How Do You Compensate Your Staff?
Of all the business decisions that owners and GMs make, compensation for salespeople is among the most important – and most varied. This question frequently arises when dealers gather together and has been covered in previous articles in Texas Dealer as well as roundtable discussions at the Annual Conference. We recently asked several dealers about their basic compensation structures and shared their answers in this blog post.
We have tried several ways to compensate our sales staff, but the one that works the best is a salary plus commission. You cannot make your salary too large. We will start them off with $350-400 a week plus $125 per car commission. We have tried salaries for all. Unfortunately, some will not do their part. We also tried giving everyone a commission on everything sold. That didn't work either. Some people would not do their fair share, and then you have the other employees unhappy.
John Freeman, Galena Park Motors, Inc.
We pay our sales staff a percentage of the down payment along with a $400 a week salary. This way, each member of the sales staff will make at least that much weekly. Also, we offer bonuses in addition to the down payment commission if a salesperson hits a certain sales goal.
Anonymous TIADA Dealer
We have found our method is pretty effective. We pay a base salary plus a commission per car. That way, if there is a little bit of time in between sales, our staff still will have at least some money via the salary. I think the size of the dealership plays an important role, and I know many larger dealerships experiment with a variety of different methods. However, we have been really successful with this compensation plan. The sales staff is happy and motivated to sell cars.
Lowell Rodgers, 11th Street Motors
We pay a weekly base salary depending on the experience level of the salesperson that ranges from $400 to $600. We then pay a commission on each sale. We operate the dealership under a hybrid model where about 40% - 50% of our business comes from outside or special finance. On these sales, we pay a 20% commission on the net profit, minus $500 for the dealership. So, if we have a $2,000 profit, then the dealership takes the first $500 while the salesperson receives a 20% commission on the remaining $1,500 of profit. On the cars sold with in-house financing, we pay a 10% commission on the first $1,500 down, 15% on the next $1,000 down, 20% on the next $1,000 down and then we slide back to a 15% commission on the rest of the down payment up to a maximum commission of $750. We also offer eight paid holidays and one week of vacation. After one year, they get two weeks of vacation. We take the person's 52-week average and that is their vacation pay. We also have bonuses throughout the year. It's not written in the compensation plan. It's just optional at the dealer's choice. We will utilize them, for example, if we need to move the inventory quickly.
Eddie Richards, Legacy Trucks and Cars