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BCE Inc. (TSX:BCE)(NYSE:BCE) has recently come under fire for high-pressure sales tactics where customers and employees alike have accused the company of being too aggressive. An investigation by Go Public found that customers were effectively lied to and misled about deals and what their plans were supposed to be.
This should not come as a surprise given that BCE was one of the telecom providers that was found to be reluctant to tell customers about the mandated $25 TV package that the CRTC said providers needed to offer to customers.
In an industry that see lots of churn and customers floating from one provider to the next, aggressive upselling and pushing unnecessary plans and options is one way a company like BCE can boost its top and bottom line.
Aggressive sales not only a telecom problem
Earlier this year, we also heard about Toronto-Dominion Bank engaging in questionable sales tactics to boost its performance. As investors put more pressure on companies to continue to grow sales, that results in more pressure being put on sales reps to meet higher and higher targets.
The result is that service takes a backseat to a company’s sales and overall profits. While this may be good for investors, it creates a race to the bottom as far as customer service goes.
Should this matter to investors?
Whether you’re concerned about companies being overly aggressive in their sales tactics or if a company like Canadian Imperial Bank of Commerce is replacing Canadian workers with Indian ones comes down to how much of an ethical investor you are.
Certainly, just looking at sales and profits will ultimately impact your returns, and so it may not matter to you, at least in the short term. However, in the bigger picture, it does matter, because these types of practices could have significant impacts on the health of the economy and how much disposable income consumers have and where it will be spent.
A poor Canadian economy is a recipe for problems, and many stocks on the TSX would suffer as a result. Investors should consider ethics as an element of their investment strategy, since a lack of ethics could be a sign of bigger problems beneath the surface.
Why customer service is bad for business
Unfortunately, as customers want the lowest prices possible, and investors want to see the strongest financials possible, something has to give, and that’s usually service. You only need to look as far as retail stores, where cashiers are being replaced with self-checkouts, and customers can place orders online at fast-food restaurants. These are examples of where service individuals are slowly being taken out of the industry.
Although this might be under the guise of convenience, it’s to save companies money. Minimum wage hikes will likely have a detrimental impact on the economy, and companies will have to cut costs just to maintain profitability.
Why you shouldn’t buy BCE
I’m not a fan of BCE by any stretch, and the sales tactics cement that position for me. A company that is taking aggressive approaches to sales shows a company that is desperate to grow its sales by any means and doesn’t have enough confidence in its own products and services.
This small-cap stock is “Hidden in Plain Sight!” It’s flying under the radar and is being touted as a “royalty collector” by several of our top Canadian analysts.
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Fool contributor David Jagielski has no position in any stocks mentioned.