For some reason, I am flashing back to psychology 101, and am thinking of the Maslow Hierarchy of Needs.

Who has not seen a buyer contemplating and finally agreeing to purchase the extended warranty at an electronics store or at an auto dealer?

It seems to me that each time that I patron the local Fry’s or Best Buy, I am stuck in line for ten minutes while the sales person “closes” a buyer in front of me, and ultimately convinces this person to buy an extended warranty.

As much as I hate suggestive selling, it is practiced because it is a very effective means to maximize sales revenues and profits. These items all tend to offer signifiant profit margins to the retailers, and these margins would have not be obtained, in most cases, without suggestive selling techniques.

I too have reinforced the suggestive sales techniques over the years. Yes, at least once, I have agreed to “super size” at the suggestion of the cashier; and, yes, I have purchased batteries not realizing that these were not already included in the product that I was purchasing.

Unfortunately, I doubt that this sales technique will ever disappear.

It’s not the sales people you should be blaming for this – it’s sales management. My son worked for multiple large retail operators in store-based sales roles over a several year period. Yes, the sales reps do just as you say, but it’s not because the sales reps think it’s a good idea.

As suggested by some of the other commenters, retail sales rep compensation plans are heavily slanted towards sales of extended warranties and other forms of service plans and add-on products. Why? Easy – much higher margins on the add-ons, especially the warranty plans which have very fat margins.

And it’s not just the compensation plans – it’s a matter of retaining their jobs. The way these sales people are measured at most of the retail chains (not sure about “all” so won’t make that claim) they can be one of the top two or three sales reps in terms of volume of “primary” products sold, i.e. PCs or laptops or whatever, but if they aren’t selling the required amount of add-ons, especially service plans, they pRobably can’t make their margin dollar targets and pRobably won’t be keeping their jobs. They get huge pressure on this issue.

The intent of this from the retail chain headquarters financial perspective is understandable – the PC and consumer electronics business is brutally competitive, with many products close to commodities, and margins on these products are very thin, so the channels are looking for ways to increase margins. But when poorly implemented and controlled, as is the case in many of the chain operations that don’t seem to have much control of the people at the end of the supply chain that touches the (prospective) customer, the effect it seems to be having is alienation of more and more of the consumers that they need to drive repeat business.

There are no stupid salesmen (for very long) – there are only stupid incentives.

There are no stupid salesmen (for very long) – there are only stupid incentives.

I don’t think business schools have shown much interest in the practical details of the customer-facing operations (sales, customer service) and this is part of the reason for the pRoblem, though by no means all of it.

a) just as important to the bottom line as you believe
b) more complex than you imagine, and therefore
d) starving for the direct, and persistent attention of the most talented executives.

Yet the brightest, most talented execs continue to avoid the selling floor and the hard choices of what average people (making a fraction of the headquarter’s salaries) should do to keep and grow more customers. They’d rather keynote a “rally the troops” offsite, find a new slogan or dream up the perfect ad. And consultants just rehash the same old “sales training” they were flogging twenty year ago.

The reason is obvious. It’s easier.

If you actually make a compelling product then people are going to want it, they are going to ask you for it, they are going to wait in line to get it. Think Xbox 360. But if what you have to offer is not interesting, an overpriced add-on that you do not need, then their only hope is to force it on you through whatever coercive means possible. The warantees are really what kill me, because you get that look like, “if you don’t buy this you’re a moron.”

The sad truth is that it must be an effective approach or retailers would wise up. At least I would hope so.