Is it time for car dealers to kill off the commission model?

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30 January 2014

By Andrew McMillan

So, here we are with the last of the articles in this short series. Thank you for taking the time to read them and special thanks to all of you kind enough to leave comments on the online versions. Clearly, some of my writing has created debate in the industry, which is all I hoped for. Some of my thoughts appeared to cause quite heated exchanges, but this last piece may be the most controversial.



	Andrew McMillan spent more than 20 years with John Lewis Partnership, developing industry-leading customer service across the department store division, before becoming a principal partner at consultancy Engaging Service.

Anyone who followed the articles for the past 18 months will have come to understand the approach I used to shape the customer experience when I was at John Lewis, namely:

♦ Define the behaviour and attitudes that will differentiate your customer experience

♦ Measure the defined behaviours, segmenting the reporting of those measures to make individual managers accountable for the culture they create within their teams

♦ Communicate relentlessly what the business is doing about employee and customer experience and why, re-telling stories of great successes

♦ Create the time for inspirational and supportive leadership to model and develop the customer experience

♦ Look for every possible opportunity to recognise and reward really good behaviour

♦ Be very clear about the sort of people you want to recruit into your business.

Is that enough?

Well, it can be and I have worked with clients in many sectors since leaving John Lewis in 2008 and helped them apply that framework with success.

Many attributed their enhanced commercial success to their improved customer experience and some even went on to achieve national cross-sector recognition for their efforts. Specifically in the automotive sector, for some, their efforts were rewarded with enhanced manufacturer relationships too. But could even better performance be achieved without the constraints of the traditional remuneration and reward structures?

This thinking came about when an automotive client asked me “Why can’t we recruit people like those at John Lewis?” The answer is simple – many of the people employed in high street retail would be unwilling to swap a regular salary for what may be perceived as a high-risk, commission-based remuneration structure.

talent & people

Comments (6)

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Comments

Scott walker in retailer coach - 30/01/2014 12:19

Great article, and something lots of car retailers certainly think about, it would take nerves of steel to implement though knowing that all your local competitors still pay on a commission and therefore have sales execs hungry to earn. I personally believe you can operate a commission model as long as the commission isn't payable only on financial success, it must include an element on CSI or whatever your brand chooses to name it's customer service measure, and the element must be large enough for sales execs to realise hitting numbers with poor customer service just isn't a profitable enterprise. There is also the the opportunity to recognise really good behaviours with financial reward for 5 star feedback. Commission models work, you just have to make sure they are working for all areas if your business.
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Sam Mawby - 31/01/2014 08:22

The commission system is a barrier to quality recruitment, but more fundamentally to sales and profit success and probably more decisively, real customer satisfaction. The whole business model is faulty. The concept of " keeping sales people hungry" and they will earn is madness. But the debate is only worth while if we re-examine the motivation of how and why brands go to market. It is easy to prove a solid business case for success if you recruit on retail service quality, correctly induct and train staff, manage them by good people managers. Pay a reasonable salary, with common sense team bonuses, and measure equable success across the business, using these to evolve and develop, people, satisfaction and quality as opposed to beating people up. Ask a customer who did not buy, why, and draw your own conclusions.
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Mark Oldfield - 01/02/2014 15:21

It will, as Scott states, take a retailer with nerves of steel to implement such a system.It must surely be the way forward if customer satisfaction is top of your priority.Most retailers pay lip service to such a scheme but are not prepared to grasp the nettle.
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Henry Wheeler FIMI - 01/02/2014 16:06

If you are a dealer, GM, or manager and you think it may be time to learn how to recruit, select and hire salespersons that work, people that will represent you properly and proudly, and only turnover when they are going on to bigger jobs and promotions, why not let me show you how? I am a former GM, twice a dealer principal, and have done every job in a retail dealership except technician, and have been teaching others how to get a staff that will match the enviable behaviour and records of a John Lewis, as well as other dealers who understand that if they keep doing what they've always done, they are always going to get what they always got. Is that you, too?
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Gary - 02/02/2014 00:01

I would like to say that this is possible and is indeed desirable but I think that trying to compare JohnLewis to a car dealership is not relevant. The pressure from manufacturers and the high ticket value of a car mean that you need good closers to SELL the product rather than just relatively tame sales assistants to answer customer questions! Having seen the difference in performance of a proactive , enthusiastic & motivated (by money) salesperson and a customer orientated, passive sales assistant I know which ones will sell more cars. Until manufacturers take the pressure off unit sales (which John Lewis don't have to worry about) we will need people who can SELL!
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Paul Cape - paul@phoenixhumancapital.com - 03/02/2014 06:48

As were are now in a more informed age and the age of ethics this industry that I love needs to reinvent itself with regards to the 'type' of people that are attracted into it. But who is going to be first! Fear is a major driver of the lack of change and I mean significant change. Way back in the 1990's and early 2000's I recall having long debates with my closest friend over our abject failure to consistently recruit quality car salesmen, my friend was Audi Dealer of the year for three years in a row and still struggled. Years later as an observer across so many businesses there has been no change we still run our processes and our remuneration to maintain the top performers of which the majority of us may only have one. It then becomes a revolving door of short term appointments and disappointments. I see us continuing to pursue the same paradigms and of course getting the same results. If you want to see the true effect of incentive based behaviour check out Dan Ariely on you tube or his website, interesting and amusing, and dare then to try something different. Recently I proposed to a Dealer Group to change the emphasis on the sales process to get the right people doing the right part of the process and have the activity controlled (almost Pendle but not anywhere near as aggressive or scripted) and more in line with TTL Consulting's Zonal approach that we used to great effect in Mitsubishi and Renault in the early 2000's. All that said its great to get an incite from someone from outside of the industry as to a way forward in terms of remuneration - I would also add a new way of looking at what is expected from each person in each stage of the sales process.
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