Sales Commission

[pagangoddess]

I'm wondering who works for commission and how their respective companies structure commission pay. And if you think they are fair or how they could be improved.

The owner of the company I work for is trying to enact commission pay for the Sales Dept, Parts Dept and Service Dept. (I work for a motorcycle shop) But it's not working out so well and there are definitely issues that need to be ironed out. He said he was open to suggestions but seems how I've never worked for commission before I don't know how those things are structured.

[TakeFive]

The owner of the company I work for is trying to enact commission pay ...But it's not working out so well ...

I don't doubt it. Commission structures reward the people that get results and punish the rest. Darwin economics.

Rough time for this too. I have some contact with the motorcycle aftermarket parts industry and sales have been in the toilet for the last several months. Lots of layoffs due to decreased demand. Even Harley is having to borrow money at near credit card rates to keep going:

http://www.forexhound.com/article/Stock ... ger/129004

So what kind of a commission split did they offer you?

[pagangoddess]

I don't earn commission. I'm the bookkeeper. We're trying to find a way to pay the guys at the parts counter commission on what they sell. They already have commission for billable hours and new bike sales but not the parts dept. It's hard to structure it because new bike sales and service both sell parts also.

So we trying to find a way to pay them commission without it being too difficult for me to calculate. We're working with Quickbooks POS. I've never worked with this program before.

[TakeFive]

We had kind of a similar situation at a place I worked. Owner wanted to pay the engineering staff a performance bonus calculated off of sales from when the project was started and ending 3 years later.

The idea was to get the engineers to bust ass and get the product on the street so they would have the greatest part of 3 years to collect a bonuses which were paid quarterly. Problem was how to divide the money. Is the software developer more valuable than the guy that does the test equipment? Owner came up with some convoluted formula based on job title, years of employment, etc.

Yikes. I figured we’d never get paid and be unhappy if we did. So we came up with a simple plan. Money for the product goes into a pot. Pot gets divided 6 ways. All 5 engineers each get one share, and the guy that “owns” the project also gets the sixth share.

Everyone understood it, making it easier to accept. Bookkeeper liked it too, since it was easy to calculate. Maybe you could do something similar?

[pagangoddess]

That's what I was leaning towards. But trying to get the sales and service guys to give up the commission they already make probably won't be easy. The other problem is it takes forever for the owner to make up his mind. And just when you think he has he'll change it the next week.

Another idea they tossed around was to just give them a percentage of the gross profit for their individual sales. The higher the base pay the less the commission would be. In POS you can assign an associate for each transaction. I can easily pull a report to see who sold how much. Seems pretty simple to me. Hopefully he'll make a decision soon.

[lovestolift]

I worked commission for a snack food company a few years ago. I made a salary + 6% of my sales. It's not as complex as your situation since I had my own area and everything that was sold there was sold by me. A guy at a rival company made 12% commission without the salary. Even at his company it varied, some had Salary + Commission. But if you have a system where it recorded each person's sales it would be easier. Do they have to punch in code at the POS to use it?

[Doo]

I heard some of the AIG people's bonuses were really commissions and that one guy's salary was just like the current CEO, $1. So, he may end up getting taxed at 90%! Need to be careful asking governments to fix what people believe to be inequities.

[atypical1]

I don't earn commission. I'm the bookkeeper. We're trying to find a way to pay the guys at the parts counter commission on what they sell. They already have commission for billable hours and new bike sales but not the parts dept. It's hard to structure it because new bike sales and service both sell parts also.

No offense but this crap is exactly why I work on my own bike. If I know the service person is getting a commission on selling me work that I potentially don't need I would go absolutely ballistic. Same thing if you're trying to sell me parts that I don't need.

Want to increase the revenue of your shop? Be fair, provide good service, and don't try to push things too hard.

james

[pagangoddess]

I worked commission for a snack food company a few years ago. I made a salary + 6% of my sales. It's not as complex as your situation since I had my own area and everything that was sold there was sold by me. A guy at a rival company made 12% commission without the salary. Even at his company it varied, some had Salary + Commission. But if you have a system where it recorded each person's sales it would be easier. Do they have to punch in code at the POS to use it?

No there's no code. It's just a drop down menu they select their name from. All I have to do is run a sales report by employee.

[pagangoddess]

I heard some of the AIG people's bonuses were really commissions and that one guy's salary was just like the current CEO, $1. So, he may end up getting taxed at 90%! Need to be careful asking governments to fix what people believe to be inequities.

Don't get me started on the ineptness of the US government. I'll hijack my own thread.

[pagangoddess]

I don't earn commission. I'm the bookkeeper. We're trying to find a way to pay the guys at the parts counter commission on what they sell. They already have commission for billable hours and new bike sales but not the parts dept. It's hard to structure it because new bike sales and service both sell parts also.

No offense but this crap is exactly why I work on my own bike. If I know the service person is getting a commission on selling me work that I potentially don't need I would go absolutely ballistic. Same thing if you're trying to sell me parts that I don't need.

Want to increase the revenue of your shop? Be fair, provide good service, and don't try to push things too hard.

james

I haven't gotten the impression that any of them are pushy. Besides their base salaries are reasonable for the size of shop it is so the commissions aren't much. But I haven't been there that long and am still learning the ropes.

[atypical1]

No worries and I didn't want to come across as a jerk. It's just that commission in the parts and service department seem like such a bad idea. Whether the commissions are small or not their still an incentive and with the prices of things being what they are it would be tempting.

james

[TakeFive]

No offense but this crap is exactly why I work on my own bike. If I know the service person is getting a commission on selling me work that I potentially don't need I would go absolutely ballistic. Same thing if you're trying to sell me parts that I don't need.

That's perfectly understandable. But doing an up-sell often can be beneficial for the customer (as well as the shop). Lots of newbie bikers need to be told to change tires even though it looks like there's plenty of tread. Then they come back and say "wow - this thing handles so much better!". Or the guy that's bolted on new pipes - and bolted off 10 HP. He needs to be told to get the thing on the dyno and re-jet it.

Anyway, back to the problem (as I understand it)

We're trying to find a way to pay the guys at the parts counter commission on what they sell. They [the shop] already have commission for billable hours [for service] and new bike sales but not the parts dept. It's hard to structure it because new bike sales and service both sell parts also.

Added a little to your statement to clarify. So it's just the parts guys you want to add to the commission structure; sales and service already have some commission structure?

[pagangoddess]

We're trying to find a way to pay the guys at the parts counter commission on what they sell. They [the shop] already have commission for billable hours [for service] and new bike sales but not the parts dept. It's hard to structure it because new bike sales and service both sell parts also.

Added a little to your statement to clarify. So it's just the parts guys you want to add to the commission structure; sales and service already have some commission structure?

Yes that's correct. The parts dept is the only one that doesn't have a commission structure yet.

[dhw]

I don't earn commission. I'm the bookkeeper. We're trying to find a way to pay the guys at the parts counter commission on what they sell. They already have commission for billable hours and new bike sales but not the parts dept. It's hard to structure it because new bike sales and service both sell parts also.

No offense but this crap is exactly why I work on my own bike. If I know the service person is getting a commission on selling me work that I potentially don't need I would go absolutely ballistic. Same thing if you're trying to sell me parts that I don't need.

Want to increase the revenue of your shop? Be fair, provide good service, and don't try to push things too hard.

james

I'm with you, I do what I can myself and use a small independent one man bike shop if it is something I can't handle. I've also worked in the service/maintenance business for quite some time. There is no way that I would pay our service technicians a commission for work or parts sales. We pay them a decent wage and if we make money at the end of the year they get a bonus. Very few technicians have the type of salesmens skills (non-manipulative selling) that I want. Hell, most of the so-called salesmen out there do not have it! We have had some customers for almost 20 years. You don't get that by using many of the sales and support tactics that I see out there.