Great Commercial Pay Plan

After the first few months of training and building habits for a strong foundation by paying for and focusing on activities, here is the best pay plan I have found for the commercial department. The retail department might also benefit from this if they become activities oriented as well. I also want to add that I have tried a number of pay plans and that this one produced the best results overall.

This plan is based on a salary plus commission. The salary says several things. One is that you can expect certain things to be done because essentially, you are paying them to do it. It also says that you care more. All of this is good. Next, the commissions on sales was a tier structure to encourage a certain minimum level of performance. The dealership needs a certain minimum job, so build it in. Next is gross. This is a problem with some commercial departments. Most fleet/commercial sales people want to be paid on holdback, but I disagree. The holdback is the dealers money as far as I am concerned except if it is a net fleet invoice. So I don't pay on holdback at all. There is also a minimum commission in case of a sale unit or other circumstance that is many times beyond the control of the sales person. This was the plan:

Salary = $1,500

Commissions on sales based on gross profit from dealer invoice and are retroactive to unit 1:
  • 1 - 9 = 20%
  • 10 - 14 = 25%
  • 15+ = 30%
Gross Bonus (based on accumulated gross profit for the month from invoice):
  • $0-$9,999 = $0
  • $10,000-$14,999 = $250
  • $15,000-$19,999 = $500
  • $20,000-$24,999 = $750
  • $25,000-$29,999 = $1,000
  • Each $5,000 level adds $250 (do not put a cap unless you want a cap on your earnings)

Minimum Commission = $100

Courtesy Deliveries do not count as a sale and are paid at 25% flat.

I have encouraged many dealers to adopt a program like this because I know it from my own experience that it is a very effective program. First, there is huge motivation to get to what I call 10 and 10, which is 10 sales and $10,000 gross. This is the first level change and the difference in pay at that level compared to just missing it is huge since the pay is retroactive. The same thing is true at the next levels. My team was always focused on 10 and 10. After 10 and 10, it really starts to payoff. I really wanted them at 15 and 25 and I was thrilled to pay out the extra money!

Remember that these sales people are going out and getting business! They are not sitting around waiting for an up!

Courtesy Deliveries as you can see are generally discouraged, but compensated. I don't want my commercial/fleet people looking for courtesy delivery business. It is not profitable and the conversion rate is pathetic. I have a lot of years worth of experience here and I think they are generally a negative event. Still, I will pay the 25% for what it is worth.

This plan encourages numbers and gross profits at the same time. At the higher levels, you will pay out more, but that will be a huge benefit because you will reap the rewards of the higher profit levels. I would recommend this plan to any dealer that wants their department to soar.

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