Misselling is a term used to describe an attempt by a salesperson to convince a customer to purchase a good or service that is not appropriate for that client. Typically, this type of activity occurs when the salesperson is more interested in making a sale than in developing a long-term relationship with that customer. Ethical businesses tend to discourage this type of activity, and may even terminate a salesperson who continually misrepresents products in an attempt to generate sales.
One of the main characteristics of misselling is the deliberate attempt to mislead a client into thinking he or she would benefit from the purchase of a product when in fact that would not be the case. As part of the process, the salesperson may tend to downplay or omit information that would alert the customer to the fact that the product is not a good choice. Instead, the salesperson focuses on creating a sense of urgency for the product in an attempt to coerce the customer into making a decision before there is time to reconsider. While misselling does constitute a moral hazard, the method typically stops short of making false claims for the product; instead, the emphasis is on presenting what the product does do as being absolutely essential for the well being of the customer.
A common example of misselling involves selling insurance to a client that he or she clearly does not require. For example, an agent may attempt to convince an individual with no children or spouse that an expensive whole life insurance policy is important as part of that individual’s personal finance plans. Rather than going over other insurance options with the customer, the agent focuses only on the more expensive coverage and fails to note that the benefits identified would also be provided in the less expensive policies.
Misselling can occur in just about any type of situation involving a vendor or supplier and a customer. Along with insurance, misselling can take place at a car dealership, a beauty shop, an apparel store, or any other setting in which a customer is seeking to meet some type of need or want. While misselling may produce sales on the front end, the practice usually precludes any repeat business from that customer, especially when he or she realizes the deception and chooses to do business with a different retailer or supplier. A business that gains a reputation for misselling will find it increasingly hard to secure new clients and remain in business, whereas a company that is known to match clients with goods and services they truly benefit from will usually remain stable and viable over the long term.