Sales pay plans

[zekensted]

Looking for a pay plan for our used car guys. What we have isnt working. 6 bucks an hour plus 100 bucks a car. Been that way here forever, and we havent been able to sell anything for about that long. What is being suggested is 400 a week PLUS 25%. Sounds WAY too high to me. Would like decent guarantee so slow months they guys dont die; but, I need them motivated, and they arent right now.

[helpers]

All our sales people (new & used) get minimum wage (required by law)or 25% front end plus 5% back end - whichever is greater. This is their base payplan.

Our salespeople who have been here for at least 1 year also get $1000/month "tenure" bonus IF they hit 10 units AND have above zone customer satisfaction score.

They also have miscellaneous spiffs available throughout the month. Up until Jan 2008, we also gave them $10/unit towards a year-end bonus, but with the economy the way it is, all year-end/Christmas bonuses have been cut this year.

[This message has been edited by helpers (edited 05-28-2008).]

[jazdale]

zek
Your numbers don't add up to a decent living.

6.00/hour = 12000/year
10 cars a month = 12000/year
professional salespeople can't live on 24k

400/week = 20000/year
10 cars/month @ 250/car = 30000
total of 50000/year

[zekensted]

jazdale - You are right. Thats why we havent been able to hire or keep a proffessional sales person here in 10 years. Which explains why sales have dropped, and dropped, and dropped.
Our old GM wanted greeters, and then he could close the deal. Now, we cant even hire and keep greeters.
I do like the idea of 400 a week and 250 a car better than a straight 25%. But, in our economic market, $400 a week and 2 or 3 sales a month would make some people way to happy. I guess thats where strong management comes in.

[calgm988]

Sorry to add to the confusion here. But, it would appear to me that it's not the pay-plan that's affecting tenure. More likely it's your management team affecting the turnover. Maybe you should start there. Good manager's create a good environement, and good environments' attract and keep good people. Your pay-plan isn't the problem...

[texaslp]

I'm sure mgmt may contribute to turnover, but $6 per hr to sell cars is ridiculous. Once they get a little experience, they can go elsewhere and earn 2 or 3 times more $$$. For $6 an hour I'm sure they can find something else to do with a lot less stress.

Ours start at 20% and go up to 35% based on volume.

[calgm988]

Hourly rate has virtually no impact on their commissions. In fact, if they have to rely on $6/hr than you don't want them anyways. Or perhaps your manager's need to train them more.

If you want perfomance than you need performance based pay plans. That is to say; if you want gross...pay them on gross production, if you want volume...pay them on volume production.

You have to start with your managment team. The number one reason people leave is the boss. Income will be there if you've hired the right staff, trained them, set clear expectations for them and were consistant in your processes. I still say it's not a pay-plan creating the turn over it's a managment issue.

[texaslp]

A slsperson selling 20 cars a month on zekens current pay plan would make about 36k. Anyplace else someone selling 20 cars per mo will make 100-150k.

zeken 400 per wk plus 25% sounds high to me as well. Perhaps straight 25% commission with 400 per week as a guarantee.

[calgm988]

I wouldn't argue your point about not making much money per car. My point was with turnover being what it is you can't point at commission structure as being the reason.

My suggestion: pay for the results you want.

Giving a guarantee isn't the answer. It will allow the sales people to sit back in difficult times instead of having to work for results. Bottom line...you pay for what you get.

[cantfind12]

Considering the current econimic situation it is disheartening to see the constant common thread of short time personal gain at the sacrifice of long term overall abundance. The sub-prime mortgage fiasco created by over zealous and short sighted currency tenders has created a ripple effect that has everyone on edge, including possible car buyers, however, there seems to be no ability to correlate cause and effect. The extra dollar and hour (or incentive) to retain a valued or potential career long employee can not be measured after the fact, but, you can trust your instinct enough to know that some things are slowly taking you on a path of constructive change or a flash in the pan 15 minutes of fame. It's all interesting but whichever path we choose we have to accept the consequence. As the commercial said "you can pay me now or you can pay me later."