Thursday, March 12, 2009

Office Depot Comes Under Fire Over Sales Policies

In January Laptop Magazine posted a story outlining an Office Depot's reluctance to sell them a GateWay LT1004U Netbook, apparently that story sparked some interesting comments, comments that have put Office Depot and their sales practices and policies under fire.

It all began when Laptop Magazine's Joanna Stern paid a visit to a local Office Depot store looking for a Gateway LT1004U Netbook. Having flagged down a salesman and telling them that she wanted to purchase the LT1004U, Joanna says the salesperson, "did everything in his power to try to convince us not to buy it."

According to the report the salesperson went so far as to ask “Are you sure you really want this,” before talking down the Netbook saying “it has no CD drive” and it has “only 512MB of RAM” (this was inaccurate as it actually has 1GB).

Upon finally convincing the salesperson that they actually wanted the Netbook Laptop Magazine says he returned only to tell them they didn’t have any in-stock, this despite the fact that there were no less than 10 merchandise slips behind the price tag. He then suggested they purchase and Acer Aspire One as “it’s the same thing,” only with a $30 difference in price.

Flash forward a few months and you reach this weeks article and some follow up the original story. Citing readers comments, supposed salespeople and Office Depot managers Laptop Magazine now says "Office Depot Associates Routinely Lie about Notebook Stock."

According to several LAPTOP readers, including a current Office Depot employee we interviewed, the retailer’s sales staff are under such intense pressure to sell such “attachments” as Product Protection Plans and Tech Depot Services, that many will tell customers who turn down these services that the computer they asked for is not in stock, even when it’s sitting right in the stock room.
Following up on comments from the original report Laptop contacted several of the comments. One of those contacted is "Rich" a verified current Office Depot employee. Rich tells Laptop it is common practice for commission/incentive based employees to not sell computers if they can't upsell the customer additional services.

According to Rich a district manager once visited his store and told all the associates to lie.

“We did get told by the district manager one time to talk to the customer, figure out what they want, do your normal sales routine, and figure out what they’re going to get,” he said. “Offer them the PPP. Offer them the TDS and then, if they’re going to get it, go check to see if we have it in stock and, if we do, bring it out to them. If they’re not going to get anything with it, just go check to see if we have it and then come back and say ‘oh, we’re out of stock on it.'"

The reason the salespeople are asked to lie is a simple one up-selling as much as possible. Rich said that a typical Office Depot has at most one or two of each regular-priced notebook in stock at any given time, with a maximum of 5 units for sale circular items. Each store each has its own daily sales goal for things like PPP and total overall sales. Anyone in the commission sales business has been through those pressures.

“Ideally, they want every single laptop to go out with a warranty, so if you sell one, that’s one opportunity that’s gone,” Rich said. “They figure if they don’t sell it, someone else will come in and get it, especially if it’s a laptop that’s in the ad that a lot of people are going to come in . . . They figure they’re going to sell it eventually. You might as well do it to someone that’s going to get something with it.”

In response to the articles Office Depot has issued the following statement:
First, as part of our commitment to providing office supply solutions to our customers, we offer numerous products and services, including service warranties and other complementary products and services for many technology products. These offerings are similar to other sellers of consumer electronics. Office Depot’s objective is to offer such products and services to our customers, without regard to whether a customer purchases or does not purchase service warranties or other complimentary products and services. Although we offer a variety of sales promotions, like most retailers, we sell customers only what they wish to purchase. We do not have, nor have we ever had, policies or strategies contrary to this objective, and we do not condone sales practices to the contrary.

Accordingly, we do not have any policies or sales objectives to limit the sales of laptop computers to only those customers who agree to purchase service warranties. Office Depot has been recognized with numerous awards for our commitment to customer service, so please know that we take this issue very seriously and will take the necessary steps to ensure that we continue to enhance the customer experience and promote quality in our customer-related processes. We are currently in the process of reviewing this situation, and if any associates have deviated from our sales objectives and policies, then they may be subject to disciplinary action, including termination.

My Thoughts:

Like it or hate it this is a commonly practiced sales approach, specially with hot ticket items, I can't think of anyone in a commission based sales position that can't or won't agree with me on that one. How often do you see a hot item selling slightly higher than its actual price for the first couple of weeks. Yes its unscrupulous but it happens. There is a lot of pressure all the way down the line to increase sales numbers and ROI.

I hardly see this as being in the same ballpark as the Sears Plasma Recharge debacle. At least here they are simply refusing to sell you something and not utterly lying to get you to buy something entirely unneeded. I can honestly say the two aren't even close to the same ballpark. And while I've never heard of a "not making a sale" approach based on the potential of getting a higher sales rate on it later I can see the potential. But most sales people will tell you moving merchandise is key.

1 comment:

  1. Anonymous9:51 PM

    Moral of the story: Say yes to PPP and all other add ons, then when they bring it out to you, change your mind.


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