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Experts say when it comes to pay plans for salespeople, staying the course may be the best option in the middle of a recession.
Whether they’re paying their sales force on straight commission, with a commission and bonus structure or some combination of methods, dealers need to do some serious homework before changing their pay plans, according to Greg Goebel, president of Greg Goebel Training and Consulting in Sarasota, Fla.
Goebel said dealers sometimes make the mistake of changing their pay plans at the drop of a hat.
“I don’t believe in that,” he said.
“I’ve lived through a number of industry downturns and I recommend changing them as little as possible.”
Where dealers go wrong is abruptly making changes without thinking about where the changes might take them.
Goebel said altering the pay plan in the face of sluggish sales may seem like a great idea until an employee has a couple really good months and is suddenly entitled to a much bigger check than the owner wants to write. When that happens, it’s because the pay plan wasn’t set up so that both sides win.
Matt Koning, general manager of Broadmoor Motor Sales in Caledonia, Mich., said his dealership pays salespeople a flat percentage on the profit, but they’ve also added a point system that works as an incentive program.
They made the switch because of a change in the way people are buying vehicles, Koning said.
The vast majority of their customers are now searching for vehicles online first, and they often don’t want to negotiate. They just want to hear the price and take it or leave it.
“The main reason we have the point system is our salespeople sell through different avenues,” he said. “One deals primarily with Internet sales, looking for more of a quick sales approach, whereas the salesman dealing with customers on the lot is dealing with a different type of customer.”
Brent Carmichael, a consultant with NCM Associates Inc., said dealers routinely look at changing their pay plans every couple of years whether there’s a recession or not.
But when it comes to compensating employees, there aren’t too many ways to reinvent the wheel.
“I don’t have an example of a pay plan I’ve seen that made me go ‘Wow, I’ve never seen that before,’” Carmichael said.
He said he consults with about 200 dealer clients, and what he sees most successful dealers doing is giving employees some sort of base salary or draw, then giving them a projection and telling them they’ll earn a certain figure if they get to that level.
Goebel said in his experience, what really motivates employees is consistency.
And there are other ways to motivate them besides money, he said.
Goebel has been in the business since 1979, and said he has rewarded people in the past with things like flexible schedules or more time off.
“One person got a week off each month, but he earned it,” Goebel said, “It isn’t always about money.” |
