Salespeople pay

[John Moore]

Who has some interesting pay plans for your salespeople? We are a multi-line GM store paying the same way as most everyone else (I think) 20-35% of gross less a $250 pack. Plus spiffs on service contracts, mop & glow, reserve, etc. Am interested in starting a volume oriented compensation plan, with bigger spiffs for attainment of sales goals. Has anyone tried this? What has it done for volume? For gross? For salespeople retention/attraction? Thanks, and I hope everyone has a great year.

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[mbowers]

Volume payplans work better in one-price or Saturn stores, unless you have a strong desk system to maintain gross profits.

We once developed a "self-motivated" pay system for dealers but the dealers hated it. If I can find a copy, I'll post it. The plan was compeltely different, at the time, from anything being done in dealerships.

Also, Joe Serra has an arrangement whereby his sales force devises their own pay plans. Anything goes as long as total sales comp does not exceed 20% of the gross.

[davidmc]

A payplan that we have had in effect for about 6 years, and has been very successful at our dealership is as follows:

We have a volume bonus based on a three month rolling average as follows:

10 unit avg.= $500.00
12 unit avg.=$1000.00
15 unit avg.=$1500.00
18 unit avg.=$2000.00
20 unit avg.=$2500.00
21 units and above = $3000.00

Example: Jan = 16 units
Feb = 14 units
Mar = 20 units
50 units / 3 mo. =16.66
rolling avg. and bonus = $1500.00 for Mar.

Feb = 14 units
Mar = 20 units
Apr = 22 units
56 units / 3 mo. = 18.66 rolling avg. and bonus = $2000 for Apr.

We have 3 types of categories of salesperson. One is a new hire and the commission rate is 25% of gross, and one is a level 2, and the commission rate is 30%, and the last one is a level 3, and the commission rate is 35%.

You must have a 3 month rolling average of 10 or better to become a level 2 and a rolling average of 15 or better to become a level 3.

A. Pack is 3% of invoice amount, and 3% of cost on used vehicles.
(The reason for a % on pack, and not a dollar figure is that it allows for you the dealer
to get a better return on investment.)

Ex. (A) Invoice = 15000.00
Pack = 450.00
Salesperson Cost = 15450.00
Selling Price = 16450.00
Comm. Gross = 1000.00

Total Gross without holdback is 1450.00 and return on investment is 9.6%.

Ex. (B) Invoice = 29000.00
Pack = 870.00
Salesperson Cost = 29870.00
Selling Price = 30870.00
Comm. Gross = 1000.00

Total gross without holdback is 1870.00 and return on investment is 6.4%.

With a fixed dollar amount of 250.00 on pack, the return on investment would be 8.3% and 4.3% respectfully.

Best of luck




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[sallen1]

We only sell Cadillac but 4 years ago we had a Cad-Pontiac dual. Pontiacs were'nt selling (commission too low) so we 'experimented' with a volumetric payplan. What we learned is that the plan has to be easy to understand.

When Pontiac went away, we returned to the basic sales plan (% of gross with a pack and spiffs). Seems to work o.k.,but I like the plan davidmc wrote about above.

scott

[DaveStrom]

Traditional commission pay plans and most variations of them are no longer appropriate as they don't attract and retain the quality and quantity of salespeople most retailers need and want. In my opinion, a "clean sheet" approach to salespeople's compensation is appropriate. The best alternative I've seen is a activity/behavior/results approach that pays salespeople for those things that we want them to do, to achieve, to accomplish. It is based on a fixed percentage of profit thereby ensuring complete control over compensation expense. This approach effectively deals with virtually all of the problems with salespeople's pay and the traditional commission approach.

The only problem with this approach is that its development and implementation requires "progressive thinking" and a significant "Paradigm Shift" that most retailers are reluctant to commit to.

Ultimately, "you get what you pay for." Therefore, if you're not getting what you want (e.g. prospecting, CSI, quality "just looking" experiences, cross-training, true teamwork, etc.), chances are you're not paying for it.

There are viable alternatives for those willing to develop and implement them

Dave Strom

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