Bad sales incentive schemes have played a role in poor advice given to financial customers

Bank sales incentivesConfidence in the advice given to consumers by banks about financial products is at an all time low. Is that any surprise with recent mis-selling scandals and the overwhelming press coverage associated with them?

Buying the right financial product buys peace of mind. But these days it can be difficult for consumers to trust that they are getting the right advice.

In the reports that have been published since the mis-selling scandals broke part of the blame was lain at the door of the sales incentive schemes that the banks and other financial services ran for their sales teams.


What went wrong

So what went wrong, and what lessons can the banks and other financial services companies learn about their sales incentive schemes?

I can’t comment on the specifics of each individual sales incentive program but generally, the schemes implemented by banks and financial services companies focused on the number of sales rather than giving good customer advice and service. I believe this lead to three main issues within these businesses:


1. Sales Targets

Many of the banks, building societies, insurers and investment firms that were investigated made the main criteria for receiving a reward or bonus the number of products sold. This meant that sales managers earned their rewards based on the number of sales they achieved and not whether those financial products were the right product for that individual. As a result the quality of the advice many consumers suffered.

2. Business Culture

In recent decades banks and building societies have gone from friendly places that provided a trusted service to a place where the consumer is seen as someone the team can sell too. The business culture became all about the sale and generating more profits for the banks and other financial services.

3. Unrealistic Expectations

A report found that one of the firms it investigated was running a “super bonus” competition, where the first 21 people to make the required number of sales earned up to £10,000. For all the other team members this was potentially demotivating to those who were not, or didn’t believe they would be, one of the 21. It could lead to over-competitiveness to reach the sales target at any cost, regardless of what the consumer needed.


MoneyRepairing their reputation

The financial services industry needs to repair its reputation, to do so codes of conduct need to be implemented and culture changes within the banks and other financial services need to occur. Sales incentive schemes, if run properly, can facilitate this change. So what does a properly run sales incentive program include?


Include non-sales based targets

Carefully plan your criteria for rewards and include some non-sales based targets such those that put the customer at the heart of the business and the transaction, for example, receiving good customer feedback or providing support to other team members. You should, of course, include some sales-based targets but these cannot be the only criteria.

Align the scheme with business goals

Before you implement any sales incentive consider your overall business culture. What criteria you will use to ensure that the scheme aligns to your corporate values? How will employees be rewarded for demonstrating those values and behaviours that contribute to the business goals?

Keep targets SMARTER

Make sure that both your sales and non-sales based targets stick to the SMART criteria: Specific, measurable, attainable, relevant, time-specific, ethical and rewarding.


When consumers get good financial advice, that advice strengthens the relationship between client and the financial adviser. In contrast, where mis-selling has taken place it can damage not just the relationship, but the business’ reputation and ultimately it’s end of year profit.


John Sylvester

John is responsible for the motivation division of p&mm ltd and a Director on the board of the IPM. Specialising in developing, implementing and directing many large scale staff motivation, recognition and employee communications programmes.

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