Pay Plan Advantage: Salary vs. Commission

A good F&I pay plan compensates F&I managers based on productivity. A great F&I pay plan motivates managers to excel, reinforces a dealer’s commitment to customer satisfaction, and ensures continuous improvement in F&I productivity and profits. At Empire Dealer Service, our mission is to provide great pay plans. But, the pay plans we structure for our dealer clients are as unique as the individual dealership. There are no cookie-cutter plans handed out.

We understand the nuances, personalities, culture, and goals of our dealer clients and personalize pay plans to ensure success all around. When creating a pay plan, we start by taking a number of elements into consideration for the dealer: Customer satisfaction, dealer product offers and profits, F&I manager and team growth and development.

Each plan’s ultimate goal is designed to motivate individuals to perform, continuously excel at their job and grow, customer satisfaction and retention throughout all departments of the dealership, and of course, increasing profitability to the dealership’s bottom line, creating a win-win-win scenario and culture throughout the entire process.

Salary

Employee Benefits: Salary offers the benefit of a stable income. Salespeople do not need to worry about how many cars they will sell or how much money they will make because it will be consistent month-to-month. Depending on the dealership, additional benefits may be offered such as health insurance, paid vacation time, and 401K saving plans.

Dealer Benefits: One of the main benefits that dealerships get from offering their salespeople a salary is employees that are focused on customer service. Instead of feeling pressure to push more sales, employees feel encouraged to engage more with their customers and give them undivided attention.

Cons: Without the incentive for additional compensation, employees will likely not feel motivated to push for more sales. Instead, they will meet the number of sales required for the performance standard and may not bother to sell more than they have to.

Requirements: Performance standards must be set for both customer service and sale targets to convey expectations from management to employees.

Commission

Employee Benefits: Employees have unlimited earnings potential. The more cars they sell, the more money they make. This can be a great benefit for employees that have good selling skills, providing them with the opportunity to earn a significant amount of money. Top car salespeople have been known to make anywhere up to $250,000 a year.

Dealer Benefits: By offering an unlimited incentive, employees are highly motivated to exceed the minimum requirements and make the most amount of sales possible. When the employees succeed, so does the dealership.

Cons: Non-compliant processes are likely to increase, as salespeople may do whatever it takes to close the sale. This poses a problem for the dealership.

Requirements: Competitive pay plans must be set in place to keep employees motivated. Performance and compliance standards must be implemented to maintain consistency.

Both salary and commission payment plans have their pros and cons. Each dealership is different, and no two plans are alike. The plans we develop are designed to motivate your team members according to your dealership’s culture, customer retention, and overall growth. Empire Dealer Services takes into consideration the fact that F&I positions are essentially revenue-generating and add tremendous value to the bottom line. With the right team, culture, and pay plan in place to motivate and drive more sales and revenue to the bottom line — rewarding and compensating the team to deliver more revenue and sales from an F&I product perspective justifies a commission-based pay plan model.

Interested in discussing pay plan options for your dealership, contact Empire Dealer Services at 508.407.8720 for a personalized review of your current process.

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