Article 15

To Tell the Truth

Call it what you like: a fib, an untruth, a fabrication.
A new SMM survey reveals that nearly half of all salespeople may
lie to clients. Are you creating a culture that promotes deception?
By Erin Strout

Every fat commission check has a price tag. For Matt

voice-mail messages that became increasingly hostile.

Then came the death threats. He left a message saying, I
know youre there. Im going to find out where you live
and blow up your house. I never spoke to the customer
againI just told the company about it so that it was out
of my hands, Cooper says. This kind of thing actually
happened a few times.
Finally Cooper couldnt take it anymore. I started
selling only what I knew worked, because I couldnt lie
anymoreso my managers told me to either close more
deals or find another job, he says. It was the kind of
culture where they broke you down and rebuilt you to
be an animal.
A reformed liar, Cooper quit and now works at another start-up in New York, but one that holds him to a
higher ethical standard. Though this dot-com is still
struggling through more rounds of funding, Cooper is
finding that building relationships with clients is a better
long-term sales strategynot only for his own financial
well-being, but for the long-term financial health of the
company. Unfortunately, not all salespeople learn that
lesson so early in their careers. A new SMM/Equation
Research survey of 316 sales and marketing executives reveals that 47 percent of managers suspect that their salespeople have lied on sales callsonly 16.5 percent have
never heard one of their reps make an unrealistic promise
to a customer.

Cooper* the cost of earning up to $150,000 per sale was

spending every day lying to his customers. It was the
promise of huge bonus checksnot his $40,000 base salarythat lured him to join the sales force of a large, wellknown Internet company two years ago. In his early
twenties, hungry, and aggressive, Cooper fit the dotcoms sales culture mold, but what he didnt realize was
that dishonesty was the price of admission.
The New Yorkbased start-up formed a big-deals
team, a group that sold multimillion-dollar advertising
campaigns to some of the worlds largest companies. The
sales forces key strategy? Do whatever it took to close
those deals. Almost 100 percent of the time that meant lying to the client. If you didnt lie you were fired, Cooper
says. It always came down to careful wording and fudging numbers.
Among various other deceptive tactics, the Internet
companys salespeople would book $2 million deals,
promising a certain amount of impressions on the clients
banner ads for the first million and guaranteeing a certain
amount of sales for the second million dollars. Wed almost always be able to deliver the impressions, but you
really can never guarantee somebody sales, Cooper says.
Back then you could base deals on the industry standard
by taking the impression rate, comparing it to the industry standard, and using the conversion rate to determine
a sales projection.
Renewals were, of course, out of the question, which
might explain the eventual demise of this and thousands
of other dot-coms. The boiler-room culture began to take
its toll on Cooper, especially after he had to begin screening his calls to avoid irate customers. Some of them had
just spent two million dollars on an online campaign and
got completely screwed, he says.
One particularly incensed client who had spent more
than $1 million on a campaign that failed to produce the
results Cooper had promised began pelting him with

Most people want to do the right

thing, but when bad situations arise
it's usually when the leadership
has created an environment that
tolerates it.
But dont be too quick to blame your salespeople for
their deceptive behavior. What drives sales and market1

Article 15. To Tell the Truth

FIVE SIGNS YOUR REPS ARE LYING

ts not often that sales executives are caught off

guard when they discover salespeople are being dishonest. Experts say that typically, the behavior is ingrained in the corporate culture, starting at the top
and permeating throughout the sales organization as
acceptedand even expected. But even the most vigilant manager may hire a bad egg now and then.
Heres what to look for if you suspect a salesperson is
being untruthful:

YOUR SALESPEOPLE ARE MOTIVATED BY FEAR Its

not uncommon for sales organizations to have a door-die mentality. If executives subscribe to Darwinist
philosophies, its quite likely their salespeople are doing absolutely anything to close deals in order to earn
their compensation and keep their jobs. There are a
few big U.S. companies that tell their salespeople that
if they dont make quota theyll be fired, Zoltners
says. That doesnt encourage salespeople to focus on
customer service, because theyre too worried about
survival.

YOURE GETTING CALLS FROM CUSTOMERS Its no

surprise that usually the first person to recognize
theyre being duped is the customer. Clients are managers best resource when it comes to checking up on
salespeople, and if theyve experienced bad service
they wont hesitate to speak up. Thats how Brett Villeneuve, operations manager at Go Daddy Software,
discovered one of his salespeople was up to no good:
A client called when he discovered activity on his account that he didnt authorize. I rarely get customer
calls, but one day I received a number of complaints,
he says.

RECOGNITION AND REWARDS ARE BASED SOLELY

ON NUMBERS If the people heralded as sales superstars on your team are the reps closing the most sales,
they probably arent the ones giving the best service.
Recognizing financial gain over how its achieved
isnt a sound strategy for producing an ethical sales
team.
YOU LIE, TOO Salespeople are a product of their
environment. If executives and managers practice unethical business strategies, it stands to reason that the
sales force will too. Executives have to make it clear
to employees that the company is ethical and honest
in everything it does, says Bill Blades, a sales consultant in Scottsdale, Arizona. If its an enforced part of
the mission, salespeople will adhere to it.

REPEAT BUSINESS IS DOWN You can only lie to a

person onceafter that trust is gone. If loyalty is
something salespeople struggle to attain, it probably
means that they dont do much to deserve it. You
only buy from people that you like, says Andy Zoltners, a marketing professor at the Kellogg School of
Management. In relationship selling you cant lieif
you mess up youll never hear from the client again.

E.S.

Internet advertising isnt the only industry that has

sold fictitious products. As California is painfully aware,
Enron and other energy companies allegedly made a fortune by selling electricity that didnt exist, rewarding
traders for coming up with new schemes and lying about
how much energy the company had in its supply. As
more details emerge about Enron, regulators are requiring traders to disclose full details of all energy sales starting this month. Examples like Enron show that greed is
really a U.S. phenomenon, says Andy Zoltners, a marketing professor at Northwestern Universitys Kellogg
School of Management. Some companies do whatever it
takes to make money.
Such deception may be more common than we think.
In the SMM survey, 36 percent of respondents said salespeople now conduct business in a less ethical manner
than they did five years ago, and 36 percent believe
theres been no change at all. What kind of fabrications do
salespeople resort to? The survey shows that 45 percent of
managers have heard their reps lying about promised delivery times, 20 percent have overheard their team members give false information about the companys service,

ing professionals to lie is often a combination of factors

not the least of which can be the way they are managed.

Greed is a U.S. phenomenon.

Back in the dot-com heyday one of the most commonly

used tactics in the industry included selling advertising

space that didnt exist. Telling clients that they had about
a one-in-300,000 chance of actually seeing their banner ad
appear on a page of the site, salespeople would sell a
$500,000 ad, cut and paste it onto a page using Photoshop
software, print it, and fax it to the customer to prove
that the banner appeared as promised.
We might have sold all of our telecommunications inventory, but then another company would call to say they
wanted to spend $50,000 on a campaign, one rep at a
New York dot-com says. What would we do? Book it,
even though all the space had already been sold. When
the numbers didnt come back as high as the customer expected, wed just chalk it up to a bad campaign. Wed take
anybody who was willing to spend a dime.
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ANNUAL EDITIONS

Source: SMM/Equation Research survey of 316 sales and marketing executives

tough economic times the quotas are as high as the stakes,

and sometimes its enough to make even the most reputable salesperson resort to unethical strategies.

and nearly 78 percent of managers have caught a competitor lying about their companys products or services. It
appears that misrepresentation of products or services is
prevalent among salespeople, Zoltners says. This is a
losing strategy, and this kind of behavior is not what the
best salespeople do.
In the short term unethical sales tactics may prove lucrative, but in the long term every executive should
worry about resorting to such strategies. Dishonesty, experts say, eventually ensures a company will have zero
customer loyalty. Unfortunately lying is what some of the
most profitable salespeople resort toand experts dont
necessarily blame the behavior on the individual. There
are probably three participants in thisthe customer, the
salesperson, and the company, Zoltners says. They are
all a part of the pressure to make money and the combination can make a rep succumb to it.

Where I worked, all of the reps were in this big room,

standing up, pitching to clients over the phone, Cooper
says. People might hold their phones out so everybody
could hear them closing a big deal. Making a three-percent commission off of a multimillion-dollar deal makes
you willing to lie.
In fact, the majority of U.S. salespeople are dependent
on commission-based pay plans. Experts say this is part
of the problem. If salespeople have to eat what they
hunt, it puts stress on them and motivates them toward
bad behavior, Zoltners says. If you look at some of the
companies that are in big trouble, you see that they give
negative incentives, such as demanding that reps make
quota or be fired. That does not create the best sales
forces. You have to create fair rewards for people.

Making a three-percent commission

off of a multimillion-dollar deal
makes you willing to lie.

Brett Villeneuve, operations manager at Go Daddy

Software, in Scottsdale, Arizona, says he purposely hires
reps who are less money-driven and more relationshiporiented. Quotas, in general, are usually set too high, he
says. We increase base pay and make realistic sales quotas that are challenging, but attainable. We dont want our
people to run around scared of losing their jobsthat
makes them lose focus on what needs to be done.

or top salespeople the pressure, especially in this rocky

economy, is almost palpable. More than a quarter of the
respondents in the SMM survey said that the recession is
causing their salespeople to become more dishonest. In
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Article 15. To Tell the Truth

cal understanding, and no one should ever be treated
with disrespect.

Villeneuve might be on to something. The SMM report

indicates that quotas may inhibit salespeople more than
motivate them. Seventy-four percent of respondents admitted the drive to achieve sales targets encourages salespeople to lose focus on what the customer really needs.
Though Villeneuve tries to run a tight ship when it
comes to business ethics, he has experienced a few situations where salespeople have crossed the line. I just had
to fire one of our better sellers after I received a complaint
from a customer, he says. In two days I got four calls
that a rep had put charges on clients accounts that he
wasnt supposed to. It made his sales look great, but thats
not how we do business.
Another team leader at Go Daddy decided to boost his
teams sales with an underhanded tacticone that
caused him to get fired. A client would call in with a
problem and his team would refund the order that the client had placed with another sales team, then put the reorder on his teams credit, Villeneuve says. It made their
sales look really good. Even though he wasnt really lying
to the customer, that kind of behavior isnt tolerated.
When you fire somebody because of it, the message you
send internally is really strong.

Where I came from,

sales drove everything.

he key driver of a sound sales strategy is that the leaders of the organization exhibit the values that they want
employees to follow, says Steve Walker, president of
Walker Communications, a stakeholder research and
measurement firm in Indianapolis. Most people want to
do the right thing, but when bad situations arise its usually when the leadership has created an environment that
tolerates it, he says. Until boards of directors want to
sniff it out, the scheming will stay in the hallways.
Walker Communications offers clients products that
determine whether a companys employees are telling
lies, abusing drugs, or otherwise violating the rules. Its
been a tough sell. Offering these kinds of products in a
litigious society is difficult, he says. Executives actually
dont want information that may indicate that theres a
problem. They dont want to officially know that their
sales force is lying.

When the numbers didnt come

back as high as expected, we'd
chalk it up to a bad campaign.
Wed take anybody willing to
spend a dime.

I started selling only what I knew

worked because I couldnt lie
anymore, so my managers told me
to either close more deals or find
another job.

That message is key to instilling an ethical standard in

the corporate culture. Some managers do this by giving
employees a means of questioning behavior they may observe. According to the SMM survey 56 percent of respondents have a process in place that enables
salespeople to alert managers to ethical breaches. Executives at Go Daddy use the companys intranet to help employees bring up any questions or concerns. An
anonymous section allows for executives to read and respond to e-mails written by coworkers who observe others lying, cheating, stealing, or otherwise behaving badly.
Initially we were scared that it might turn into minor
bickering and tattling but so far its helped keep us aware
of legitimate concerns, Villeneuve says.
Though the intranet tool is still new to Go Daddy, executives say the most common type of anonymous notifications relate to customer treatment by individual
salespeople. Other examples include reporting a coworkers uncontrollable attitude or anger with a client,
and the failure of another salesperson to follow procedures in place to assure proper customer care. We have
zero tolerance for this kind of behavior here and our
salespeople know it, says Bonnie Leedy, public relations
director at Go Daddy. Everybody is trained to understand that customers come to us with all levels of techni-

Sometimes its the executives themselves who promote

deception. Take VeriSign Inc., a domain registration and
Internet security provider. The marketing team sent out
domain expiration notices to their competitors customers, designed to look like the notices were coming from
the company they currently used for their Internet domain registration. The hope was that the notices, which
stated that owners would lose control of their domain
name if they did not return the form and $29 by May 15,
2002, would get people to transfer or renew their domain
names with VeriSign, in some cases at three-times the
price they were paying.
A U.S. court ordered the company to cease the directmail campaign in May, saying it was misleading to consumers. VeriSign would not comment on the litigation,
but a spokesperson said the company is complying with
the court order. The industry is plagued with unethical
marketing and sales tactics, Leedy says (Go Daddy is a
VeriSign competitor).
Some executives have their priorities focused solely on
profits, thereby placing rewards on the wrong behavior.
I came from a sales organization where the culture was
bottom-line focused, Leedy says. The top performer
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ANNUAL EDITIONS
territory to retain clients, he says. If you dont, people
will get hurt down the road. The only reason execs dont
deal with this is cowardice.
Making an example of unethical salespeople is one
way of letting the rest of the team know that lying wont
be tolerated by the company. When somebody is allowed
to sell by whatever means necessary, it sends a message
that the behavior is acceptable. Where Go Daddys Leedy
used to worka call center sales environmentthe signals were clear to everybody. You could hear the top
sales guy making false comments to his customers, but no
disciplinary actions were ever taken, she says. To the
people who were lower in the company it was an example
of what they needed to do to be recognized.
Another way to safeguard your team against dishonesty is by making smarter hiring decisions. I always talk
to a potential hires former employers because I find they
will say more about a persons personality than anybody
else, Blades says. The best predictor of future behavior
is looking at past behavior.
Keeping a sales organization honest means keeping
close tabs on its performance. I find that conducting
monthly evaluations is more productive than annual
evaluations, Blades says. Get salespeople to tell you
how they achieved something or what they think went
wrong. You have to be strong and let reps know from the
beginning that youre a straight shooter.

was the roughest salesperson Id ever seen. Customers

complained about him, but there was never a response,
because he was bringing in money.
Top salespeople with poor ethics are the trickiest creatures for managers to deal with, experts say. Bill Blades, a
sales consultant in Scottsdale, Arizona, has walked away
from projects that involved dishonest salespeople because CEOs hesitated to get rid of them. On one occasion
Blades asked the president of a company to let one top
salesperson go, because he consistently cheated on his expense reportsit was a well-known fact that the company was footing the bill for his dates with call girls.
The president agreed he should be fired, but in the end
wouldnt do it. He was afraid of losing clients, Blades
says. Id say that ninety-nine percent of all of my clients
are ethical, but a bad banana shows up once in a while.
In May Blades and executives he was working with on
a project sent a rep home for two weeks when they discovered he released false information about an acquisition to a customer. Hes not allowed to make any client
calls while we figure out what value he brings to us,
Blades says. Hes missing the national sales meeting,
which is embarrassing for him.
Such discipline isnt necessarily the norm among sales
organizations. The SMM survey shows that although 87
percent of respondents believe salespeople who are
caught lying should be disciplined, 51 percent have never
actually punished anybody. Maybe its because theyve
never caught them, but likely a percentage of managers
dont know how to deal with superstars fibbing to clients.
Blades has suggestions. If you have a top guy with a lying problem, get the vice president of sales to cover that

*Salespersons name has been changed.

Senior Editor Erin Strout can be reached at estrout@salesandmarketing.com

From Sales & Marketing Management, July 2002, pp. 40-47 by Erin Strout. 2002 by V N U Business Publications USA. Reprinted by permission.