Not a week goes by where a client doesn’t reach out to me with questions about building pay plans and asking for any sample plans I might have (I don’t have any – just a guide on how to build solid plans). When I start a conversation with a dealer about the behaviors they want to motivate, the local cost of living, and the role of the position, most dealers come to understand why I don’t provide sample pay plans. No plan works well for all dealers.
While my process for building pay plans has a lot of components, one of the key things I force dealers to look at is the unintended consequences of a poorly thought out plan. Many of these only come to light during open and frank discussions. Here are a few examples of things to think about.
– Sales Manager – Dealers who only pay managers on gross profit often have issues with old age inventory.
– Sales Associates – Pay only on the gross profit and it can be hard to motivate staff to sell small vehicles that don’t generate much in the way of margins.
– Parts Counter Staff – Pay plans that pay a percent of total sales often result in lower margins.
How do you build pay plans that work over the long term?
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