The sales staffs at the Melloy dealerships in New Mexico have a choice of compensation plans: They can be paid either a straight salary or a commission, says Alex Bahls, general sales manager at Melloy Nissan in Albuquerque.
'We started the salary program in 1999 to attract a better class of person to our sales staff,' Bahls says. 'We felt the stable family person who is looking for some kind of insurance would apply.'
Bahls says the theory proved to be correct. Although he has maintained some of his old staff, all of whom stayed on the commission program, a new breed of salesperson started looking at Melloy Nissan, which is owned by Robert Melloy. The 77-year-old dealer also owns Melloy Dodge and Melloy Suzuki in Albuquerque, and Advantage Dodge in Farmington, N.M.
A new breed
Bahls says most applicants now are college-educated. 'Seventy percent of our staff had never sold cars before they came here,' he adds. 'The idea of a salary made them willing to try something new. They are stable family people and don't have the greedy salesman image.'
That holds true, Bahls says, in spite of the fact that the salary is only $2,000 a month.
'Yes, it's small, but it's enough to provide a cushion, and they have an opportunity to earn more with the unit bonus,' he says. The unit bonus kicks in after 10 units are sold in a month, and it escalates with 13, 16 and 20 sales. The average income per salesperson is $3,500 per month.
If there are disadvantages to the program, they are all disadvantages to the salesperson in the first two or three months, Bahls believes.
'It happens when the salesperson sells 13 or 14 units and realizes how much more he could have made if he'd been on commission.'
For that reason, Bahls says, sales personnel can opt to convert to the commission program at any time. Currently, none of the staff is paid a salary, although most of them started with that option.
'We advertise that the salary program is available and that the commission program is available,' Bahls says. 'Knowing that they have the option has kept down problems and confusion.'
Most choose commission
Three months is the longest any salesperson has stayed on salary before converting to the commission plan, Bahls says. But the reason for offering the salary has given the dealership what it wants: a higher caliber of salesperson.
Customers are generally unaware of which option the salesperson has chosen, according to Bahls. 'As far as I know, that is just not discussed with customers,' he says
If the choice of pay plans attracts good people, Bahls says he believes the benefit package keeps them there. The package is part of both pay plans.
'We have a good 401(k) and insurance program,' he says.
As for management's side of the story, Bahls laughs when he admits it would save the dealership money if all salespeople stayed on salary. Still, he says he has nothing to complain about with a highly professional staff and sales that were about 20 percent higher in 2000 than in 1999.
Says Bahls: 'I don't plan any changes in this program. ... I expect (this year) will be even better than 2000.'