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Recently had a Dealer ask me what I had found to be the best payplan for a Sales Consultant, since I travel and see dozens from around the country.
I advised that transparency is the key, and the Dealer should pay an acceptable percentage of every piece of profit, front gross, holdback, finance, dealer cash, and stair step with no packs. Can easily be mapped and controlled as an expense and gives motivation in every area, including retaining holdback as most deals will not be mini's.
What are your thoughts?
I'd like to add to the discussion by asking about spiffs? Too often a spiff can turn into an expected part of a pay plan. Is there a way to use them to motivate a behavior?
I have found that it is best when you keep the salespersons pay plan under 18% of the gross profit of the sale.This I consider the gap between ACV or NET and Sale Price.
Foe example, if you made a gross profit of $ 2000. The salesperson should not make over
$ 360 total pay for that sale.
So if your sale was $2000 and you had $ 600 pack the net payable gross would be $ 1400.
If the salesperson pay plan was at 25% they would get a commission of $ 350, a bit lower than the 18% rule.
You can move the pack and commission rate anyway you want , but stay in that 18% range.
Spiffs are important but don't let them get so out of hand that the salesperson sells less and makes more from the spiffs.
the problem with most Dealers, is the over pack the vehicle. some feel the less one make the more sales they will make.which i find to be the opposite! been in sales for 30yrs and the more I make on a deal motivate me to work harder to make more. pay plan is 30% on New w/ $100.00 pack and 25% on used w/$700.00 pack plus 20% of F & I controll my deals from start to finish!
Thanks for sharing!
They way to control spiffs is to take the time to vary them every month. It takes time and energy, but they should be accounted for in your expected payout.
If your intention to pay out 18% of your total profit, then create a plan based on 16% with the understanding that 2% is spent every month. The amount should be planned in the beginning of the month around your forecast. If you plan $300,000 gross profit then $6,000 should be spent to motivate. Budget it under bonuses before the month starts.