Best PracticesDealership Operations & Processes

What They’re Worth: A Dealership Pay Plan Paradox

Dealership Pay plan scenarios continue to vex everyone from dealer owners to salespeople.

While DealerKnows is called upon to consult on pay plans for different positions, historical expectations continue to be obstacles in their design. We must get away from antiquated expectations for pay, and start paying people what the position is worth in terms of value to the organization.

I’ve long said the position of sales manager is the most important role within a dealership. Most sales managers we come across are paid accordingly. Yet, we see that many of their sales teams tend to underperform… consistently.

Even after the greatest sales volume record in automobile history (last year), sales teams struggle to improve or don’t hit the quota month in and month out. Most don’t do everything that’s asked of them, expected of them, or even required. That is a sales management problem.

So are they (salespeople) truly worth the six-figure pay plan they’re granted?

If the average salespeople on commission-based plans yield an average of $50,000/yearly, have we devised a structure that matches performance, or are dealers wrongly rewarding “average” work ethic?

I come across killer BDC’s with dedicated agents going above and beyond their daily task lists. I meet BDC Managers controlling far more than how phones and leads should be handled, while overseeing entire technological deployment and marketing spends. Some of these professional are paid peanuts. We witness BDC and Internet departments yielding 40% of a store’s business, while influencing far more. Yet being paid half that of an average salesperson.

It is time we close our eyes, forget about what positions have been paid ($$) in the past, and start structuring pay plans based on what profitability and value that position brings to the bottom line of the store?

I’m not advocating that all BDC agents are paid more than sales professionals – yet (some, though, certainly deserve to be.) But I have found countless BDC reps who outperform most salespeople in value to the organization (quintupling outbound calls and task completions), and even more top performing Internet Directors paid under half of what the “chairborne” sales manager is.

With pricing being posted transparently online, paying on commission is a disconnected strategy at best. Take a close look at who is truly generating the traffic and sales for the store. You may recognize that some positions are worth more than others to the bottom line.

Is it time to pay accordingly? Sound off in the dealer forums.