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Jared Hamilton

Jared Hamilton Founder - CEO

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Today, the Internet Sales Manager is one of the most important and emerging positions in your dealership.  Here is some direction to creating a pay plan that will fairly compensate an ISM and insure the success of your dealership’s web efforts.


1. The pay plan should focus the ISM on their responsibilities:

The objective of your pay plan is to align your employees’ job with your dealership objectives, so the employee is compensated for achieving what the store needs in way that generates fair pay in your market.  Thus, the very first step to creating your pay plan is to review your written job description to see the expectations you are asking the ISM to meet.  If you, like most people, do not have a written job description then your fist step is to create one.  Here are the most popular “Roles” ISMs have in dealerships. 


Various ISM roles:

Sales ISM: This ISM is directly responsible to take customers through your process and deliver units.  They are similar to a floor sales person, but rather than take ups they work with Internet leads.

Manager ISM: Similar to sales ISM except in this scenario the store has grown beyond a one man Internet department and has added a team of “Sales ISMs.”  The Manager ISM is given the responsibility to lead the crew.  This person may also desk deals for their team.

Director ISM: In this position the ISM branches out to manage multi rooftops in a dealer group or to oversee multiple dealership departments, such as the web efforts for parts and service.

BDC ISM:  Business Development Centers typically handles the leads, make the calls and sets appointments for the sales team.  The BDC typically does not walk the customer through the sales process and close the deal, but is usually responsible to achieve specific metrics for lead response, appointment setting and revenue generated from their appointments.

Marketing ISM: This type of ISM manages the website, the lead purchasing, the SEM and SEO efforts, email marketing, data base segmentation, publishes the online vehicle data, does the social media marketing and handles the vendor relations.


2. Use various pay structures to align with your ISMs Role:

Not all methods of compensation were created equal.  Every employee deserves to know how their success will be measured and the range of unacceptable, acceptable and outstanding metrics they will be judged by.  This improves the leaders ability to manage and provides your employee with a roadmap to success.  Different compensation methods will better align with the most important metrics that you will use to measure success.  Such as:

Commissions – the most standard pay method can be based off of gross or volume generated. Commissions should be a part of the pay plan for all ISMs responsible to deliver units and revenue.  Be carful though, an ISM pay plan should rarely be 100% commission based.

Activity pay - For those ISMs who dont focus on selling cars themselves, but rather are responsible for the activities that lead to the sales process, should be paid on those activities. The most common “activity pay” in the market is paying for appointments showed or leads generated.  Activity pay is usually best suited for Marketing and BDC type ISMs that control specific metrics that lead to the sale, but in the end pass the customer off to a sales team.

Salary or Base pay, since the ISM’s job, particularly when they are a director, marketing or BDC type role, is very fluid and changing daily, a base pay of some sort is good to cover all the little things these roles do that do not directly result in a measured activity or a sale.  Often times the base is simply a base guarantee, or a minimum monthly total guaranteed to the employee.


3. Putting it all together and finding balance in “Role” and “Pay.”

Look at your written job description and decide realistically how much time and focus should be given towards each objective, back this into the value your market places on this role.  For example, if your role is 100% to sell cars to Internet leads, than a 100% commission structure should be fine. 

However, most ISM roles are a hybrid of roles.  For example, 20% lead generation, 20% site management/vendor relations and 60% sales.  In this situation your ISM role should receive 20% of their pay in SALARY to cover their misc management, 20% of their check in ACTIVITY PAY for the leads they generate and 60% of their pay in COMMISSIONS from to the deals they close.  All totaled, with average results, they should earn average pay for your market.  If they under perform the commissions will naturally lower their pay and when they over perform the compensation will likely naturally rise.  This same theory can match any pay plan to any ISM job description.  Just simply outline what percent of their job should be focused on what activities and match the pay plan accordingly.


4. A couple tips:

Increase performance through EOM reporting.
At the end of each month you do not want to just hand your ISM a check, especially if their pay comes from multiple roles.  Rather, break out the performance of each pay type and let them see how much was salary, how much was commissions and how much was “Activity Pay”.  To go the extra mile, off to the right of their totals, display what the pay would have been had they hit their goals.  If they over achieved, they will know it and receive the proper recognition.  If they underperformed they will have a clear depiction of where, and can see exactly what to focus on next month to improve their performance and thus their pay.

 

Where do I bill the ISM on my statement?
Another pitfall is many dealers feel their percentages of pay on their financial statement will not support a properly paid ISM.  However, usually they are lumping the entire pay into one account and then complain that the account is over the “20 group” guideline and needs to be cut back.

Depending on the ISM role, it is usually best to split their pay up into multiple accounts to keep things accurate.  For an ISM that is 30% sales, 30% management and 30% marketing, I recommend splitting their pay up into those three accounts to accurately reflect your stores spending.  Accurate decision making starts with accurate data.  Your ISM plays multiple roles across multiple accounts and often against multiple departments, be sure to account for the job properly.

 

Keep it simple.
The work should be in creating the pay plan, not in calulating it each month.  If your employee needs an oracle database and a super computer to calculate their pay, i guarantee you have an ineffective pay plan when it comes to employee motivation.  Simple and trackable is best.


The ISM has a role that is different from your other sales people and from your other department managers; their pay should be structured differently too.  It is not best practice to pay the ISM like someone they are not.  The best practice is to start with a blank slate, clearly define their responsibilities, the metrics they will be graded on and then to construct a pay plan that meets the dealerships needs while paying a fair wage for your market.  Don’t be afraid to break the mold and have active communication with your ISM, in the end everyone will benefit.

Susan Burgess
Absolutely beneficial and appreciated! I've been looking for a layout of this for a long time and this post hit every section that has ever been questioned. Thank you, Jared for putting the time into collecting and posting this! I know I have more to say...my coffee hasn't kicked in yet tho...
Jacob Jackson
I agree with susan, this is helpful. It seems like a lot of work, but helpful. Thank you.
Jared Hamilton
Thanks for the support. Im glad this is helpful. Post any particular thoughts or questions, id love to hear what is and isnt working out there for others. The frame work I mentioned here is broad, more of a process to create the pay plan rather than an exact pay plan itself. That was intentional as I think pay plans should vary from store to store since the role played is so different in each dealership.
Stan Sher
I like how the roles and different setups are discussed. This is some great information. I agree with Jared that a pay plan must be customized to each store uniquely.

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