Pay plans

Tony Ferrigno

Ok looking for some feedback on sales pay plans.  I have many guys that are experienced and are payed 25 percent commission.  We have unit bonuses and gross bonus as well plus we do spiff problem child cars and a couple of finance products.  Quit frankly I have transitioned this store drastically over the years I feel keeping processes relevant and keeping us a store that hasn’t fallen behind with the exception of pay plans I feel.  Some of my guys just don’t understand what you have to do be visible.  I’m not saying we’re the lowest or the highest but quit frankly you just can’t go to the auction and buy a car and mark it up 4K like you were able to at one point in life.  They want to make money and I respect that but at the end of the day by the time you run a car through the shop, recon it certify it, most  dealers have some sort of pack and then certify it it’s hard to to compensate individuals who are used to making gross.  I know many stores have gone to salaries and for these individuals and my dealership circumstances it’s just not in the cards.  No way to make them happy and it to make sense for the dealership.  Was really looking at reducing pack amounts and lowering commissions and paying a flat per unit with out bonuses.  Put a pencil to it and it actually made some sense as long as they performed at a solid level which I totally expect them too.  Is there anything that is working you that you have done with salesman that have been at your store for a long time?

Derrick Woolfson

I feel your frustrations, it by no means - as you have mentioned - is an easy task. And the other issue with paying flats (or tiered bonuses) is that if the gross is not there, the dealer does not make as near as much money. One of the things - on another note - that we have done to try and protect front-end gross on pre-owned units is to purchase them as a buying center. This way we can pay them a flat for their purchasing the car, and then if they sell it, they can make an additional flat/percentage of the gross. This has been very effective. But when it comes to selling cars, the veteran sales guys want to only sell pre-owned. That said, our percentage paid on gross is lower, and they get more in tiered volume bonuses. But in order to get a larger bonus, they need to hit 15+ units. Another thing some dealers are looking at is to remove the F&I position. Allowing the sales consultants to do a deal start to finish. I am not sure how I feel about that concept, but it saves thousands of dollars and increases profits from what I have heard. Of course, so long they are effective at it. 

Tony Ferrigno

We do a 13,17,21 and basically every 4 cars after plus gross bonus that starts at 8k and goes every 2k.  I feel like we are fighting and kicking for every unit with GM trying to hit sfe.  With that said there are sales guys sitting there at 14 cars knowing that there 2 way from unit bonus and if I give a car away it won't help the gross bonus so there like what's in it for me.  The any customer that have that's on the fence gets pushed into next month with the hope that it will get better.  The scary things is that with Chevrolet there digging themselves into holes.  I swear if you were in the market 3 months ago and waited there's a good chance it cost you a decent amount of incentive money.  At the end of the day you don't want to penalize anyone for selling a car. 

Amanda Hanson

We pay 500$ flat every vehicle- corvette to spark

Bart Wilson

Amanda, that's an aggressive pay plan.  What is your new to used sold ratio?

Derrick Woolfson

@Amanda, do they get a weekly draw/salary w/ bonuses or just the flats?  

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