If there is one hot topic in your dealership, it’s pay plans. It is the ultimate water cooler discussion, and the most leveraged tool for managers to motivate performance.

But, it seems like you can’t look on the internet without reading about how job searchers are changing what they want from an employer. And with a larger number of millennials entering the workforce, it probably warrants a view into what drives this generation of workers.  Studies suggest they prefer recognition over money, they feel entitled to receive more benefits and perks from their jobs, the list goes on and on. So does that mean that pay plans are losing their luster overall?

We wanted to find out, so we asked this question: do salespeople entering the industry care about pay plans, or instead place more value on other factors (like customer service or career path)?

We surveyed nearly 500 salespeople to see exactly what motivated them to perform at their dealership.

Pay Plans - do they work?

First off let me start by saying I’m not going to blow smoke; pay plans are still the clear cut winner of what motivates salespeople. When asked what motivates them at work, 45% said that compensation was number one.

So that answers the question, right? Time to double down on building the right pay plan. Well…

NADA reported in December 2016 that salesperson turnover was 67%. This is the case in in spite of the fact that financial compensation for dealers grew at 1.4% in the face of only a .4% growth in profitability. That means that compensation grew 250% faster than profit, and it still didn’t really improve turnover.  

Obviously the tried and true philosophy is that your pay plan shouldn’t really outpace profitability, but in an attempt to keep good salespeople it seems profitability was sacrificed. There has to be a better way to keep people than continually throwing more money at them.

Other Motivations

It is true that pay plans are the number one motivator, but that’s not the only thing that motivates salespeople. It may surprise some people, but according to the responses we received, 21% of salespeople were motivated by developing skills, 15% were motivated by a career path and an additional 15% were motivated by delivering good customer service.

This hints at the fact that there may be more to motivating a sales team than just adjusting (again and again) your pay plan. These other motivating factors imply that pay plans are not the end-all-be-all motivator. In fact, it can even by an indication that you could have the wrong hire.

In It For The Long Haul

We also asked all of the salespeople how long they planned to be in the automotive dealership. With all the turnover in the sales department we figured there had to be a large portion of vagrant salespeople who were in it for the short-term payoff. The truth from our findings: 60% of salespeople who had worked in the dealership for less than a year, planned on being there for over 5 years.

Only 5% of the salespeople coming into the dealership for the first time planned on being there for less than a year. 63% of people who planned to leave within the first year said their primary motivation was compensation. Even though 95% of people planned on staying, a year later only 33% of them were still there, with 40% of those leaving in the first 90 days according to NADA.

When we compared  how long salespeople wanted to stay in the dealership, to their motivations at work, an interesting break happened. Salespeople who planned on leaving within a year were 40% more likely to be motivated primarily by compensation.

Salespeople who planned on staying were more likely to be motivated by something other than the pay plan. Don’t get me wrong, pay plans were still number one at 32% (down 10% from the average), but this group was 23% more likely to be motivated by developing skills and an impressive 73% more likely to be motivated by career paths.

Here’s the good news, not only did these individuals want to stay at the dealership, but they also closed more deals. Salespeople who planned on staying longer reported outselling their peers by 9% on average.

Looking Past the Pay Plan

Pay plans are still king when it comes to motivation, but only when the other factors are addressed. Ignoring other aspects of employee motivation could turn into a detriment to your dealership. You can download our full study here to see other factors that impact motivation.

All salespeople are not created equal. Those who want to stay are looking for you to invest in them beyond a monthly check, they want to know there is a path for developing skills and a their career.