Reference no: EM13902836

Trust versus incentives. Product-specific sales incentives (PSIs), or ‘‘spiffs,'' have created conflicts in relations between salespeople and customers for more than 50 years. PSIs are incentives, from money to merchandise, offered by manufacturers to salespeople to encourage them to promote certain products above those of competitors. This practice can motivate salespeople to recommend products that might be inferior or more expensive, compared to other products. Customers often look to salespeople for expert advice when buying items that are complex or unfamiliar to them. PSIs energize sales, yet jeopardize trust and integrity in the marketplace. If a customer relies on a salesperson's advice when the salesperson is motivated by a PSI, that advice becomes suspect. Consumer organizations state that spiffs are like bribes.

Retailers can compensate their employees less when compensation from PSIs is allowed. Manufacturers must inform the retailer that a PSI is being paid to the salespeople, and it must be paid to all salespeople in the store who sell the specific product model, but consumers do not legally need to be notified. Researchers have found that for salespeople the predominant ethical problems with PSIs were bribery and misleading the customer. Women and subordinates were more likely to have ethical dilemmas than men and senior man- agement. Some managers believe that use of PSIs contributes to distrust among consumers, salespeople, and corporate America.

Should retailers allow PSIs for their salespeople?