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[22 comments]

Is Buying a Competitor's Products Disloyal?

February 22, 2013

To eBay's CEO John Donahoe, employee loyalty means actually using your employer's products.

"I see competitors' boxes coming to our mailroom," Mr. Donahoe told a group of 2,500 eBay employees assembled at the San Jose Civic near its headquarters, according to a profile of the company in Fortune. "You should be using our products and using PayPal products wherever you see them."

The remark was just a small part of the extensive profile of eBay, but drew some attention across internet blogs with many assuming the "competitors' boxes" had to be Amazon's. The overall article detailed eBay's successful shift from online auctions to a full-service e-commerce model that helps retailers compete against the likes of Amazon. Mr. Donahoe said in the article, "Retailers are coming to us and saying, 'We need to have a technology partner.'"

Outright banning employees from buying a competitor's product appears rare. But, depending on their competitive nature, a code of conduct — often unwritten — appears to exist at some companies. In the mid-2000s, Ford earned some attention for forcing workers at its Dearborn truck plant not driving a Ford vehicle to park in a lot across the street.

Last year, Microsoft reportedly banned departments from purchasing Apple products, although employees weren't prohibited from buying Macs and iPads for their own personal use. Still, an article in The Wall Street Journal at the start of the current decade detailed how many Microsoft employees hid the use of their personal iPhones at work, especially in front of CEO Steve Ballmer.

In an article last year written for cbsnews.com, Steve Tobak, a consultant and former high-tech executive, advised that highly visible execs should probably avoid using a competitor's products to avoid any negative PR. For the rest, using their own money to buy a competitor's product "should be nobody's business but their own."

Healthy discounts can be used to maximize the opportunity to make a company's workforce their "best evangelists," he adds. At the same time, such efforts can backfire if employees can easily find the company's products at lower prices elsewhere or if they start reselling their discounted perks.

Discussion Questions:

Should or can companies demand employees not to use their competitors' products or shop at competing retailers? Where is the line drawn between personal and work use of competitors' products?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Should a company be able to require that its employees not purchase competitive products?

Comments:

I've worked at and for a number of companies where the exact opposite was encouraged. How else are you going to know the strengths and weaknesses of the competition if you build a wall around yourselves? When we found a competitor's product that was better than ours, that was both a signal and a motivator to improve.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

We've all seen this in apparel stores where a young woman is wearing something like a pair of jeans with "juicy" written across the butt—and they don't carry them. Someone shopping in that store might see them on and say, "I want those" due to the walking billboard and get the employee to recommend a competitor.

I won't get into the wisdom of wearing pants like that to work to begin with....

Brands want their employees as ambassadors, certainly. And it makes sense for the employee to use the product to help know the ins and outs of their products.

To most of us, it's just common sense but that can seem uncommon these days.

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Bob Phibbs, President/CEO, The Retail Doctor

I agree with John Donahue and Ford on this one—if you love other guy stuff more than your employer product, then go work for the other guy!

Ed Dunn, Founder, (Stealth Operation)

When executives see their employees using competitors' products or services they should pay attention and take the time to understand why. These are amazing opportunities to learn and address the differences in order to make your own product or service even better.

Employees are real-world consumers and shoppers and they are your 'canary in the coal mine'. Those that convert to your product and service because its better will become your most passionate sales and marketing brand ambassadors. Using your company's products and services in business presentations and public forums is considered politically or culturally 'correct' but may mask the reality.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Employers can encourage use of their products, an provide incentives for their use, but should not demand it. I agree with Mr. Tobak's statement: senior management should avoid using competitors' products at the risk of negative PR, but if employees are using their own money, they should be able to buy whatever they want.

Subsidies and healthy discounts can be used to encourage employees to buy their companies' products, but the use of those products should not be demanded.

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Max Goldberg, President, Max Goldberg & Associates

If you want them to buy your product make sure you build a product they would want to buy. Also give them an incentive to buy your product.

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Mel Kleiman, President, Humetrics

We have all seen the pictures of someone in a Starbucks' uniform buying coffee (or something) at Dunkin' Donuts or in a Burger King, or someone in a McDonald's uniform buying product at the other's location. Coke and Pepsi have made a number commercials playing off this theme.

For the individual, it's a smart thing to do, probably not especially if they are recognized. Should it be banned? No. What people do on their personal time or with their money should be their business, but using a competitor's product at work or having one delivered to your office isn't very bright unless, as Stephen points out, it is research.

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Steve Montgomery, President, b2b Solutions, LLC

Companies should not demand, but encourage and incentivize. If companies want to get really smart, they should engage their employees, figure out the why, and make those changes immediately. If the people creating and representing the brand can't get behind it, there's a real problem. I always try to support and be loyal to my customers' brands, even if their competitor is priced lower. It's the right thing to do.

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Zel Bianco, President, founder and CEO, Interactive Edge

Employees should use their employer's products. It only makes sense from an economic perspective and in some cases it will enable them to perform their job duties more effectively.

Economically, employee bonuses and raises are related to company performance. Giving business to competitors hurts the company you work for and as a result hurt the employee's income. In an economy where many are unemployed or have not received a raise in several years, employees should voluntarily do their part. At the same time, employers should also offer price incentives to make it easy for employees to do the right thing.

From marketers, product development, customer care and many other perspectives, using your own product will enable you to do your job better. If you do not use a product that you are developing, how can you be expected to understand it fully and expect to make it better?

At the same time, employers do not have the right to demand employees do anything off hours and out of the office. That creates a privacy issue and just seems big brotherish.

Kurt Seemar, President, Analytic Marketing Innovations

I'm with Mel. Just make sure the product is so compelling that employees want to use them. Compelling mean the products are good and the price is nearly free.

David Livingston, Principal, DJL Research

When I was in grad school, the place was rife with myths about the intern who was dismissed for bringing Pepsi to Coca-Cola or showing up to Ford in (gasp) a foreign car.

I'm of a mixed mind on this one. There should be a fierce pride in your company's products. But instead of persecuting employees for not having that pride, maybe you need to spend some time finding out why a competitor is winning even those hearts and minds. You might learn something about how to make your own products better.

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Nikki Baird, Managing Partner, RSR Research

The board of directors needs to look at how the employees are being treated in this empty edict at once. If this conduct and behavior is in concert with their corporate vision, there is not much time for investors to adjust their portfolios to include new membership.

Any leadership that openly turns on employees is sending a message not only to its own talent, but also to those with talent looking for opportunity as well. A brain drain will almost certainly follow soon with this heavy-handed leadership style.

If nothing else can be learned one can easily surmise that leadership here is lost for answers like "where are we?' and "where do we go from here?" As for the rest of the market there is much to learn and avoid in this leadership misdirection.

'gjarnoldjr'

I think it is difficult to police the personal use of an employee using a competitor's products, but let's be practical about it.

First of all, we want employees that are enthusiastic about our products—and that means using them. I've worked for a number of companies where employees are enthusiastic about their products and would NEVER consider a competitor's products. There are other companies where it's reasonable to use a competitor's product, but leadership has fun with the employees by asking them to stay away from using their "arch-enemy's" products.

Employees using a competitor's product doesn't mean they are less than enthusiastic about their own company's product. Sometimes it's just not practical. If I work at a restaurant, I'm sure to eat out at other restaurants.

There is a realistic balance that a company should expect about employees using their products.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

If you are not using the product that your company brings to market then you have made a poor choice either in personal product selection, employer, or judgment.

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Larry Negrich, Vice President, Marketing, nGage Labs

I too have a mixed mind on this one. I have a brother-in-law who works for a beverage giant and is not supposed to dine in any restaurant or stay in any hotel that does not serve his product. Earlier in life, this was not taken as seriously, he just didn't ask. But now, he is fiercely loyal as is the whole family. I guess this says to me that maybe when you are younger and just starting out, there is much to explore and pennies to pinch, but if your decision is to move up with the brand, it should come hand and hand with your loyalty.

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

I think I've found a new hero in 'gjarnoldjr'. I second every word he—or she—wrote.

As the Fortune article quote seems to be more of a wish than a command, I'm willing to give Mr. Donahoe the benefit of the doubt, but as to the practice in general, my answer is a resounding "NO!"

'notcom'

Lots of different slants to take on this one. I agree with Mel and others that the surest way to ensure anyone's loyalty, including employees, is to make a great product and maybe throw in a dash of incentives.

That being said, ignorance of your competitors products or experiences can be a dangerous thing too. Employees should be out in the marketplace gathering ideas and staying current. This is especially true in fast changing markets like consumer electronics.

It's incumbent upon executives to lead by example on this issue. A colleague of mine once had a meeting at a leading tire manufacturer. Before the meeting he checked the executive parking lot and found the majority of cars had competitor's tires on them. He opened the meeting with his findings and it forced a great discussion on commitment to the business.

Service providers should show as much loyalty to client's products as employees do. Over the years my choice of smartphone, apparel and other items has been determined by who my clients are.

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Martin Mehalchin, Partner, Lenati, LLC

Business use should be the employer's products and services, along with official business partners. Personal use should not be restricted. I feel if an employee forgoes their own employer's products, there must be a reason. That, alone, should be looked upon positively by the employer, and the product development/marketing people should be interviewing those employees as to why they own the competitor's products.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

When I worked for AT&T I always used AT&T phones, long distance and calling cards. It was out of a sense of loyalty to the organization that I worked for and no one had to tell me to do it, but at the same time it was not required.

I would agree with the premise that if it is for business use it should be highly encouraged to use one's own company products or services to avoid the image issues that result from using a competitor's product (especially for visible executives). But for personal use, give employees a strong reason and perhaps even an incentive to use their company's products. Unless of course you are doing a little competitive intelligence...in that case, you might want your employees telling you how the competitor is doing versus you!

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Brian Numainville, Principal, The Retail Feedback Group

I feel for the beleaguered employee.

Executives of the company and people who are making substantial salaries should toe the line and buy from their own companies. But people who are making junior money have every right to search out the lowest prices and the best values. Stop trashing employees and let Americans be free!

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Cathy Hotka, Principal, Cathy Hotka & Associates

This is a "duh" topic.

1. Of course employees should be allowed, and even encouraged to buy whatever they'd like. When a competitor's products are purchased you have an in-house ability to understand what drives the decision to buy certain products and then have the opportunity to make adjustments.

2. Most companies wisely offer discounts to allow employees to purchase their products which encourages use. And for those retailers who require employees to wear their products in the store, most state laws require the company to provide the product as part of their uniform. In those instances, of course it is okay to have employees not wear competitive products while working, but not to prohibit them from buying for personal use.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

I don't think trying to dictate people's behaviour is ever fruitful. If your offering is not compelling enough that they choose it of their own free will, you probably want to find out why that is.

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Alexander Rink, CEO, 360pi

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