SF Plans Can Be Tricky Business

June 2008, Auto Dealer Today - WebXclusive

by Kris Wright - Also by this author

A Team-Conductive Play Plan

Pay plans should evoke teamwork. Many stores I visit have pay plans where everyone gets paid from sales gross regardless of where it is derived from. These stores hold higher grosses, have higher closing percentages and are more productive than the average store. Remember, a team will get a lot more accomplished than an individual. The idea behind teamwork-conducive pay plans is to take advantage of the inherent desire of a sales-driven person to “work” their pay plan.

If we were not sales-driven, we would not be in the sales industry, thus why not play on that known drive to “work our pay plan”? If all management is paid off of special finance, then they will all pull for a common goal, making more money, which will inherently make the dealer more money. Here are some sample pay plans that I’ve found to work well with a blended floor for special finance. Remember, it evokes teamwork.

• Pay is based on after-pack gross
• F&I manager compensation: 6 percent of special finance back end
• Special finance desk manager: 12 percent of total (front and back) special finance gross
• Total salesman compensation: 15 percent of front-end gross (or regular commission)
• Sales manager compensation: 4 percent of total special finance gross
• Funding clerk: to be hired at 25 units per month or 100 plus application flow.
• Special finance deals total compensation will be 31 percent of front-end gross (after pack) and 21 percent of back-end gross less charge backs, plus the cost of a funding clerk

I recommend a pack of around $600. Some urban areas of the country may dictate more, while some of the more rural areas may dictate less. Remember, this is only a guide. The real percentage you are paying on front gross is somewhere around 13 percent.

A man I worked for years ago made me realize why “quality” people followed him. He paid them well (probably too well). I have nothing but the utmost respect for this man, Ron McCauley. He understands that he is only as strong as his weakest link, so he pays his people well and demands above-superior performance. Guess what; he gets the above-superior performance every time. That old adage “you get what you pay for” rings true in almost any situation in life. 

If you have good people, don’t be afraid to pay them more than the “market” says they are worth. It will cost you a lot more to lose them than it will to pay them a little more than the market dictates.

Special Finance Insider Vol. 2, Issue 3

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