Simple Strategy #1: Pay for the Performance You Want


Simple Strategy #1: Pay for the Performance You Want


This is Steve Stauning with another “Steve Stauning, Short and Sweet Video Training Lesson”. Today’s lesson is – Stop Over-thinking Your Internet Sales. Now this is going to be an ongoing series. We will be adding new videos to this series so check back often.

These are simple strategies that are going to help you close more internet deals today. So, let’s get started. Let’s talk about simple strategy # 1.

The strategy is to pay for the performance that you want. “Duh, Steve. That’s what we do. We’re in a variable business”. Right? “This is automotive. We only pay when we sell a car.” Time out. See, here’s the problem: for those of you with business development centers – you know, call centers, you’ve created these convoluted pay plans that pay a spiff to the BDC on appointments AND on sales, all while paying them a healthy base wage. AND you’re paying the floor team a full commission for doing less than half the work when they close a BDC deal.

So, whats the reality? The reality is that your BDC learns to live off the base wages. I’ve seen it time and time again. You’ve got a BDC agent. He or she is getting 200 opportunities a month. Now, when they receive 200 opportunities a month, you should be getting about 50 (minimum) appointments that show each month. That’s a 25% show-to-lead ratio. But, when they learn to live off their base wages, you know what you get? You get about 20 appointments that show for 200 opportunities. See, the spiffs become meaningless. They are living off their base wages and a $15 spiff for an appointment that shows and a $25 spiff for an appointment that closes doesn’t really mean that much when they are making $400 a week on a base.

Plus, the reality is that the appointments aren’t even real. That’s right. This is a dirty little secret that BDC’s have that most owners and general managers don’t understand and that is if you pay the floor a full commission, there is no one to provide your checks and balances on your BDC and this is what will happen: Let’s say I’m a BDC agent in your store and I got a lead two weeks ago from a ‘Jeff Smith’. Two days ago, a ‘Jeff Smith’ showed up at the dealership and bought a car. Through something called reconciliation, I’m going to reconcile the records. I’m going to take that ‘Jeff Smith’ that bought a car from us two days ago and I’m going to say that ‘Jeff Smith’ was a BDC deal. I’m going to put an appointment in the CRM. I’m going to show that appointment as shown and then I’m going to show that appointment as sold. I’m going to get paid my spiffs on something I really had nothing to do with since I set no appointment. Now, how am I able to get away with it? Simple. Nobody cares. See, nobody cares if the BDC gets overpaid. My manager’s not going to stop it, is he? Right? He gets his spiffs as well. It’s called reconciliation and it’s what happens when you pay your floor a full commission on BDC deals. Realize this – if your floor team did their job, you wouldn’t need a BDC. So, when your team is crying to you if you’ve cut their commission and are saying, “But, Boss, we do all the work.”, say “Hey, guys, if you were doing all the work, we wouldn’t need a BDC in the dealership, would we?”

So, what’s the solution? Well, you need a 100% “at risk” pay plan for your BDC. So what does this “at risk” pay plan look like? Well, it’s simple. You pay me a base wage. Let’s say it’s $10 an hour, $12 an hour, whatever. I make the $10 or $12 per hour but I get $50 for every appointment that shows. That’s my commission. That base, that hourly, is just a draw against these commissions. So, I get $50 for every appointment that shows. I’ll get another $100 for every ten appointments that show. If I’m a good BDC agent getting 200 opportunities a month, I should get you 50 appointments that show each and every month. If I get you 50 appointments that show, that’s $3000 and that will cover my base pay.

You also only want to pay on real appointment shows. That means you only want to pay for appointments that show within 45 minutes of their scheduled time. You don’t want to give me an hour, two hours, ten hours. I’ve even seen dealers give 72 hours leeway that we will talk about in another ‘simple strategy’.

You want to pay a half commission to the floor. Now, whether that’s a half commission and a full mark towards their volume bonus or a half mark towards their volume bonus is irrelevant but realize this: the floor did less than half the work. The minute your floor is ready to make all the calls; the minute your floor is ready to handle all the inbound leads and all the inbound phone calls and do them the way that you need, sticking to your processes, you won’t need a BDC. Until then, until they are ready to do all that, you’ve got to pay for the BDC and that’s a half commission to the floor. The great thing is – when you pay the floor a half commission, when you are splitting the deal between the BDC and the floor, guess what you get. You get built-in checks and balances. That’s right. You get someone making sure that the BDC doesn’t steal from you via reconciliation.