Implementing a salary program for the sales staff, working out the bugs and then working out more bugs: 'Well,' Marshall Jespersen says, 'it's not the easiest thing in the world.'
Jespersen owns Honda North in Danvers, Mass., and Dover Auto World in Dover, N.H. The New Hampshire dealership sells Hondas, Chevrolets, Porsches and Audis.
Jespersen adopted a salary plan for both dealerships in 1997, and, at the same time, he began a one-price sales policy. He says the change was made in response to the ever-changing playing field for selling cars.
'The amount of information available to customers (via the Internet), and the fact that demand for consumer protection has risen has made a difference,' he says. 'And there are brokers now, as well as the traditional dealers, and we must be aware of all those changes.'
The changes, Jespersen says, puts the customer in more control than ever and, he says, the old adage 'buyer beware,' can now be changed to 'seller beware.'
In addition to a salary, the Jespersen plan includes a bonus based on two factors.
The first is a graduated scale for the number of units as well as accessories sold, plus finance and insurance penetration. The second is based on the Honda quality program that requires customers to complete a form regarding the professionalism and courtesy of the salesperson.
The salary-plus-bonus program was not without its headache.
'We lost some staff at first,' Jespersen says, 'but we got most of them back when they realized they could make just about as much as they did before.'
Salespeople who work under the program are 'self-selecting,' Jespersen says. 'Some people like the stability of a program like this,' he says, 'and a strong commission salesman won't even apply.'
Jespersen's own headaches resulted from fine-tuning the productivity bonus to make it fair to both the sales staff and the owner.
'We had an escalating scale for the productivity bonus,' he says, 'and the best way I can describe the problems is with the story of a king who liked the game of chess, and he wanted to reward the person who invented it.
'He asked the inventor to choose his reward, and the guy said he would start with one grain of rice placed on the first square of the board, and he would double it with each square. By the time he got to the last square, there was no rice left in the kingdom.'
When Jespersen saw his own kingdom in danger of running out of rice, he made some adjustments. 'We've worked out a fair and consistent program, and we are very straightforward with our staff about what we're trying to do. Most people say it's fair, but it doesn't pay enough. But then, you can never pay enough.'
In spite of that common complaint, staff turnover has been reduced, Jespersen says.
Customers are made aware of the no-commission and one-price policy at his dealerships. 'We tell them we're here to get you in the right car,' Jesperson says. 'The salesperson gets the same credit toward his bonus, whether he sells a (used) Civic for $2,000 or the top of the line.'
Unlike some dealers, who are reluctant to discuss details of their salary plans, Jespersen has no such reservations. 'I'll happily share with anyone,' he says, 'but very few dealers want to do this. People don't look at change in good times.'
Jespersen, who predicts some softening in the next few years of what he calls an 'unparalleled market,' says that may require further modifications of his salary plan. 'But,' he says, 'the principles are correct.'