The Most Effective Pay Plan for Service Advisors

Do have a question for you Chris, and it's about two topics that you just recently talked about on your podcast there, which I have a lot of interest in. I'm a first year writer so this is my first complete year and I'm loving it thus far. I work at a great dealership that's busy and has been a pleasure to work for thus far.

But for like the past 20 years, 20 plus years I've worked in public service, in education. So you know, I bring a lot to the table and I believe that a lot of the things that you review in your show are truthful. So I was listening in about focusing on the things that you can't control. Like that 85% you were saying.

Previously before that you were also talking about gross profit and as writers, how it's the worst way to pay the advisors and the writers, which I agree with you 100%. Gross profit, as you mentioned, writers have nothing to do with.

And don't see it and don't control it. So that 15 additional percent of things we can't control often have a big impact on the money that the writers can make. So my question to you, if this was the worst way to pay the advisors.

What'S the skinny on the other ways to pay us? Appreciate you taking my call, Chris. Look forward to hearing some answers.

Thanks for the question. So if you heard me talk about nada, what happens is dealers go to 20 group meetings and then somebody in there says, oh, I pay my advisors on gross. You got to pay them on gross. They have no idea why. Most dealers don't even understand service. And so they think that by paying advisors on gross they're protecting themselves somehow, like they're punishing the advisors. I think sometimes when I've asked people why they think it, why you pay on gross, they say because it lowers discounting. So they don't even understand what gross is. It's the weirdest thing. Yeah, it makes no sense whatsoever. It's a huge demotivator because advisors on most DMs is can't even tell what the gross is easily and so they don't know what they're tracking to make. It's kind of like an illusion also like there's, there's a demotivating factor because sometimes office managers are putting other things to the cost of sale. Like maybe they're putting the whole quick lube against gross. So just everybody knows the difference between sales and gross is the cost of the tech. But are you putting benefits in there? Are you putting vacation school in there. Like there's lines on the financial statement for that. But a lot of times office managers are charging unproductive wages against that and just things that are completely out of the advisors control and that they don't understand. So it makes zero sense. I think the, in the intention was misunderstood. Like why, why that's so common. Like it went through the industry like wildfire. Like everybody was doing it and it never made any sense. So my preferred pay plan is I pay the advisors a percentage of everything they write warranty, customer pay, internal.

I know some people believe that you don't pay advisors on warranty which is. Nope, that is I, I and internal. Like they're like well it's just a part of whatever you're, they're still doing the work though. Yeah, they do. Like I, it's so funny. Like I don't know how many times there's been, you know, somebody who says like they're adamant I don't pay advisors on internal. And on a Monday morning I'm watching a customer that just bought a car not get helped because nobody wants to ride it and they're, they're sitting in their office checking their email with their seatbelt on, completely oblivious to the fact that they're wrong in their opinion and understanding of what that does. So the other thing is. So then another trend is that they will pay just on labor, not on parts. That's always fun to come in behind because as soon as you start paying the advisors on parts, the part sales go up. It's odd but they'll let extended warranties or customers bring in used parts. It's the, you know, weirdest, oddest thing that they do. But so part sales go up, you know when you flip them back to being paid on parts or flip them too, being paid on parts. So at the top of the pay plan.

And usually I try to make this, 50% of the advisors pay is a percentage of parts labor, internal warranty, customer pay. Right. So that's 50% of the pay. Now that'll change if I'm in a scenario where the advisors are going to have a base. So then it won't be 50% of their, their pay. So it'll, it'll be less. Then 30% of their pay is going to be on CSI if it's a manufacturer that has CSI. So I want, so let's say an advisor makes $6,000 in a month and they don't hit CSI. I want them to make four. I want it to hurt. I want them to be vested. I don't want an advisor that will just sell and doesn't care about CSI or the customer experience. Thanks so much for watching this clip of Service Driving Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.