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Car dealers increase experiments in sales staff pay models

We will reduce the number of sales executives  in each dealership  eventually Scott willis, arnold clark

Arnold Clark is increasing the number of product geniuses throughout its 200 dealerships, but it is not yet ready to move away from the traditional pay structure for sales executives.

Scott Willis, Arnold Clark sales director, told AM the group has taken on more than 300 product geniuses in the past three years and wants to increase that to 500.

“Genies”, as they are known within Arnold Clark, help take customers on test drives and help them with any product-related questions. Most of their pay is salaried at £18,000 with a “very small proportion” of bonus based on hitting customer satisfaction targets.

The product genius job role is a growing one, with many franchises following early adopters such as BMW and Kia to create similar non-sales positions.

Marshall Motor Group is one of the first to attempt to retain and attract new talent to the industry by offering higher basic pay. It has introduced a £25,000 basic salary for all new sales executives at the end of May this year, irrespective of previous experience.

Marshall will also pay loyalty bonuses – £1,000 on the second anniversary of their start date and £2,000 on the third – to reward sales executives and encourage them to stay with the business. There is no cap on earnings.

Some dealers may be waiting to see what effect the new pay structure has on Marshall’s new car sales volumes.

Willis said: “We haven’t been brave enough yet to take that step, but having all staff as salaried would be something we would definitely like to do.”

However, he said there is a fear that removing or lowering the bonus incentive would create a lack of urgency to hit targets among sales staff.

BDO’s 2016 Motor Salary Survey showed that for all 27 positions surveyed,every position featured a commission-based element of pay.

The survey reported that the national average for a new car retail sales executive is £14,883 basic with £26,361 in bonus payments. That works out at 64% in bonus payments to make up the total on-target earnings of £41,244.

A BDO spokesman said the figures don’t suggest a groundswell of support for a 50:50 basic to bonus ratio, although he said the idea is starting to catch on.

He said: “I’ve yet to see the evidence personally, but we shall see if there has been a further movement in the ratio in our 2017 report, which is due to be compiled soon.”

 

Pay ‘a reflection of carmaker bonus’

Paul Brayley, Brayleys Cars managing director, told AM he doesn’t see how remuneration packages can change while manufacturer bonus payments remain essential for some dealer groups to make a profit.

He said: “The commission-led model is a reflection of manufacturers’ volume-led bonus payments and will not change until a time when each car sale yields a set margin, with no volume bonus.”

While the sales executive remuneration package may not be changing in the short term, it could be that the importance of the role is slowly phased out over time.

Sales executives outnumber “genies” in Arnold Clark’s dealerships, by a ratio of about 10:1, but Willis said this will eventually change.

He said: “We will reduce the number of sales executives in each dealership eventually. They have to be productive and as we take away the amount of time spent with customers from sales and move that to product genies, it will reduce how many sales executives we have per showroom.”

Willis said Arnold Clark is attracting a higher calibre of applicants to the role of product genius than it would if advertising for a trainee sales executive. He said the role is also helping with gender balance, as 40% of genies are women.

He said: “We’re trying to take the intensity away from what used to be a high-pressure sales environment in the showroom.

“That environment isn’t good for attracting new employees and it’s not good for customer service.”

Each new product genius at Arnold Clark goes through a full induction and training process at one of the group’s three internal GTG training facilities in Glasgow, Edinburgh or Wolverhampton.

Willis said: “The product genius recruitment drive has been a huge expense that we didn’t have before, but knowing what I know now in terms of the impact it’s had on customer satisfaction and sales volumes, we would still do the same thing.”

 

Resources

The psychology of incentives

PwC global study into
the impact of pay and
incentives on executives.

 

Video: changing a contract

ACAS guide for varying a contract of employment if a bonus scheme were to be changed.

 

 

Secret salaries

TEDx talk by Professor David Burkus on cultural assumptions around sharing salary and bonus information.
am-online.com/SharingSalaries

 



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