In a new car and truck dealership, what is a good payplan for a secondary finance manager with 3 secondary salespeople under him? Also, how would you pay the salesperson who first greeted the customer?  There always seems to be discord between the primary dept and secondary department. Are there any suggestions to bring harmony to the 2 departments?

Any and all suggestions are welcome

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Comment by Ronnin Einhaus on April 25, 2014 at 11:31am

Everyone has a some valid points, I however believe that number one you need a strong secondary, special, subprime guy, One that is smart knows the programs and utilizes them. There are so many out there that call themselves special finance guys, and they do business with the shotgun approach although can be effective, it can cost marginal deals in the long run, just like any bank the better you know there programs, the better you serve Your customers, the less crap the lender has to look at, and burn time on, and hopefully maybe they will step up on the ones that make sense on paper but don't in the scoring system. Pay the sales people a birddog and do not be cheap; pay them for there time $150- 200 range should be good, and figure it in on every deal just like the discount. The better the initial salesperson feel about it the better the customer will.

Comment by Mike "BK" Anthony on September 11, 2013 at 11:40am

We had a "SPLIT" sales force for 4 years, always issues,, we now have a SF Manager/Sales manager at the sales desk directing traffic and submitting deals and working the banks for the best rates and terms. All of our sales people handle prime and sub prime. We use some qualifying questions ( on a scale of 1 - 10 how is your credit, etc ) to determine who get brought in to pull credit and investigate. Anything 620 beacon or less is special and those people we have a finance/desk girl do an interview so we know what we are dealing with.  This process works good for us as we do not have to turn people from one sales person to another eliminating that conflict, also the special guy can spend time working the banks and penciling the deals , if we need a turn/closer to go in it is normal process prim or sub prime.  We also have a Funding manager who works with the lenders for funding.  

The SF guy is a sales manager and is paid accordingly, the funder is paid $10.00 an hour and a bonus on days from delivery to funded and the interviewer is paid $10 an hour and a bonus on all the sold customers she interviews.

Comment by Shawn Foster on April 18, 2013 at 12:27pm

David, you couldn't find two better people than Gene and Greg to answer that question but if it matters, here is my 26 years worth.  I started doing subprime, like Greg, back in the early 90's.  Only then it was called, Secondary Finance.  The reason was due to the fact that these were the deals that were "Secondary" in the F&I guys mind.  They sat in a pile behind the desk and you worked on them when you had time.  The F&I guy didn't care if they ever happened because back then, there was no backend on those deals.  That said, the dealers then did not want to pay more money for what they considered a job they were already paying for.  So they tried to take half the commission away from the salesman and pay the F&I manager, todays Subprime Manager.  At that time it was usually the guy who was struggling on the sales floor that learned how to do it.  He eventually became the Secondary Finance Guy.    DO NOT DO THIS, IT WILL NOT WORK.  Its hard enough to motivate salespeople in todays world.  If you ask typical sales people to sacrifice half of a mini deal, (how they will see it), they will fight you all the way.  Go with Greg's suggestion and train everyone to work the customer properly and welcome every deal from the "sales" department.  Unless everyone buys in, you are going to have a long road.  

Comment by Paul Hamilton on April 18, 2013 at 12:23pm

Hello David,

In summary, "half of something is better than all of nothing!"

Like Mr. Goebel, I would try to develop a sales process which allows for the salesperson who makes first contact with any prospect to establish and maintain a relationship with him or her throughout the entire process until the vehicle is delivered and beyond, or until they can no longer complete the next step in the sales process and must turn the prospect to another salesperson or manager.  Even if that requires transferring the deal from the sales desk or retail sales department to a specialized Secondary Manager who has the time and knowledge to put together the best opportunity for that prospect to become a buyer, and to serve the best interests of the consumer and the dealership.

With that being said, it can be very difficult to implement a training program where every retail salesperson can be properly trained to maintain a fruitful relationship with a prospect once it is discovered that they are a "special finance" customer.  The mindset of a retail salesperson is to find the perfect vehicle for a customer based on wants and needs, which is a complete contrast to the mindset of a special finance salesperson who must establish a professional rapport with the customer and discuss credit issues prior to vehicle selection which is done by the special finance manager and not the customer.  In order to maximize your opportunity with every customer and to increase their chances of going home in a new or pre-owned vehicle, I recommend retail salespeople work with retail buyers and special finance salespeople work with ALL special finance buyers.  Now, the size of your store may or may not allow for that, but based on the fact that you have a subprime department with a dedicated spifi manager and 3 dedicated spifi salespeople, I preclude that your store is equipped for this type of department setup.

Like anything, if explained and planned properly with salespeople, you will get very little push-back from professional salespeople who understand the customer and dealership come before their own objectives and agenda.  When salespeople understand that "half of something is better than all of nothing," and that by turning a customer to the best salesperson or department for the situation, they will be happy to earn their half commission (which may end up greater than the whole commission if worked incorrectly).

David, please keep in mind, I am a special finance trainer and consultant, so this is all just theory. However, my sales teams and I have applied these principles in dealerships for over a decade and they worked.  I have implemented them in dealerships around the nation and they work, with the right commitment, team, process, inventory, marketing and finance (lenders) in place.

As for comp plan... first, I recommend adding a "spifi pack" to every deal of $200 or more, depending on your dealership policy of spifi advertising, hold checks, etc.  Second, the SF Manager should be paid a % of the total gross of the department, front and back end.  With 3 dedicated salespeople, that range should be 10% - 15%.  We use a simple equation to come up with pay plans that seems to work across the board.  In a 1-person dept where manager is salesperson, pay 25% of total gross (some dealers may start at 30%).  For each salesperson added to the department (up to 3, or 4 if started at 30%), reduce that by %5 to the manager, so with 3 salespeople deduct 15%.  10% is the floor for 4 or more salespeople, and before adding a 6th salesperson to the team, consider hiring another manager and starting a new team.  Each salesperson gets paid 20% of front end after pack until they hit 8 units, where they get a bump to 25% retroactive to deal 1.  At 12 units, increase another 5% to 30%.  And so on to keep them motivated to stay on the phones the entire month.  Here is the basis of that payplan:

100 leads per salesperson @ $30/lead = $3,000 ad expense per salesperson

8 sold per salesperson @ $2500 total gross = $20,000 total gross per salesperson

25% of front end after pack (assuming $2000 gross front, $1500 net front, $500 back) = $3,000 commissions per salesperson

This is only assuming a 8% closing ratio, which may be higher or lower depending on many variables: experience, abilities, process, inventory, lenders, crm solution, lead quality, etc.

The days of mass vertical integration are behind us and companies in all industries are outsourcing in an attempt to maximize economies of scale through specialization. The auto industry is no different.  If someone can't use a computer, they are not in your internet department.  If someone is unable to make repairs to a vehicle they are not a service tech.  And if someone is unable to control a customer and be firm but considerate, they should not be working with special finance customers.

I hope at least one piece of my response can be helpful in building your department the right way.

Best of luck to you and your special finance team.

Paul Hamilton, Special Finance Solutions

Comment by Gene Daughtry @ on April 18, 2013 at 11:36am
What I always did was have the entire sales force ask early in the qualifying if our SF is what brought the customer to the lot. If the answer is yes have sales shift gears and get an application and check the credit. In most stores that involves the sales manager. The sales manager makes the call on the TO to SF. If the prime sales person isn't continuing with the customer then give them a bird dog. I prefer that. SF and prime sales are different and I want someone understanding the SF process to handle it from there. I agree with Greg on the % for payroll expense. Just focus the pay on where your profit comes from. Downs, backend, pools.
Comment by Greg Goebel on April 17, 2013 at 11:26pm

Good questions, David! What you imply is one of the biggest sources of conflict - comp plans designed where someone has to lose in order for someone to win. 

In general, I don't like situations where a sales person that greets a customer must turn them over to another sales person just because of credit. I would rather train the entire team to be able to work the deals through a SF manager.  In that case, no one gets shorted.

If that can't happen, what generally happens is that the "prime" sales person works the customer to the ground to make them a prime deal where they would get the entire commission.  In doing so, they generally put customers in the wrong vehicles (too much or non-booking vehicles) or with bad structures, which ultimately can never be approved.  By the time the SF manager tries to put the toothpaste back in the tube it is too late.

As for compensation, for years and years the benchmark for the combination of sales AND supervision compensation is slightly less than 26% of total SF gross.  That can be weighted heavier toward the manager in some stores, and more towards the sales team in others. (I should point out that that percentage is of general ledger (true) gross profit

For SF sales people I generally prefer flats with bonuses, since the SF manager is often the person controlling the gross.  A good target on comp per unit sold is between $350 and $375 per car.

I hope that helps!

Best regards,


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