Turnover- and that one dirty word we never say!!!

[Jewanski]

I'm curious what thoughts are so I'm posting this in off topic. While dealership turnover has increased, and many dealers find salespeople in short supply- is anyone brave enough to look in the mirror and say "pack"?
I'm just curious so I'll give you an example. Let's say dealership A averages 100 cars a month, 1400 front per copy, with ten salespeople, while dealership b does 60 cars a month, 2100 a copy and has 8 salespeople. You'd rather work at dealership B, right? Except both stores have a 1700 pack so you are working 70 hour weeks for very little companionable income. Thoughts?

 

[ryan.leslie]

...so you are working 70 hour weeks for very little companionable income. Thoughts?

I don't want to get off track, but I wonder if the root of the short supply of sales people may not have anything to do with commission-able income at all. Could it be the expectation of a 70 hour work week?

There are plenty of studies out there that suggest that the millennial entering the workforce doesn't want to be defined by his work and values "work/life balance" above most other things. I wonder if the paradigm shift from "long hours waiting for ups to avoid missing opportunities" to "being always on as your own marketing machine to create your own opportunities" will eventually change all of tier III retail sales to ROWE (results only work environment). I realize I'm painting with a really wide brush and a good number of sales people reading Refresh are way ahead of this curve.

 

[DealerAdvocate]

I concur with @Ryan Leslie .

If you doubt that time off is more important than financial compensation, run two sales contests; one for a $250 bonus in their paycheck and one for an additional day off to be taken consecutive with their regular day off and see which one gets you the hustle that you have been trying for.

It was eye opening for me but I think what is at the root of it is a sense of pride that seems to be innate with millennials. They don't want anyone to think they can be bought. And when you give them time off, you honor their priorities and they may respect you for it.

With respect to "packs", I don't disagree with the practice. I do think that if you are going to have a pack that it not be discussed with anyone. Its too much information for salespeople to process. They can think that the pack is "stealing" from their commission as if they have any concept for the cost of workman's comp policies, liability insurance, wholesale losses, and the need to have a rainy day fund. Its not lying. Its not deception. This is your commission. And your managers should exhibit enough trust, integrity, and leadership for that to be the end of the discussion.

 

[Jewanski]

The practice of packing vehicles isn't the problem, its the way its done. In a velocity market, smaller front end grosses lead to consistently stable margins. With average per copies around 1700-2200 at velocity stores, isn't it a little disingenuous to simultaneously bemoan the dearth of "good salespeople" and also remove companionable income from a payplan that is based on companionable income? I'm in a Midwest market, a town with 4 big dealers. And all four dealers run vauto (as they should) and all four are heavily marketing themselves as destination locations (as they should) to try and pull customers in from out of market. I've got friends at all four stores, they all average about the same amount of profit. 3 of the 4 dealers have a 25% pay plan on used, and some version of a pay per sale model on new. The fourth dealer has a progressive paying pay per sale pay plan, but its heavily skewed so that most salespeople are going to be living off draw until they build up a book of business, and in an attempt to stop bad follow-up, all ability to use a crm to prospect has been removed from the salespeople, they don't even follow-up with unsolds.

I understand this is a microcosm of the dealer world, and it probably doesn't paint a fair portrait of the industry as a whole (I've never worked in a metro store) but based on this bleak portrait, either the role of the salesperson in the dealership has to change (see carvana) or the job, and pay, of a salesperson has to change (see Truworth Auto). All the studies say that non commission product specialists helped Best Buy win the battle with Circuit City.

Not trying to rant, but I do feel something has to change.

 

[Tallcool1]

I concur with @Ryan Leslie .


With respect to "packs", I don't disagree with the practice. I do think that if you are going to have a pack that it not be discussed with anyone. Its too much information for salespeople to process. They can think that the pack is "stealing" from their commission as if they have any concept for the cost of workman's comp policies, liability insurance, wholesale losses, and the need to have a rainy day fund. Its not lying. Its not deception. This is your commission. And your managers should exhibit enough trust, integrity, and leadership for that to be the end of the discussion.

In theory, I agree that it is much easier to not even tell salespeople about the pack. It is a lot of information to process, and many times it really doesn't make sense.

In reality, not telling (having a signed pay plan on file) salespeople about the pack is a mistake. There is too much potential liability hanging out there in the event that a Department of Labor were to get involved through a disgruntled employee.

I realize the amount of a pack is not your point, but I couldn't help but shake my head when I read $1,700 pack. That is a lot of pack!

 

[DealerAdvocate]

Clint, you are correct that the pack needs to be disclosed in the pay plan in most states. I guess I just meant to emphasize the fact that that should be the last time that it is spoken about lest it sound like it is something that is negotiable as well. Dirty little word indeed!

 

[Jewanski]

So, here is a little update. I just found out our pack here at this dealership just increased to 1900 from 1710. No disclosure has been made to the salespeople, and no one has figured it out yet other than the managers who have access to itemized cost in accounting. I'm worried about a potential legality issue, (Im in KY). Anyone have any thoughts?

 

[Tallcool1]

So, here is a little update. I just found out our pack here at this dealership just increased to 1900 from 1710. No disclosure has been made to the salespeople, and no one has figured it out yet other than the managers who have access to itemized cost in accounting. I'm worried about a potential legality issue, (Im in KY). Anyone have any thoughts?

I do have thoughts.

You know it is wrong, and you know that there is nothing good that can come from the way this is being handled in your store. If you get caught by the Department of Labor, the store is busted. The DOL will go back as far as they want and the dealership will pay commission on any and all undisclosed pack. You will be cutting checks to employees that haven't worked at the store for years. You will be cutting checks to past employees estates! I have been through this with a past 20 Group acquaintance from....of all places...Kentucky!

The thing is, what can you do about it. These are decisions that you are obviously not in control of.

My question is, how do you feel knowing that you are working for and with people that choose to have no regard for the livelihood of the people that put food on their table and put their kids through college?

Don't tell me, let me guess......your ownership is doing everyone a favor by ALLOWING them to work at their dealership.

This type of behavior says a lot about the people you are working for. I just hope for your sake that you aren't on commission.

 

[tomwhitejr]

Commissioned based sales pay plans are SO 1986! Get rid of commissioned based pay plans and you don't have to pack cars. Packing cars just allows you to advertise you pay 25% or 30% commissions so you can look better when competing against other dealers for talent IMO... Pay a good salary and bonus on volume - you will attract a better employee and stop the pay plan games going on in the industry...