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Mike Gorun

Mike Gorun Managing Partner/CEO

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6 Simple Commission Ideas for Improving Customer Retention

 

As the economy has continued to fluctuate almost constantly, businesses have been forced to adapt processes and strategies to fit changing economic demands. One of the biggest changes in the automotive industry is that dealers are no longer able to wait for customers to come to them. Dealerships need to ensure that their sales teams are prepared to first find the sales.

Sales people will generally focus on the processes that deliver the dollars, and these processes have changed. Dealers are not waiting for a vehicle supply to push; rather they have to pull a demand for vehicle sales out of their customers. And if dealers want to effectively change to a demand-driven process, they need to reward the processes that create the right opportunities and deliver the right results.

We’ve included some suggested commission ideas that would be simple to implement and effective at driving desired behaviors from personnel in your service and sales departments and ultimately help your dealership build sales and revenue.

1) Service Retention

Many dealerships see a steep drop off in retention between the first and second vehicle service visits. By splitting a small commission between your sales department and your service advisor on returning service visits, you will encourage both departments to improve skills in customer service and upselling.

2) Orphaned Customers

Customers who haven’t been in for a service visit in over 12 months are probably having their vehicle serviced at a competitor. Generate a call list including orphaned customers and a word track for available employees to use to follow up with these lapsed customers. Offer a $5 or $10 commission for each service appointment made during these calls.

3) Internet Contact Requests

Whether it’s information from sales or service, if your customer completes a contact form online, they need to be contacted to schedule an appointment. Encourage your sales and service department employees to follow up quickly on Internet contact requests by offering a small bonus for each successful appointment made through an Internet lead.

4) Test Drives

“Test drives sell cars.” Dealers have been using this adage for years because it works. The closing percentage generally goes up if the prospective buyer has sat behind the wheel of the vehicle they’re considering. Use this tool to an even bigger advantage by incentivizing your sales department for what actually sells cars. (We also recommend you include a minimum close ratio to avoid “tampering” with the test drive commission program.)

5) Repeat Purchases

If your sales and service departments are doing a great job at keeping your customers coming back, reward them. Allot a specific amount to be shared between the two departments for each customer who purchases a new or used vehicle who is a current service customer (meaning they have been in for service sometime in the last 12 months).

6) Service Department Prospects

Maybe one of the best places to look for potential buyers is in your own back yard… or at least back door. Encourage your sales department employees to be proactive in reviewing scheduled appointments. Have them scout out customers with vehicles more than 2 years old and suggest they test drive a new model while waiting for their vehicle to be serviced. Pay a bonus for used vehicle trades sourced through the service department.

There are many ways to reward your employees for their efforts and hard work. What other incentives have you found to be successful?

Jim Bell
Interesting concepts. We don't do any type of spiffing like this since we do have a high retention rate being a single point dealer. In a multi-dealership market, I could definitely see where some type of plan like this can benefit the dealership.

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