LOS ANGELES -- As general manager and part owner of George Chevrolet in the blue-collar Los Angeles suburb of Bellflower, Carlos Uruchurtu was seeing too many shoppers earnestly making deals to buy a car, only to have the deals fall through at the finance and insurance counter.
It was especially dispiriting for his sales staff to see all of their hard work negated by a customer with damaged credit or no pay stubs. Operating in a lower-middle-class area, with about 20 percent of deals falling through at the finance desk, Uruchurtu struggled to keep salespeople from jumping to bigger dealerships in better neighborhoods.
Lying awake late one night, he came up with an idea: a compensation system that would provide sales staff small but significant rewards for their efforts, even if those efforts didn't lead directly to a sale.
Under the plan, if a salesperson makes a deal, but the customer can't get financing, the salesperson still gets $25. It's not a commission, but it at least gives the salesperson monetary recognition for the work.
"There are a lot of credit-challenged people," Uruchurtu said in an interview, noting that 65 percent of completed sales still go to nonprime customers. "I didn't want my salespeople trying to figure out if they have a deal or if they are wasting their time. That's not how you take care of a customer."
The rewards can come in different ways. If a salesperson isn't getting anywhere with a customer and hands him or her to a colleague who might have better chemistry, the second salesperson stands to earn the entire commission. But the first salesperson gets $100 for getting things rolling. Same goes for the Internet sales department: If an Internet salesperson hands off a hot lead to a floor salesperson when the prospect walks in the door, the floor person gets the commission, and the Internet salesperson gets $100.
"The thinking always has been, 'Why work a deal that the first guy already gave up on if I'm just going to get half a commission?'" Uru-churtu said. "This way, everyone's head stays in the game."
Uruchurtu's pay plan dishes out flat payments of $300 for every new vehicle sold and $150 for every used vehicle sold.
Commission is 20 to 25 percent of the gross profit. Then there are stair-step incentive payouts from General Motors that range from $50 to $200 per unit.
That makes it much easier for a salesperson to get excited about trying to sell a low-margin Sonic.
"It's important to be able to make a living selling cars. If you pay salesmen $2,000 a month, that's the sort of person you're going to get," Uruchurtu said. "But if you want $6,000-a-month salesmen, you have to give them the right tools."
Uruchurtu can empathize. He started out as a Chevy salesman in San Diego, "did pretty well" and worked his way up the ladder to become a dealer partner. But he never forgot his roots on the showroom floor.
The 52-year-old Uruchurtu came into owning George Chevrolet while sitting in a Chevrolet 20 Group meeting in 2009. He had just sold his share in a San Diego-area Chevy dealership and was looking for an equity stake in a new store.
One of the dealers at the meeting, Jeff Estabrooks, told Uruchurtu that he was retiring and asked whether he was interested in becoming general manager and buying a stake in the store.
Uruchurtu's initial reaction: "Hell, no."
After all, Bellflower isn't exactly Beverly Hills. Its lower-middle-class demographics and large immigrant population would be no picnic for the F&I department. The financial crisis was frothing, and dealerships were in trouble, especially GM stores in California. The store needed updating and had to contend with a giant Penske Automotive Group-owned rival less than a 10 minutes' drive away.
But Uruchurtu gave it some thought. George Chevrolet recently had been named Bellflower's top merchant by the city's Chamber of Commerce. And because GM was gutting its dealer count in Southern California, few other stores, let alone ones in good stead, were available. So Uruchurtu bought in.
After a strong 2013 -- averaging about 115 new and 60 used vehicles sold a month -- George Chevrolet reported record sales results for February, March and April. Although the volumes for that period were about the same as last year, gross profits per vehicle were up 20 percent, as the sales force works harder to get quality deals completed. Plus, with salespeople taking better care of customers, the store's customer satisfaction reports from Chevy are "through the roof," Uru-churtu said.
In import-crazed Los Angeles, it helps that Chevy is bringing in some competitive passenger cars. "From 1987 through 2010, Chevy dealers around here sold trucks. That's all we did," Uruchurtu said. "Now, we sell 20 or 30 Cruzes a month. And we have Malibus and Impalas, too."
Perhaps best of all, he says, employee turnover is way down. He lauds the patience of the F&I managers who scramble to find ways to close deals with credit-challenged customers.
As for the Penske store just 4 miles away, Uruchurtu sees no big threat. "We're surrounded by big stores, but we're proving we can swim with the big fishes," Uruchurtu added. "We were so small, we were on Page 2 of the monthly sales report. Now, we're on Page 1."