SAN FRANCISCO -- Ford Motor Co. has high hopes for its redesigned small cars, including the Fiesta subcompact and the 2012 Focus compact, which is coming in March. But those cars may not hit their sales targets if Ford's dealers stick to their current pay plans for salespeople. In those plans, commissions track vehicle size, so smaller cars offer smaller commissions and get less effort from salespeople.
Now dealers are rethinking compensation plans. But some of the most common alternatives bear a striking resemblance to the stair-step incentive programs offered by automakers -- and reviled by dealers.
Many Ford salespeople prefer to sell pickups and SUVs. The typical margin on a truck could be upwards of $1,700 whereas the profit margin on a subcompact such as the Fiesta is only about $300, dealers say. That leaves most salespeople earning about $75 on the sale of a small car vs. hundreds on pickup and SUV sales, dealers say.
"It used to be you could be an average salesperson and make a good living," says Beau Boeckmann, vice president of Galpin Motors in Los Angeles. "Today you've got to be a really good salesman to make an average living."
Boeckmann says he has lost some good salespeople because of shrinking commissions.
Galpin recently started supplementing those smaller commissions with sales contests based on customer satisfaction. Galpin also has started what Boeckmann calls "volume bonuses." Those are extra bonuses paid to those salespeople who sell a certain number of new vehicles.