Article

Performance Based Pay Plans - Service

August 2006, Auto Dealer Today - WebXclusive

by Don Reed - Also by this author

“THE MEASURE OF SUCCESS IS NOT WHETHER YOU HAVE A PROBLEM TO DEAL WITH, BUT WHETHER IT IS THE SAME PROBLEM YOU HAD LAST YEAR.” – John Foster Dulles
Does this quote apply to your dealership? Specifically, does it apply to your service department? If your service absorption is 100 percent or higher, congratulations on a job well done. However, if it’s not quite that high, you might want to read on.
In previous articles I discussed how dealers should take a front end approach to achieving 100 percent service absorption in the back end (backbone). You start by training your service advisors to become salespeople! They should dress like a salesperson, follow the road to a sale like salespeople, have goals like salespeople, be held accountable for their sales performance daily like salespeople and most certainly should be compensated like salespeople!
 
Ask yourself this question: “Do I compensate my salespeople based upon their individual sales performance?” Most salespeople are compensated for the number of units sold, gross profit produced, sales dollars produced, a multitude of daily, weekly and monthly spiffs and bonuses, or some combination thereof. Chances are you do not have too many 20-unit-a-month salespeople working for a straight salary, right? Therefore, you compensate them based on their individual performance.

Question: Why not do the same for your service salespeople? To do so, you must consider a pay plan that compensates them for their sales, to include parts. So many dealers I work with pay their advisors on labor sales only. Why? Would you pay a finance manager on finance reserve only and not on extended warranties? You probably answered “NO.” Most service advisors are going to sell anywhere from 80 cents to $1.15 in parts for every $1 in customer pay labor. That being said, why would you pay an advisor on only about half of what they actually sell? This encourages the advisor to focus on labor intensive repairs and ignore the profits from additional parts sales that your aftermarket competition is stealing from you simply by offering the filters, hoses, etc. that require very little labor. To understand better, you might want to drive one of your used cars to the nearest “Quick Lube” center and just ask for an oil change, then go back to your service department and watch one of your advisors write an oil change repair order. I rest my case!

Nationally, we know warranty revenues are going down, and internal sales are really dictated by the current market trends. Consequently, customer pay parts and labor sales are where you are going to find the additional gross profit to achieve 100 percent service absorption. As a result, any pay plan should focus on the advisor’s customer pay sales performance. Also, CSI continues to be a concern for many Dealers and often I hear them say, “I don’t want my advisors to sell too much because it will adversely affect my CSI.”

If you are of this mind set, then ask yourself another question: “Who has the highest CSI on your sales force, the five-car-a-month salesperson or your top salespeople?” I find that the top salespeople in our industry have excellent CSI because those people with the best sales skills know how to communicate with their customers professionally based on the customers’ wants and needs. That’s all CSI is – EFFECTIVE COMMUNICATION.

Your advisors’, professionally trained in sales skills, can achieve similar results. The higher their sales per customer pay repair order, the higher their CSI!

Now, let’s write a pay plan that motivates your advisors’ to sell and provide a high level of customer service.

Pay them a percentage of everything they sell on every RO they write, customer pay, warranty and internal, parts and labor. This should be between four to five percent.

Pay them a monthly bonus based on customer pay hours per RO based on your retail labor rate, not your effective labor rate.

Pay them a monthly bonus based on their individual CSI score, if available.

Pay them a weekly draw towards their commissions.

Do not pay them a salary.

You must evaluate their performance daily, and your manager must review it with them in writing. Accountability for their individual performance is crucial, just as it is on the showroom floor with your salespeople.

Some dealers are fearful of making changes in their service operations because “these people are hard to find,” or “I am afraid that I won’t be able to replace them if they quit,” yet when an automobile salesperson consistently sells five to eight units a month, you have two choices: 1) Train and show them how to sell 10 or more or 2) Do them a favor (as well as yourself) and terminate them! These same options are applicable to service advisors who cannot achieve 2.0+ hours per customer pay repair order. Just like the salesperson selling five units a month, these “underachievers” in your service lane are costing you thousands of dollars each month in additional gross profit and thereby preventing you from achieving 100 percent service absorption.

Recruit those people that are motivated to make more money (don’t be afraid of Green Peas). Train them on how to SELL, and then compensate them based on their efforts. Remember, if a good salesperson wants a pay raise, he or she simply looks in the mirror and asks for one!

Vol 2, Issue 6

Comment

  1. 1. rick [ January 31, 2011 @ 07:40AM ]

    obviously you have never been a service writer or you would design a better plan for all the stress and crap you put up with starting with csi/having your pay deducted because the cashier didnt smile,or the tech didnt fix car right dealership appearance ect how happy would you be if you lost 30 percent of your pay due to this ,why dont you go undercover and really find out what writers go through.you have no clue

  2. 2. svc mgr [ April 30, 2011 @ 09:52AM ]

    I've never had a job where you didn't have "crap you put up with".

  3. 3. Jeff Peterman [ March 20, 2014 @ 09:31AM ]

    Hey Rick....CSI, as the writer stated, is all about effective communication between you and your customer. If you get lousy scores because the cashier didn't smile then you didn't effectively communicate to your customer that the survey scores you personally. The stress and crap you experance, while difficult sometimes, is no different then the stress and crap anybody in retail, sales experiances.

  4. 4. Nikki [ May 30, 2014 @ 02:39AM ]

    Jeff: I'm sure you realize Rick may have used the "cashier" just as "example" and not the norm!

    Fact is, the way CSI scores are established is completely all wrong in the service dept. you can do everything (including telling the customer about how the survey effects mostly the writer) however if that customer had grease prints found on the steering wheel they are pissed no matter how much you candy-coat the closing after the sale!

    AND the factory surveys do not go out right away. Days/weeks go by generally and if (hypothetically) if that customer lost their job or had a fight with their husband in a marriage crises and the survey comes out after the spent a ton of cash on that bill they now need, they WONT be happy anymore even if that visit they were treated great and satisfied at that time!

    Now the writer gets screamed at or fired because the customer wasn't in a good place when the survey came? No. That's bullshit.

  5. 5. CK [ August 05, 2014 @ 07:02PM ]

    Jeff, you haven't got a effing clue... I've been in this business for 35 years, and work for Mercedes-Benz. You have no idea what the hell you're talking about, so just shut up and go back and sit on your couch and drink a beer...

  6. 6. Paul [ September 22, 2014 @ 06:49PM ]

    CK I am at a Top Land Rover store and want to try to get a new pay plan. Any examples

  7. 7. Curtis [ October 14, 2014 @ 07:13PM ]

    Jeff, you have not a clue. I can literally all but walk my customer through the process and at times they still don't get it. Service advisors are responsible for everything. From how the vehicle was made to the way the finance guy explained the maintenance package he sold them. Some customers are hell bent on letting their anger out on someone, anyone. I get tired of being treated like second class citizens at the dealership. Bottom line we are likely the reason someone will or wont ever buy another car at a dealership. We should be paid commensurately to the hoops and obstacles we face daily, not to mention the revenue we bring in. CSI is horseshit, designed to take money from our pockets. You should see my pay plan it is literally a freaking joke when you compare it to what I make my company. Sad, just sad.

  8. 8. MK [ October 16, 2014 @ 04:07PM ]

    Jeff - Get a life, rick & ck and curtis are right no matter how well the communication, there are too many people touching the vehicle and some of them make $8.00 an hour. The other thing is customers are mean and have no clue what they are filling out, nor do they care, they everything for nothing. SERVICE ADVISOR is the toughest job at the dealership and we get under paid, yet you have some service directors and gm and managers walking around the dealership with coffee in their making 200k give me a fuckin break. The last 3 years CSI have become a nightmare the brands have created, cause they hold large amounts of money over dealers to meet these scores, it's all bullshit. Time for me to get out

  9. 9. Billy [ June 09, 2015 @ 07:33AM ]

    I was an advisor and now I'm a manger. I feel that CSI should be part of a pay plan. When I was an advisor my CSI scores were great and I took pride in them. Sure you are going to get some bad ones every now then, but if you coach the customer and truely take care of them , they will take of you. I have learned that most of the time the advisors just aren't asking for the survey and some customers are just not sure of how to fill them out. In regaards to finger prints on the interior, why not do an inspection when you are pulling the vehicle up for the customers. This only takes of few moments and will be look good to the customer when they see you care. Your right! Adivsor is a tough job and not everyone is cut out for it. But if you get the customer to like , trust and respect you then the numbers will take care of itself. Quit making excuses and make it happen.

  10. 10. MFK [ July 09, 2015 @ 12:19PM ]

    Gentlemen, Although I see both sides of this and have lived from tech, to dispatcher, to advisor, manager and now director....I GET IT!!!!! However there is a whole lot to be said about communication and making it personal for YOU. It takes a new age person who understands how this works and how to get it to happen. I have rescued 4 stores from disaster and retrieved brand fund dollars for all. And without having to fire ANY advisors to get it.... We Win this as a team, yea I make it happen but not without full cooperation and willingness to do so by the entire service dept staff. And they get paid for their efforts! I have done this over and over and know how it works, so don't tell me to go have another beer or sit down! That old school attitude will NOT work in this age....So I think we know who needs to go out to pasture here!

  11. 11. Chuck Willinger [ September 25, 2015 @ 12:03PM ]

    After working for years on the new car side. I think CSI is important and in control of the SW. I always felt it was too easy to hit the CSI goals and for years have. Your job is to satisfy the customer profitably. And build good enough value to bring them back. Doing a great job at that will take the edge off if things dont go well. And that happens in the auto service world. Working as an independant now I relish other shops letting me talk to their customers. Thats how they become my customer and I fight to keep them. Its not about falling over but building value and amking sure all of the job is done as well as can be.

 

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