Jason Lentini

Internet Sales Manager & Internet Sales Representative Pay Plans

One of the most common mistakes when it comes to incentives is a focus only and specifically on money as a way to motivate people to perform. It takes far more than a well-thought out pay plan to motivate people to perform and keep turnover to a minimum. A good work environment and customized non-monetary benefits may be even more effective than pay in employee satisfaction and performance. For example, a flexible work schedule as a reward for reaching objectives goes a long way toward satisfaction for some people. See Rewards that Motivate.

An important distinction should be noted in the responsibilities and pay plans for Internet Sales Representatives versus those of the Internet Sales Manager. The ISR performs duties similar to Sales Representatives, demonstrating and delivering cars and is responsible for Customer Service Index scores. There is generally more than one ISR in any given dealership.

The Internet Sales Manager is not rated on Manufacturer CSI and there is typically only one ISM in the dealership. The ISM's responsibilities include such things as website maintenance and all other duties related to the success of the digital dealer. The ISM pay plan is based on the assumption that this position does not go on demos or deliver vehicles.

Internet Sales Representative - Gross Oriented

Description:
The most common pay plan for ISR's is gross oriented because it has worked for so many dealerships for so long. Based on front-end gross profit alone, this plan is common to the showroom sales department and offers the ISR a commission based on a percentage (usually 20%-25%) of the front-end gross profit for each of their monthly sales. If other sales representatives are compensated on back end spiffs, those too will apply to the ISR.

Example:
A $1,000 gross profit sale would pay $200 - $250 based on a typical commission range of 20% - 25% of front-end gross profit.

Pros: Motivates ISRs to try and maintain a high gross profit average for the dealership. Another pro for the dealership is that they only pay their people a percentage of what they make, so higher profit margins can be maintained. This pay plan is also simple to calculate and has been used by dealership accounting offices for years.

Cons: The amount of front-end gross profit is often out of the ISR's hands – this can be a source of frustration for the ISR and may pit him against the customer. There is little incentive to sell a large volume of vehicles for the ISR that can maintain a high gross profit average.


Internet Sales Representative - Volume Oriented

Description:
Percent of front-end gross profit (FEG) that increases or decreases based on previous months sales volume, plus a bonus (or penalty) based on customer satisfaction index (CSI) average for previous month.

% FEG sliding scale:

• 0 – 7 sales = 19%
• 8 – 12 sales = 23%
• 13 – 16 sales = 25%
• 17 + sales = 28%

CSI Bonus:

• • + 2% CSI average above the Dealership CSI average for same month
• • - 3% CSI average below the Dealership CSI average for same month

Example:
A $1,000 gross profit sale would pay as much as $300 (30%) if the previous months sales for this ISR were 17 vehicles or greater and if his/her CSI average was above the Dealership CSI average.

Pros: Motivates ISRs to move volume while maintaining gross profit and customer satisfaction.

Cons: Complicated and requires more administration than other pay plans. The amount of front-end gross is often out of the ISR/ISMs hands.


Internet Sales Manager – Volume Oriented

Description:
This management position does not demo or deliver cars, but focuses exclusively on Internet and phone activities to set appointments in addition to other responsibilities noted above. Face-to-face customer interaction is generally limited to meet and greet and Turnovers.

Salary, plus commission based on number of units delivered appointments that showed, but did not buy, and a percentage of total dealership front and back-end gross profit.

Example:
A $1,000 weekly salary $50 per delivered unit, $20 per appointment show that is not delivered, up to 1.5% against total F& I gross. The appointment pay is not combined with delivered unit as each are mutually exclusive.

Explanation: ISM reports 40 delivered units and 15 unsold appointments resulting in $2,000 delivered and $300 for unsold appointments kept totaling $2,350. Total F&I gross is $175,000 X 1.5% = $2,625. ISM is paid $2,350 bonus.

ISM reports 50 delivered units and 25 unsold appointments for $2,500 and $500 calculated bonus, totaling $3,000. Total F& I gross remains the same at $175,000 X 1.5% = $2,625. ISM is paid out $2,625.

Pros: Allows for aggressive up front pricing for maximum volume while encouraging ISM to maximize back end profit average for the dealership. ISM is not the only manager making money in any given month. Requires ISM to track unsold appointments in addition to sold units, exposing weaknesses in road to the sale.

Cons: The amount of back-end gross profit is often out of the ISMs control and no motivation to keep front end gross. This has potential to pit Sales Manager against ISM in the case of under performing Business Managers place. Significant incentive to sell a large volume of vehicles for all managers with strong F & I department.