Notifications & Messages

Jared Hamilton
From: Jared Hamilton
Hey - It’s time to join the thousands of other dealer professionals on DrivingSales. Create an account so you can get full access to the articles, discussions and people that are shaping the future of the automotive industry.
×
Mike Whitty

Mike Whitty Author, Trainer, Consultant

Exclusive Blog Posts

Why Educating Car Shoppers Is So Important!

Why Educating Car Shoppers Is So Important!

The average consumer doesn’t understand the complex dynamics of the automotive industry. In fact, they probably don’t even care enough to learn about i…

OP-CODES?

OP-CODES?

      At one time or another, we are all (assumably) guilty of running the same service specials online month to month. Asking …

Top 6 Things Car Dealers Do To Make Car Buying Difficult

Top 6 Things Car Dealers Do To Make Car Buying Difficult

[youtube https://www.youtube.com/watch?v=3R7Y3kZIDVg] Your Turn To Drive discusses Top 6 Things Car Dealers Do To Make Car Buying Difficult.  Jim D…

5 Benefits of Using Google AdWords Click-to-Message Ad Extensions

5 Benefits of Using Google AdWords Click-to-Message Ad Extensions

Looking for a new way to win over people more likely to send a text message than to call? Set up this free message extension for your text ads on the Googl…

Must-See NADA 100 Expo Displays for Fixed Ops

Must-See NADA 100 Expo Displays for Fixed Ops

New Orleans is ramping up for the 100th anniversary of NADA, and the convention promises to be outstanding. You’ll be entertained at the NADA100 Carn…

One of the temptations of Sales and General Managers is to look at the commissions of their salespeople as a great place to cut into their operating budget. After all, a great salesperson might out earn the vast majority of sales managers. Many dealerships will cut commissions to increase their bottom-line thinking that this is the smart and clever thing to do.

However there are four factors that come into play when you undertake such a strategic move:

Results:  Sales is a results driven profession. Salespeople are naturally competitive and will compete with other salespeople as well as themselves to increase their performance and the results they can produce. There is no bigger high for a salesperson as getting a new sale. It makes their day. They live and die by the results they produce. It’s feast or famine since they have no fall back on a salary or the luxury of just showing up to be paid. They must produce results.

Motivation:  Results are produced by a motivated individual. You either pay or fire a salesperson. There is no middle ground. When you reduce a commission rate, you have taken the wind out of their sails. Some sales managers will tell them to work harder to make up the difference, but the trust has been broken. Without that trust between the salesperson and the dealership, the motivation will quickly deteriorate.

Risk:  Salespeople are natural risk takers. Being paid a commission is a natural risk in their profession. However risk takers expect to be compensated for the risk when it pays off. You as a sales manager benefit from the risk by not paying when the results haven’t been produced. It is suicide to tinker with the salesperson once they have reached the level of success which is both beneficial to both the dealership and the individual. It doesn’t undermine the relationship, it destroys it.

Retaliation:  Once the dealership breaks the trust with the salespeople by tinkering with commissions, it can expect some form of retaliation. In a demoralized and demotivated sales force, there will be a notion of why even bother. Results will drop. This is the least of your problems. In many instances salespeople will actively voice their discontent with customers causing long-term problems. Salespeople are your company to the customer and people buy from people they like. This could cause a backlash. In many instances salespeople have left the dealership and taken a loyal following with them to their new employer. This is often difficult to counter and recover.

The risks that a dealership undertakes when they attempt to alter the compensation structure of their salespeople can be tremendous, well in excess of any earnings they might wish to recoup. Before you consider such a move, it is wise to explore all the possible implications and consequences such a move could cost your business. The short-term gain may not be worth the long-term loss.

If you’d like to learn more about Sales Management, visit www.autosalesmanager.net

Jim Formanek
Good Article. QUESTION: Are you familiar with Lead Flow, a real time auction for wholesale leads? In short, dealers have direct access to a lead (hot within 5 minutes) auction (cutting out the middleman) and a friendly web-based crm/ilm system to manage all activity. Dealers can create their own buying criteria; average household income, number of leads to purchase by hour, day, month and a time management tool to purchase 24.7.365. If you would like to learn more, email me directly to discuss.

 Unlock all of the community & features  Join Now