Gupta asked a particularly good sales person in his local John Lewis store what he earned. The answer was £16,000 with a further £2,000-3,000 bonus a year. The motivation for them, however, was the career path from sales person to department head, store manager and then area manager.
“The motor retail industry has the same career path – and so much more– but there is a perception that we’re back street retailers,” said Gupta.
New pay model ‘would change perceptions of the industry’
He believes the pay model is partly to blame.
“We should pay a higher basic and lower commission. It would change all of the perceptions of the industry as one based on selling customers what they don’t want.
“But Marshalls couldn’t do it alone. A top performing sales person could be on £15,000 basic, but earning £50,000-60,000 with commission. Revise the pay model and they’re earning significantly less and they would leave to work somewhere where the old model prevailed.
“However, if the industry collectively moved to the new model, customers would have a far better experience. We could attract better calibre people, be able to instil in them the importance of good customer handling and I believe sales and margins would improve dramatically.
“There are fewer dealers and margins are being eroded. The only way this model will work is if the entire industry signs up to it. And all the CEOs and MDs of dealer groups I’ve spoken to fundamentally believe this is a move we should make.
“But if I implemented a pay plan tomorrow that said our sales execs are going to go a to £20,000 basic and £10,000 commission, I would probably lose the majority of my top-selling sales people overnight.”
It’s a point Richard Williams echoes. The counter-problem is, he said, that for new starters it can take two years in a sales role on relatively low earnings before they are getting the repeat customers needed to really do well. Some of those new starters, or their managers, aren’t prepared to wait two years.
He has also found that even people he recruited from outside the motor retail industry were eventually turned into traditional car salespeople because of “incessant targets” from mainstream brands.
Looking beyond the sales staff
Changing the industry’s pay mechanisms is an area Gupta understands he cannot influence alone, but closer to home he is looking at how the lowest paid in the company, those on minimum wage, can be paid more without prohibitively impacting on profits.
David Oldroyd - 14/06/2014 10:11
Maybe the industry should used formal probationary periods as a mechanism to deal with under performers that have been hired. Thus low basic at joining then upped basic after 3 months then as result confirm competence then increase basic pay as it becomes irrelevant.