Car Dealer Pay Plans: How Do You Structure a Pay Plan for a Hot Mess BDC?

 

I recently received an email from a colleague asking about a pay plan for an automotive BDC that I describe as a “Hot Mess.”

Why a Hot Mess, you ask? Car Dealer Pay Plans

Plainly stated, a dealership’s sales structure and associated process flows should be simple and straightforward. When these flows have multiple forks upon multiple forks upon multiple forks, you create a Hot Mess where performance improvement and accountability become difficult, at best.

Now, to an abbreviated version of the email I received:

“My BDC has really taken off and now I’m now going to transition into a full Internet department. Do you have any advice on a commission pay plan for my Internet salespeople?

I will initially have 1 full-time and 1 part-time BDC appointment setter and 2 salespeople that will also be tasked with BDC work when they’re not selling a car. I was thinking somewhere around 60% of the standard commission as the BDC will be driving all the traffic.

Does that sound fair or do you have a proven pay plan structure you would recommend?”

My response went something like this:

With a pure BDC-to-Floor Sales relationship, I like a simple pay plan similar to this one:

SUSTAINABLE BDC PAY PLAN

The key to a sustainable BDC pay plan is simply to pay the Appointment Coordinator some flat amount (detailed below) for every appointment they set that shows within 45 minutes; and to pay the floor salesperson who is assigned to the appointment and closes the sale a split commission. The split commission can be either:

  • A true half deal; or
  • Half of the normal commission and a full mark towards their volume bonus

The split commission for the floor is a non-negotiable aspect of the sustainable pay plan. If the dealership decides to pay a full commission to the floor for these sales, they can expect their total compensation to become excessive and unsustainable as the BDC becomes more successful.

The most successful BDC Pay Plans allow for 100% “at risk” compensation. For example:

Appointment Coordinators: The overall pay plan should start with a “target compensation” and work backward from there – expecting 50-60 appointments shown per coordinator.

Target Compensation: $2,500 to $3,000 per month (The target compensation is, of course, market-based, as is the draw amount)

Draw: $10-$13/hour wage. (This is a draw against commissions)

Commission: $50 per appointment that shows within 45 minutes either way of their pre-scheduled time

Volume Bonus: $100 additional at 10, 20, 30, 40, 50, etc. shown appointments in a given month

However, it sounds like you’re doing something that combines end-to-end with some BDC elements – and this makes it much more complicated.

While I don’t have specific percentage recommendations on pay, I do have a couple of major cautions:

  1. The BDC Agents must be directly “paid for” by the people selling the deals coordinated by the Agents. If you let them work as a team – but without “charging” for the services of the Agents – the Agents become assistants for the end-to-end sellers, and the sellers stop making their own phone calls, etc.
  2. It’s important that no one tasked with responding to leads gets to choose who receives which leads. If this is the case (for example, let’s say you give one of the end-to-end guys the duties of an Assistant BDC Manager), then the person in charge will assign all the “good” leads to himself and assign the remaining leads to the BDC. (I’ve seen this happen way too often.)

So, with these in mind, I would likely structure the commissions in a way that pays people for the results they personally accomplished/influenced. Something similar to this:

For the end-to-end sellers:

X% commission on the deals they sold from end-to-end with no BDC involvement (This would also include any traditional ups they sold)

Y% commission on the deals they sold with any BDC involvement

For the BDC Agents:

Nothing for deals where they had no involvement

$Z for valid appointments that show on time (within 45 minutes of the appointment time)

$A for deals sold where they had some involvement

Where X is a full commission; Y is a split commission (but with a full volume mark); Z is a robust amount (since you want valid appointment shows); A is about 20% of Z; and “involvement” is determined by the team and committed to a written definition before the first commission is paid.

By paying in this manner you will ensure you get the built-in checks and balances that the sustainable pay plan delivers, while still being able to run a complex BDC/Internet Department.

Hope that all makes sense. Please let me know if you have any questions.

Good selling!