I get a lot of hits on this blog from dealership managers looking for new and creative spiff ideas for their salesmen. I sometimes scratch my head at the lack of imagination that is out there, but I appreciate the interest. If you Google “spiffs” my post on the subject is near the top of the list!
I was thinking about other ideas for spiffs and it dawned on me that I have yet to comment on the practice of using a spiff to scam car salesmen out of an honest commission. Here’s the way it works: The dealer puts an extremely high pack on his cars, so high that you are almost guaranteed a mini-commission no matter how hard you work for a gross.
Just to clarify, a pack is an amount of money, usually a percentage of the invoice on a new car or total cost of a used car after reconditioning, that is added on before the salesman gets his cut of the sale gross. The normal pack on a new car is usually between 1 to 3 percent of the car’s invoice. The pack on a used car can vary wildly. It’s sometimes fair, it’s sometimes a blatant way of stealing money from the salesman. I might write something just on that someday!
So in this situation the salesman gets a mini-commission. Then under the guise of a spiff you are given an incentive to earn additional money. For example, if you sell five cars, you get a bonus, ten cars another bonus. Instead of giving you an honest commission up front, something that is fixed and you can count on; the salesman has to jump through hoops to get the money that should have been yours to begin with! There are many variations of this, but you get the idea.
Any salesman that works at a dealership where the spiffs are more than the commissions should run like hell. They are taking advantage of you and your talent. It’s a win-win situation for them. If you have to work harder to earn your rent, they win. If you fail, they win too because they can keep the money that should have been yours to begin with!
Dealers, pay your salesmen honestly and up front! If you want to put on a contest or a weekend spiff let that be in addition to his commission. In the long run the salesmen will be happier and a happy salesman is one who will hang around and not jump ship at the first opportunity.
And while I’m on this subject, I happen to know the greatest sales spiff of them all: a fun place to work. The car business is tough, and these days it’s more than tough. This is the time that separates the men from the boys and the women from the girls. The greatest spiff of all is to go to work knowing that you are entering a supportive environment where at least you have a fighting chance to earn a living.
Now don’t get me wrong. All Car Men need rules. Our heads aren’t screwed on that tight to begin with and without supervision we tend to wander off, usually to a bar. We definitely need to be managed. So have rules, expect the best from your salesmen, but show them the respect they deserve and try to make the process of selling cars enjoyable and profitable for all!
Talk to you later,
David
1 comment:
Excellent points, Mr. Teves! Some dealers spend as much time thinking of ways to screw salesmen as they do imagining new ways to improve the gross. I know of a competitor of ours who is famous for 3 and 4 'revised' commission vouchers after the fact. Packs themselves are a way to water down the actual commission percentage being paid to the salesperson. And of course, all of this wouldn't be so bad if the dealers were willing to assure the salesperson of a living wage during leaner times...I think a lot of sales people would agree to lower commissions in return for higher 'guaranteed pay' no matter what happens. Dealers tend to think of our pay in terms of ancient dollars from 10, 15 and even 20 years ago. When a salesman earned $100 in 1967, was it the same as it is today in 2009? Of course not. That hunskey don't buy nearly the amount of bacon that it used to, but dealers forget this fact. They agree to huge rent factors, buy expensive computer systems, spend tons on advertising, but will sit idly by when their best talent walks out the door to go to work for a competitor. Salesmen tend to follow the 'hot' cars like locusts chasing crop harvests...if Honda is selling like wildfire, why kill yourself trying to put people into that morphodite Buick? I think dealers should regard their sales team as the most important part of their operation. Even though the salesperson may be the lowest cog on the wheel of power within the store, that salesperson is what is going to determine how successful or unsuccessful the day, week, month and year will be for the dealership. Sure, there are "more" salesmen to take this guy or gal's place, but will they be better, or will they be the crop chasers following trends? Let's be honest, selling cars isn't any can of corn. Not everyone can do it, nor should they, yet everyone thinks they know everything there is to know about cars, including how to buy (and by corollary, how to sell) them.
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