“For years, Wells Fargo was one of the most respected banks in the United States. While other major banks became embroiled in scandal and eroded the public’s trust in the banking industry, Wells Fargo long managed to avoid getting caught up in the industry’s spiral of reprehensible behavior. Apart from its reputation for integrity, the bank also had a track record of financial success. Much of this success was attributable to the bank’s cross-sell strategy. While customers of other large banks held on average three products, Wells Fargo’s customers held six. But the bank’s ambitions were even greater, with a goal of selling eight products per household, which was embedded in the company’s mantra: “Eight is great.” Behind this success, however, was another truth that caused the bank to lose its reputation as the “good bank.” It became clear that improper sales practices had been at the root of the bank’s cross-sell success. The bank had set ambitious sales targets and exerted intense pressure on employees to achieve them, which caused them to crack. Employees opened millions of fake accounts and employed aggressive sales techniques to trick customers into buying products they did not need or use in order to meet sales targets. Wells Fargo stumbled into a public outcry when the matter came to light. Under political heat, Wells Fargo’s Chief Executive Officer John Stump resigned, and millions of executives’ incentive compensation was clawed back.”
Author: Huguette Knols, Miguel Pina e Cunha and Milton Sousa
Reference Number: NSBE 15-25001
Number of pages: 48
Publisher: Nova School of Business and Economics
Teaching Notes: Yes
Language: English
Price: €3,50