Salesperson Responsible for Selling Their Own Trades! Wait, What???

For some odd reason, I am seeing more and more Marine dealers adopt a policy of reducing a salesperson’s commission on a deal when a trade-in is involved. Instead of paying that individual on the full deal, commissions are reduced by the trade value, and are only reinstated when the trade-in sells (often within a pre-determined time period).

Personally, I think this a bad idea. It feels like a crutch for poor managers who are not good at controlling and/or marketing inventory.

Changes made to pay plans to control and direct the behaviors of employees often result in unintended consequences, and in many cases, they result in reduced financial performance. I am a proponent of simple pay plans, ones that reward the results we want to see, and that do not cause the team members to lose focus on their priorities.

When a salesperson’s commissions are reduced because the deal involves a trade, we often see some of the following results.

In an attempt to not take the trade, a Salesperson will low-ball the value of that vehicle. The result is that the dealership might not get the trade, and in the end they can lose the sale of the new boat.
Trades that need to be retailed in a given time period so that the original salesperson can recoup lost commissions might be sold in a rush and at below market values.
When a sales manager refuses to negotiate on a particular trade, the salesperson might see it as a personal attack because it is impacting their paycheck.
Salespeople will prompt the customer to personally sell the trade, pushing the customer to find another dealer that is more friendly toward taking trades.
CSI suffers as sales employees make poor recommendations to consumers. They are more focused on selling particular vehicles, not in making sure the customer purchases the boat that meets his/her needs.

Dealership management should be the ones who place a value on a trade in, and it should be the responsibility of the Sales Manager to ensure that vehicles are correctly priced, marketed, and retailed. Sales personnel should focus on selling boats, management should focus on managing the inventory.

I do not see any positive results from these convoluted programs. They take more time for dealers to manage and the sales personnel do not like them because of the impact on their paychecks. I know I would never sell boats for a dealer that had one of these policies. I sure hope we do not see other industries start to adopt these policies.