In an article that I wrote several years ago (which you may wish to review at http://garryhouse.com/serv01.htm), I stated that “There are today, and there probably always will be, as many different compensation plans as there are dealerships. That is the nature of our business…...to be individualistic....to have a unique dealership culture….reflected in the way we treat our customers and our employees. And management and sales "pay plans” are certainly a part of that unique culture.” So after reviewing pay plans from dealership to dealership, I certainly know that “one size (definitely) does not fit all.”  

What I’ve also learned in over 30 years of dealership consulting is that “one size does not always fit all” (nor should it) when developing compensation plans for vehicle sales personnel in the same dealership. Historically, dealerships with separate new and used vehicle sales people may have had different pay plans, however, until recently, most dealers with a combination sales staff have not been particularly creative in compensating their sales people according to their respective strengths, weaknesses, and individual needs. Following are just four examples, or salesperson groupings, that illustrate where and why you might wish to consider adopting specialized salesperson compensation plans within your Variable departments. There are certainly other examples as well.   

In order to attract entry-level vehicle salespeople (Group One) to the dealership, some clients have introduced pay plans that feature a relatively strong salary combined with volume bonuses and other miscellaneous incentives. Typically, the total income potential from these pay plans is significantly less than for a conventional commissioned vehicle salesperson. Interestingly, when “the rookie” proves his/her worth, and is given the opportunity to convert to a full-commission, higher income pay plan, many elect to remain on the plan on which they began their employment. Why? They (and/or their dominant family member) are much more comfortable with the security and consistency of a predictable and steady pay check!

On the other end of the scale (Group Two), some client-dealers now offer a very favorable and special pay plan (and work schedule) to those veteran salespeople who are comfortable working only with their personal customer portfolio. And why not? They require little advertising support and minimal management supervision. They have earned the privilege of “senior status.” In some cases they are allowed to handle their own F&I transactions, and they have proven to be as effective, from a $PVR and product penetration standpoint, as a full-time Financial Services Producer.

Another specialized compensation plan we’re beginning to see is for Group Three, those vehicle salespeople who are highly dependent on BDC/ILM personnel to field their leads and develop their appointments. Because these salespeople are consistently facing off with both a higher quantity and higher quality (better closing rates) of sales opportunities, some dealers have elected to reduce the per vehicle commission on BDC/ILM originating deals to offset the expense of the BDC/ILM personnel.   

I define Group Four as being 100% comprised of “the All-In-One” salesperson. There aren’t a lot of people in this group today, but some dealers believe that they may deserve special compensation consideration. I describe this salesperson as one who has the proven capability and commitment to both effectively develop relationships with new sales opportunities (whether originating by Internet, Phone, or Walk-In) and to nurture and maximize on his/her existing relationships (unsold prospects, past customers, owner referrals, bird dog referrals, and his/her personal circle of influence). He/she comes to work to work (not wait), and he/she manages his/her own activities.

Please don’t misunderstand me. I’m not saying that every dealership needs more than one pay plan for vehicle sales people; but rather, I’m saying that it’s OK to have multiple pay plans, if that strategy will better fit the needs of the dealership and/or the individual sales personnel.       

If you are one of those dealers who is wondering how to deal with the uncomfortable prospect of implementing needed changes in sales, management, and/or administrative compensation, Garry House & Associates Co. will very capably assist you with this challenge. Although our industry abounds with qualified management consultants, I am one of the very few trusted subject matter experts (SMEs) who specialize in compensation analysis, planning, and application. The complete client list of dealerships and dealer groups with whom I have worked in this very specialized consulting area demonstrates my experience and is available for review at http://garryhouse.com/serv03.htm. I expect and welcome your due diligence.