How I dealt with an over-promising sales person

Entrepreneurs Andy Fung and Rene Sugo started MyNetFone back in 2004, and since then have expanded throughout New South Wales, offering phone and internet services to thousands of individual customers and SMEs, recording revenue of $13 million in 2010.

But the pair ran into trouble when a salesman they hired began promising customers the world, and the company couldn’t deliver. Fung says the incident serves as a lesson that companies should carefully watch what their sales team are doing and prevent extravagant promises from escalating.

How are things over at MyNetFone? How are you preparing for the NBN?

Things are going well here. I can’t disclose the detailed planning, but we’re certainly doing more than just thinking about it. We’re working on getting engaged with users, and really working towards being an ISP that will provide broadband services through the NBN.

We believe that we can be one of those ISPs working with the NBN, and we think it’s a positive move because we’ll be dealing with a government body, and not a competing retail market.

You had an issue with a bad sales guy awhile back. What happened?

It was around the time that we had started. We started in 2004 and listed in 2006. When we first started, we focused on the residential market. We’re still doing that, but we knew that we had to expand from residential properties into SMEs.

With that type of business model, the way you approach it changes. The way to handle SMEs is very different from handling residential properties. The products are more complex, you’re dealing with different people and the entire operation changes.

We did a lot of product development in that space, and we knew we had to start hiring sales people to go out and get customers.

So he was interacting with customers face-to-face?

This particular person in question was the first person we ever hired who would go on the road. Until then we didn’t really have people doing that, it was more over the phone stuff. But he was one of the very first we put on the road, going out and talking to people.

So what was the problem?

The issue, we found out, was that the things he were saying to customers, and things he was saying to us, could often be quite different. That’s where the disconnect and potential disasters came in.

What was he promising these potential customers?

Sales guys being sales guys, they were very gung-ho about it, and wanted to prove their point. They were ambitious, and so what happened was, he would say that instead of a six-week lead time for a new service, they were saying they could deliver things within a week.

He never wanted to say no. So the timeframe of delivering services as a big issue, because there were simply limitations on the way we could deliver services in that timeframe. It’s extremely difficult.

Did he keep anything else to himself?

Yes, he didn’t really disclose the full complexity of the task to the customers. It was another sales job for him, but it turned out that he was promising certain things and it turned out they weren’t that simple to deliver. Technical things.

Customers blamed us, and that was what the company had to carry.

That would have put a lot of strain on the business.

A lot of strain. There was a big disconnect between what the customer was expecting and what the salesperson disclosed to us.

I don’t believe he was deliberately lying, but he was putting a lot of strain on us because customers would call up saying, “So and so said this could be delivered in a week”. And of course, if they’re moving to a new office they want phone services straight away.

There are obvious reasons why we had a six week lead time, because you have to get cable organised and so on. That’s simply one of the things we had no control over.

It caused us a lot of grief. Customers blamed us.

What happened to him?

In the end, he obviously lost his job. You want to give the benefit of the doubt, and say, perhaps there was a miscommunication. But it just kept happening again, and again, and again. We were threatened with legal action, customers cancelled orders. It was stressful.

In some cases we had to pay compensation, and it ruined our reputation. And this went on for a few months, because it takes time for these situations to develop. It takes awhile to figure these things out and see what’s really happening.

What did the company gain from this experience?

I think we learned that you always need to make sure you’re hiring the right guy. And more than that, I think we’ve improved our internal systems since then. The one big thing is accountability – there needs to be records, etc, so every step is auditable.

You really need to put processes and systems in place so that everything is managed professionally. You need to know that if one guy is making a mistake, then it can be caught much, much earlier.

That isn’t necessarily because people are doing it deliberately. But people make mistakes, and the earlier you can catch something that’s going on then the better off you’ll be.