks off a spiral of financial problems with lasting consequences. Cases of mis-selling have been widely reported in the media recently¹, and continue to occur. In February 2019, poor sales practices leading to customer debt was identified by the Telecommunications Industry Ombudsman as a systemic issue in complaints².

To understand why this is happening, ACCAN commissioned some research to find out what incentivizes sales staff to sell products and services. We also wanted to understand whether sales staff are aware of key obligations for responsible selling and if so, are they following and fulfilling those obligations. We’ve now published the findings of this research in a report called Spotlight on Telco Commissions and Targets.
Research approach

Our research provider, Lonergan, conducted interviews with 30 ex-staff from the three major telecommunications companies, Telstra, Optus and Vodafone. The job titles and companies they worked for are in the table below.

Participants were asked about a number of aspects of their role, including training; likes/dislikes; remuneration; challenges; and how the company motivated employees.

What did they say?

Sales staff are paid more to sell more

Almost unanimously, it was agreed that the role of sales staff is to sell, upsell and cross-sell. Upselling is selling an existing customer a more expensive service than they currently have and cross-selling is selling related products or services, like handsets or accessories.

Management set sales target for each member of the team, as well as store-based targets. These targets usually increase during peak seasons, like Christmas, and will also increase for specific campaigns (like a new phone launch). Sales targets were monitored daily and were a focus of conversations between management and sales staff.

When sales staff meet or exceed targets, they receive payments in addition to their hourly wage. These payments are referred to as “incentive payments” and can be for:

• products sold
• targets achieved overall
• exceeding targets – additional bonus
• selling the most in a month
• achieving store or team targets
• upselling and cross-selling

The value of incentive payments as a proportion of total pay (hourly wage plus incentive payments) varied between 0% and 50% of total pay for full time employees and 4-5% to 30% of total pay for part time. Most of the time incentive payments were approximately 15% of their total pay.

Several people reported that their targets were difficult to achieve, some considering them unreasonable, for a number of reasons:

• Store traffic was overestimated by management who set store targets
• Targets during (seasonal) quiet times, though adjusted down, remained high
• Targets were continually increased traffic was overestimated by management who set store targets 

 The sales staff interviewed preferred collective or store targets, rather than individual targets as this created a more collegial, rather than competitive, working environment.

How you pay sets the work culture

Sales targets generated pressure on staff to make sales. Targets that were focused on individual sales performance created a competitive atmosphere that resulted in a lot of pressure on sales staff. Some considered the competitiveness a negative aspect of the job:

“The staff wanted to undercut you for sales” – Interviewee #2, Customer Sales Rep from Telstra,

“We wanted to out-do one another” – Interviewee #5, Customer Sales Rep from Vodafone

“Everyone full time would fight for sales” – Interviewee #10, Retail Sales Associate from Vodafone

“It became cut throat” – Interviewee #9, Sales Associate from Optus

However, when targets were more focused at the store level, it was viewed as encouraging more team work. One former Vodafone employee recommended collective targets to improve staff attitudes and remove excessive pressure to achieve sales targets.

“If we had that [a collective] incentive, the team environment would be better and would operate better” – Interviewee #29, Customer Sales Rep from Vodafone

“The culture on the outside was good with your workmates and managers but culture on the inside that Optus manufactures was all about targets and sales. That’s all that it was about.” – Interviewee #19,Sales Consultant from Optus

Sales culture and impact on customer outcomes

Sales staff are balancing two potentially conflicting objectives:

• individual sales targets that they need to meet which are hard-set, inflexible and directly impact on their pay, security of their role and career advancement; and
• meeting customers’ needs that staff understand are important and need to be considered and delivered.

These two objectives can result in some conflicts or tensions.

In some cases, the staff interviewed reported a highly competitive sales-oriented environment where the needs of the customer were not always the focus and making the sale became more important.

“Because it was such a competitive environment, selling them what they needed went out the window” – Interviewee #9, Sales associate from Optus

“On a slow day, the customer would feel a little bit of a push” – Interviewee #3, Customer Sales Rep from Optus

“You either do things the ethical way, or you do things to make your metrics stand up.” – Interviewee #14, Sales and service consultant from Telstra

“Quite unreasonable sales targets... competed with the pressure from customers to do the right thing by them” – Interviewee #14, Sales and Service Consultant from Telstra.

Most of the staff interviewed understood that having the interests of the customer in mind was important but this approach was not necessarily followed. Upselling and cross-selling sometimes distracted staff from selling products that were in the best interest of the consumer. One person interviewed suggested that there were few sales staff that focused solely on the interests of the consumer.

“Upselling was something we had to do” – Interviewee #5, Customer Sales Rep from Vodafone

“You try to upsell everyone that comes in” – Interviewee #8, Customer Sales Rep from Optus

"You're under high-pressure to upsell and cross-sell people" – Interviewee #18, Customer Sales Rep from Telstra

However, it was also considered poor business practice to sell products customers didn’t need and couldn’t afford, as it resulted in customer dissatisfaction which could also result in complaints in-store.

Sales techniques to get customers to pay more

Sometimes to achieve a sale, the plans and offers that were presented were made to appear better than they were. This was done by rephrasing the offers or suggesting that staff used the product themselves when recommending it. They may also create a sense of urgency during campaigns by saying that these offers were about to end so that the customer was prompted to buy. Consumers that were unfamiliar with product offerings could be sold more than they needed.

“I don't like lying but unfortunately that’s the name of the game. “Well I’ve actually got this phone and it’s great”- things like that” – Interviewee #2, Customer Sales Rep from Telstra

“Rephrasing something that makes it seem like a little bit better than what it is […] the stuff that we say is more or less correct” – Interviewee #19, Sales consultant from Optus

“[…] suggest that the campaign is about to end” – Interviewee #17, Store manager from Optus

“If they don't know much, you're more likely to sell them more” – Interviewee #21, Customer Sales Rep from Optus

In some cases it was reported that staff would sign up customers to products they did not really need or were not suited to.

“The customer wouldn't need what they were getting” – Interviewee #10, Retail Sales Associate fromVodafone “They're paying extra for junk” – Interviewee #18, Customer Sales Rep from Telstra

“They usually left with more than what they anticipated buying” – Interviewee #26, Sales assistant from Optus

“[Management] try to pressure you into selling things to people that might not be in their best interest in the long-run” – Interviewee #18, Customer Sales Rep from Telstra

When asked which customers were easier to sell to, sales staff identified customers that were generally less informed and more confused or unsure about what to buy. This was uncomfortable for sales staff to talk about and there was some suggestion that vulnerable populations might be at risk in some circumstances.

“Older people, people who don’t speak English well, people with disability pensions” – Interviewee #18, Customer Sales Rep from Telstra

“Consumers with non-English speaking background” – Interviewee #10, Retail Sales Associate from Vodafone

“The older demographics are being taken advantage of – in [inner city suburb NSW – location withheld], many people are elderly and not knowledgeable about what they buy” – Interviewee #8, Customer Sales Rep from Optus

“The younger generation was easier to upsell” – Interviewee #20, Customer Sales Rep from Vodafone

“The savvy ones get the discount and the non-savvy ones pay full price” – Interviewee #10, Retail Sales Associate from Vodafone

“An elderly customer wanted a phone that I knew was too complex… But that was what he wanted so I signed him up for it” – Interviewee #3, Customer Service Rep from Optus,

“[some would] take advantage of customers who didn’t know exactly what they were dealing with” – Interviewee #14, Sales and service consultant from Telstra

There were some reports that optional extras like voicemail services would be added to a plan by staff and the customer was told that the extras were built in to the cost of the plan, when they weren’t.

“They would say optional added extras were actually just included in the plan” – Interviewee #9, Sales Associate from Optus

“Adding on premium voicemail (converts voicemail to text) which is free for the first month but $5 afterwards – customers are not always told” – Interviewee #19, Sales Consultant from Optus

“They didn't know what they were signing” – Interviewee #4, Customer Sales Rep from Telstra

Store staff focused on selling, not on solving problems

A significant proportion of traffic in store related to existing customer complaints. Complaints generally related to sales issues, customer service and product issues and problems with the network including the nbn.

“Generally, if someone's going into an Optus shop, they're complaining” – Interviewee #9, Sales Associate from Optus

“60% [of customers] were probably coming in with issues” – Interviewee #18, Customer Sales Rep from Telstra

“There were more complaints than sales […] It’s out of control” – Interviewee #24, Customer Sales Rep from Telstra

“Delivering customer service was a real challenge […] I had many more complaints when working for a Telco than in any other industry” – Interviewee #7, Customer Service from Telstra

Dealing with customer complaints in-store presented a challenge for sales staff as having to deal with complaints provided fewer opportunities for sales and not enough time was allocated to handle customer service matters.

“Not enough time allocated to helping customers as it doesn’t help with targets” – Interviewee #10, Retail Sales Associate from Vodafone

“You're constantly under pressure to solve issues from other areas, in addition to trying to cross-sell” – Interviewee #24, Customer Sales Rep from Telstra

Sales related complaints were not uncommon. Customers sometimes complained about the plans they were on, many questioning why they were put on a particular plan. Other complaints included being sold a phone or phone system they didn’t need and issues relating to fees and charges they were unaware of. Several respondents mentioned that consumers did not understand the terms and conditions of the plans they had signed up for and they had to clarify this for them.

Most of these problems stemmed from the point of sale where product and plan details, costs etc. should have been explained. Respondents believed that these issues were likely the result of sales pressure on those who originally served the customer to achieve sales targets.

“He had signed up to a plan and gone out to a rural area that had no service” – Interviewee #3, Customer Sales Rep from Optus

“They had been sent an NBN modem, yet they didn't have the NBN service” – Interviewee #22, Customer Sales Rep from Telstra

“You guys have put me on this plan… I don't understand why I've been put on it” – Interviewee #22, Customer Sales Rep from Telstra

“People being sold a phone system that is beyond their needs” – Interviewee #25, Customer Service from Telstra

“Someone may try to sell a fish-shop owner a phone that is more suited to a hospital switchboard” – Interviewee #25, Customer Service from Telstra

“Some people were set up on the wrong plans. They misunderstood what they had signed up for.” – Interviewee #7, Customer Service from Telstra

Overall, sales staff saw a gap in the telecommunications companies’ ability to provide effective support to existing customers in after sales service. Existing customers often had to use a different channel for support than they did at point of sale and many believed that this was not the best way to deliver customer service and only added to the volume of complaints and poor customer service outcomes.

"The targets they were expecting us to achieve while providing quality customer service was not possible" – Interviewee #9, Sales Associate from Optus

“I would have preferred just helping those people rather than just selling stuff” – Interviewee #10, Retail Sales Associate from Vodafone “Just doing the sale, then looking after the customer meant pretty much nothing” – Interviewee #14, Sales and Service Consultant from Telstra

“Their [Telstra's] customer focus was very poor” – Interviewee #22, Customer Service Rep from Telstra

Training – an insufficient support

All sales staff underwent some basic induction training, however, this was not always formal training in a classroom or seminar setting. Sometimes training was held in-store and conducted by the store manager or a training representative or the employee simply learned ‘on the job’.

Recollections of induction training at Telstra ranged from three to four weeks in 2015 to three days in 2017-2018. Former Optus and Vodafone employees report induction duration of 8 and 3 days respectively.

Training helps new employees integrate into the company and their new working environment quickly and efficiently; it set the rules and the tone. Online modules appear to be a common form of training delivery; however, it enabled skipping or glossing over content. Online training was widely used for the Telecommunications Consumer Protection Code – which is likely why half of all those interviewed could not recall receiving the training.

Sales staff that had prior sales and customer services experience thought that new staffdid not receive enough training to make them sales-ready. Those with prior experience in the industry (or similar) believed they would have found performing their role very difficult based on the training they went through, or that it was too superficial to be relevant to them.

What can be done to improve consumer outcomes?

This research is a small study, limited to the perspectives of the 30 former employees interviewed. Processes may have changed since they left their jobs, but the cases we hear about from consumers raise questions as to how effectively these are applied at the shopfront. The study confirms what we are seeing from the consumer perspective – that sales are more important than customer service, causing detriment of the customer. Consumers rely on the expertise of sales staff in making their purchasing decision, but when sales incentives come into play, the advice given can be compromised³.

This study flags that there is a problem, and that it’s time for a closer look to better understand the relationship between staff incentives and sales practices. The banking industry has recently recognised this, having conducted an independent review of product sales commissions⁴  and it is now implementing changes to more closely align the interests of bank staff with those of customers, for example by removing incentives for frontline staff for cross-selling products⁵

[1] For example, https://www.abc.net.au/radio/programs/am/poor-telco-sales-send-consumers-into-debt/10852718; https://www.abc.net.au/news/2018-09-29/telstra-debts-in-the-hundreds-of-thousands-accrued-by-just-74/10289686

[2] https://www.tio.com.au/publications/news/systemic-insight-report-sales-practices-driving-consumer-debt

[3] https://www.commsalliance.com.au/__data/assets/pdf_file/0013/61330/MoneyMob-Talkabout.pdf

[4] https://www.betterbanking.net.au/better-service/paying-bank-staff-help/

[5] https://www.ausbanking.org.au/media/media-releases/media-release-2019/overhaul-of-bank-staff-pay-on-track-to-meet-royal-commission-deadline