Right for the Customer or Right for theSalesperson?

Introduction

This case abstract is representative of a real-world scenario.Jack was a very successful salesperson for International BusinessMachines (IBM), a major computer company, and was considered by hispeers and customers to maintain the highest level of ethicalbehaviors. IBM has a highly regarded reputation in the computerindustry for ethical behaviors toward customers. The company has astrict code of conduct policy regarding employee behaviors relatedto customer and takes steps to insure employees are aware of thecode of conduct and comply with the code. This awareness byemployees, especially salespeople, should insure a commitment onthe part of salespeople to interface ethically with customers.

Research suggests that such codes, ethical cultures, and ethicalexpectations contribute to a social network in which each member(salespeople and customers) are committed to acting in the bestinterest (at least not acting in a harmful way) of other members inthe social network. In his first five years in a sales territory,Jack had consistently exceeded his year sales quotas, earned highcompensation bonuses for his sales attainment, and had qualifiedfor sales recognition events by the company each year. In his sixthyear in the sales territory, however, Jack was faced with anunusual customer situation that had implications for the customer’sultimate satisfaction with both the product Jack was selling andwith Jack’s company.

Scenario

Toward the end of the year, Jack had exceeded his annual salesgoals to the extent that he qualified for a level of compensationbonuses tied to his annual sales attainment. During the latter partof September, a salesperson from a computer forms company let Jackknow that one of the computer-forms salesperson’s customers wasgetting ready to purchase a business computer system from acompetitor of Jack’s company. Jack immediately called the prospectand set up an appointment.

During the first appointment with the owner in late September,Jack found that the prospect was getting ready to purchase thecompetitor’s system, but before doing so, wanted to see Jack’sproposal. Jack also discovered that the competitive system withnecessary software was priced around $30,000, which the ownerindicated was his company’s budget for the automation project. Jackwas somewhat discouraged in that he could not offer a system forthat price, but did come back the next day to complete a survey ofthe prospect’s automation needs. Based on the survey, Jack thoughtthat the prospect would need a small central computer with fiveattached workstations; three displays/keyboards and two desktopprinters. The three workstations would be placed in accounting, theorder department, and in the warehouse. One printer would be in theaccounting office for daily bookkeeping and one printer would be inthe order department/warehouse. Additionally, Jack found that theprospect was projecting additional growth in the business around100 percent over the next two years. A major factor in theprospect’s decision was that the computer network had to bedelivered and installed by the end of the year. Jacks major concernwas not only the prospect’s low budget, but also the requireddelivery timeframe that Jack could not meet with any of hiscompany’s current products.

Jack’s Actions

During the week, as Jack was about the give up on the prospectdue to the prospect’s low budget and delivery requirement, Jack’scompany announced a new business computer that seemed to meetJack’s prospect’s requirements. The new computer consisted of asmall, limited capacity computer that would accommodate up to fiveworkstations in any combination of displays/keyboards and desktopprinters, had a price under $30,000 and could be delivered in twomonths. Jack immediately configured a product solution for theprospect consisting of the business computer, three workstations,and two desktop printers that had a total price of around $32,000including the application software for the prospect’s business.Jack realized that his proposed business computer fit theprospect’s current business requirements, but would not be able toaccommodate any future growth. Jack, however, decided to go aheadand present the proposal to the prospect but not inform theprospect that the proposed product solution was limited to onlycurrent needs.

The Results

The prospect liked Jack’s proposal as compared to Jack’scompetitor’s proposal, and placed an order for the businesscomputer and software. Jack left the customer’s office verysatisfied because the last minute sale put him in the next tier forbonuses for sales attainment. This sale represented an extra $1000in commission on the sale. All went well. The business computer wasdelivered and installed in December. Then there was good news andbad news. The good news was that Jack’s product solution perfectlymet the customer’s current needs and the customer was delighted.Then the bad news came. On the first business day of January, thecustomer called Jack, told him how happy he was with the product,and informed Jack that he wished to move up his anticipated growthschedule and immediately add additional workstations(displays/keyboards and printers). At this point, Jack panickedknowing that the product he had sold to the customer was at itsmaximum capacity and could not accommodate the customer’s growthplan, but thinking he had one or two years to address theadditional growth with another product solution. The customerexpects Jack to set up an appointment as soon as possible to placean order for the additional workstations.

The Issue

What should Jack do? Jack realized he could be in trouble withboth the customer and with his company. The customer would probablerealize the company had purchased a business system that could notexpand to keep up as transaction volumes increased the businessgrew rapidly over the next few years. Jack’s company identifiedsuch sales behavior as violating the company’s policies and groundsfor dismissal.

Questions for Discussion

1. Was Jack’s action ethical? Why or why not?

2. What factors (both internal and external) possibly led toJack’s situation with the customer?

3. What actions do you think Jack should take? Should Jackdiscuss the situation with his immediate manger? How should Jackapproach the customer?