Dealers need to tackle the issue of sales commissions and incentives following the pending Financial Conduct Authority (FCA) investigation, John Sylvester, executive director at P&MM Motivation will tell dealers at this year’s AM F&I Compliance Conference.
The FCA principle of treating customers fairly, or TCF, has placed sales incentives under the spotlight and the use of such incentives to boost sales is fast becoming a priority for the regulator.
“Striking the right balance between incentivising staff to sell accessories and F&I products whilst at the same time delivering the best customer experience is increasingly becoming more of a challenge,” said Sylvester (pictured).
“The FCA has recognised this as a potential threat to TCF and has promised consumers it will investigate.
“Dealers are much better off pre-empting the FCA and putting practices in place which are more likely to meet their requirements rather than waiting for the regulator to take the lead.”
Sylvester will outline solutions to the FCA probe for dealers and manufacturers when he speaks at the conference which takes place at the Motorcycle Museum in Solihull, West Midlands on November 10.
“We don’t believe we are seeing the end to incentives on the showroom floor, merely an evolution of this tried and tested motivational technique,” said Sylvester.
In order to meet the FCA’s probable expectations, dealers are likely to have to adapt their practices which see sales executives and service advisors receiving financial bonuses for reaching targets.
However, Sylvester will suggest incentive schemes themselves just need tweaking rather than shelving and by evolving their approach and format, dealers and manufacturers are more likely to meet any future FCA requirements.
“Setting high targets with expensive rewards is likely to incur the attentions of the FCA as not being in the interest of the consumer,” said Sylvester.
“However, setting incremental targets with accompanying lower value awards on a regular basis is much less likely to be considered as detrimental to the consumer.”
Sylvester will explain how both dealers and manufacturers should revise their incentive schemes to combine both high end rewards and regular lower level ones which recognise daily achievements.
He also suggests these should reflect company values such as customer service, best practice and integrity rather than relating to volume and profits alone.
Incentives can also be offered to employees who undertake certain training or achieve relevant qualifications and Sylvester also advises that creating personalised incentives will have a dual impact of encouraging higher levels of motivation whilst reducing the risk of miss-selling.
By making incentives more accessible, rather than seemingly unachievable, automotive companies are less likely to see staff adopt questionable practices in the hope of meeting stretching targets.
Meanwhile, high flyers can be offered higher level rewards with additional supplements to keep those who are already engaged motivated.
A limited number of tickets are still available to dealers and manufacturers, to book please visit http://am-fandi-compliance.am-online.com/ or contact Nicola Baxter on 01733 468289, email firstname.lastname@example.org.