Group 1 Automotive Inc. is rewarding employees for referrals and giving discounts on new and used vehicles sold to their relatives and friends.
The bonuses have made salespeople out of receptionists and mechanics who work for the nation's fifth-largest dealership group.
About 30 percent of eligible employees have participated in the "VIP" program. Group 1 launched the program in April 2003 at its nine Houston dealerships.
From the program's inception through June, the program has led to 1,008 referrals resulting in about 500 deliveries, the company says.
Publicly held Group 1 had $4.49 billion in revenues and sold 162,692 new and used vehicles last year.
"Referrals have always been an important part of the automotive industry," says B.B. Hollingsworth Jr., Group 1's CEO. "If each of the (Houston) platform's 1,000 employees referred five more customers during the year, the numbers could easily equate to an additional 2,500 to 5,000 new customers, not to mention referrals that could be developed from the new customers."
The program applies only to employees below the level of general manager at Group 1's Houston dealerships and corporate headquarters.
Employees get $100 immediately when a referral results in a sale. Company officials deliver the checks.
For every $100 bonus it pays, Group 1 contributes another $50 to a pool to reward employees for meeting minimum VIP sales targets. These extra bonuses are paid monthly, quarterly and annually. Cash amounts vary, depending on the numbers of referrals and participating employees.
To coax referrals, the plan offers price discounts to employees, their friends and their relatives. The price breaks vary based on supply of and demand for a particular vehicle. But employees and their affiliates generally can expect to pay dealer cost minus factory rebates.
Interest in the VIP program is growing. Group 1 promotes the effort at employee meetings, when it hires employees and on fliers. The company is developing a brochure to explain the program to employees.
In the first six months of 2004 the program yielded 761 referrals. Half of them led to sales, Hollingsworth says.
Group 1 has dealerships in nine states other than Texas. Houston accounts for about 12 percent of the company's new-vehicle sales.
Hollingsworth says Group 1 dealerships in other markets may copy the VIP program once its success is assessed.