It follows that some of those attracted to a predominantly commission-based pay structure will be less risk-averse and perhaps have a greater level of self-belief than those who opt for a more stable reward framework. I’m not suggesting one approach is wrong or that another is right, I’m just pointing out they are fundamentally different and are likely to attract different characteristics in an employee. At its best, the traditional commission structure attracts high-performing sales people able to hit and exceed sales targets while creating great customer relationships.
However, at the other extreme, the traditional model can create individuals for whom the only focus is personal reward. This makes team working almost impossible, creates ‘us and them’ silos with other parts of the dealership and puts the customer far down the pecking order in terms of genuine care and consideration.
What’s my point?
Some businesses can combine all of the positive aspects of the traditional model with creating a great customer experience and I really admire them. However, some businesses struggle to recruit the very best sales people and for them, changing the model might be a viable alternative.
What could it look like?
Well, you would offer a base salary slightly greater than the shops, restaurants, banks and building societies pay locally for customer-facing staff and thereby attract the best from those sectors. Service advisers, parts advisers and salespeople would all be on a similar base salary, but there would be pay bands, discussed and agreed at an annual performance review, to reflect historical performance based on revenue creation and customer service excellence. At the end of the year, a bonus would be paid to every member of staff on the site for achieving a balanced site scorecard across sales performance, service performance, parts performance and workshop productivity. In this way sales, service, parts and technicians would be incentivised to support each other and work as a team.
This model would, of course, place more fixed cost on a business, as it does for high street retail businesses. In a downturn it may be less attractive, but in an upturn it limits the amount of commission payable, so it could be a case of ‘swings and roundabouts’.
Whatever your view, I wish you a Happy New Year and good fortune in the months ahead.
Scott walker in retailer coach - 30/01/2014 12:19
Great article, and something lots of car retailers certainly think about, it would take nerves of steel to implement though knowing that all your local competitors still pay on a commission and therefore have sales execs hungry to earn. I personally believe you can operate a commission model as long as the commission isn't payable only on financial success, it must include an element on CSI or whatever your brand chooses to name it's customer service measure, and the element must be large enough for sales execs to realise hitting numbers with poor customer service just isn't a profitable enterprise. There is also the the opportunity to recognise really good behaviours with financial reward for 5 star feedback. Commission models work, you just have to make sure they are working for all areas if your business.