As Wells Fargo rather spectacularly demonstrated in recent months, putting too much pressure on employees to notch up a certain kind of sale can lead to a perverse incentive: Employees who need to keep their jobs may try increasingly underhanded things just to meet an impossible metric. This week, a report suggests that the latest set of employees who might be lying through their face to you just to keep their jobs are the ones selling video games.
That’s what’s happening now at GameStop, a report from Kotaku claims.
The program, dubbed “Circle of Life,” was rolled out in the last few months. It gives each store four quotas they have to meet: one for game pre-orders, one for reward card subscriptions, one for used game sales, and one for game trade-ins.
It’s not new for GameStop to encourage employees to make high numbers on all of those; they’ve been GameStop’s bread and butter for well over a decade.
Game publishers set a minimum retail price, usually $60, on new products, and GameStop can’t deviate from that any more than Target, Amazon, or Walmart can — at least, not if they want to be able to keep stocking that publisher’s games in the future.
But that $60 doesn’t leave very much margin for GameStop, or any other retailer; the price a publisher is charging stores to be able to stock those big-budget games is fairly high. That means companies that sell blockbuster video games make the bulk of their money elsewhere. For Amazon, Target, or Walmart, the options are legion; for GameStop, they’re mostly used games.
So GameStop employees have always been encouraged to push used titles where they can, and to talk shoppers into trading in and selling used games at every moment. But what is new is that all of those metrics are now balanced against each other in strict percentage-based quotas.
As Kotaku explains, say a store’s quota for used games is 30%. If that store sells $1000 in merchandise, then $300 worth of that merchandise needs to be pre-owned games.
All of the percentages are balanced into a quota for both the store and the individual employee. So if you walked into a GameStop in January to buy, say, Resident Evil 7, but didn’t buy any used games, trade in any games, sign up for a reward card, or pre-order another game, that sale would significantly harm the numbers of the employee who sold it to you, and the store where she worked.
In short, Kotaku reports, the program is basically an incentive not to sell new games or hardware, and it’s such a strong one that some employees are outright lying to customers about what’s in stock.
“We are telling people we don’t have new systems in stock so we won’t take a $300 or $400 dollar hit on our pre-owned numbers,” one GameStop employee told Kotaku. “We also tell customers we don’t have copies of new games in stock when they are on sale—for example, Watch Dogs 2 is currently $29.99 new and $54.99 pre-owned. We just tell them we don’t have the new one in stock and shuffle them out the door.”
Another employee outright lamented selling several copies of three new games on a recent Tuesday (the day nearly all blockbuster, wide-release video games launch). “Now I’m f**cked for the week,” that employee posted to Reddit. “Now I have to sell way more pre-owned this week.”
Following Kotaku’s report, GameStop sent out a company-wide memo to all employees — which Kotaku again acquired — defending its aggressive sales quotas, and downplaying Kotaku’s initial report.
“In the article, there were behaviors described that indicated our Circle of Life program placed pressure on store associates to mislead customers on the value of certain products,” company COO Tony Bartel writes.
“Let me be clear on this, nothing could be further from the truth,” Bartel continues. “We want every customer to get the product and deal that is right for them – whether that be a new or pre-owned video game product, digital game or collectible.”
Bartel adds that “I know [the behaviors in the article] don’t represent the vast majority of our associates and how they treat our customers.”
However, what Bartel’s memo also makes clear is how strongly the sales pressure GameStop puts its employees under benefits the corporation.
“The Circle of Life generates great value for the customer,” Bartel writes. “Consider these facts: GameStop issued approximately $1 Billion of trade credits to our customers last year. 70% of the time, those trade dollars were immediately spent on new gaming products.”
If consumers are constantly re-spending their money in your store, that’s great for the store, regardless of whether it’s good for the consumer… and since it’s working so well for the retailer, it’s questionable whether it’ll ease up the pressure on its front-line employees anytime soon.
by Kate Cox via Consumerist