How to compensate your business development team


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

How to compensate your business development team

  1. 1. New Vision Sales Automobile Dealer Sales Training – Article SeriesHow to Compensate Your Business Development Team<br />By the time you are at the point of considering how you want to compensate your business development center (BDC), you have committed to the program and have decided what type of BDC you will have:<br />• a large, full-service BDC that includes customer servicerepresentatives (CSR) who will team, you have committed to theset service appointments and conduct CSI follow-up<br />•a small BDC that only handles sales leads<br />•a hybrid in which your store handles the BDC functions, while an outsource provider handles your CSR-related duties<br />First, let me say that there are literally hundreds of ways to set up compensation plans and none of them is “perfect.” The plan has to work not only for the dealership structure but also for the market, and markets vary immensely.<br />Having said that, it is important for every BDC comp plan to include a motivating factor which is either a bonus structure or an incentive component for performance.<br />Start with business development representatives (BDRs). This is an entry-level position for the BDC department. Let’s be clear that entry-level doesn’t imply that they are unskilled or untrained. It merely means that it is where everyone in this department starts. The BDR position should be paid a small base rate. Hourly may be the easiest, but a salary can be used. Just make sure that, in combination with hours worked, it is compliant with all minimum wage laws.<br />The balance of their pay should be an incentive bonus component based on the number of appointments that show (not just set). I want all BDRs focused on setting appointments, not pre-qualifying customers. There can even be an extra bonus for those who consistently exceed goals. For example, a BDR who averages more than five appointments that show per day is paid an additional bonus.<br />Another option is a commission-only BDR pay plan. No hourly wages are paid, just commission. In this case, it is usually based on shows and sales (for example, $15 per show plus $40 per sold show). Since the BDR is paid on both shows and sold shows, there is still incentive to avoid pre-qualifying any customers. However, management will need to watch closely for a lower effort level on customers who are perceived “no sales.”<br />I am aware of other commission-only pay plans that pay BDRs in a fashion similar to the new “flat rate” commission for salespeople (the same commission is paid regardless of gross). These BDRs make no base salary, but are paid five times the average per-show amount when compared to BDRs who make a base rate. Again, regardless of which pay plan you elect to use, I believe that the function of the BDC is to get appointments to show.<br />Tread carefully when paying BDRs on sales because human nature can lead to filtering and prioritizing for the benefit of the individual BDR rather than for the greater good of the store. My experience has shown that decision making about the priority of calls should already be made for a BDR. A significant factor in lost business is with short-time salespeople who either cannot or will not follow up as effectively as a BDC. When I ran a sales department, I wanted every opportunity possible, not just the ones that an individual (sales rep or BDR) deemed worthy. Too many cars are sold to those “unworthy” leads by your competitors. Relentless commitment to a BDC (regardless of type), coupled with a tenacious sales team, is how more cars are sold.<br />All shows must be evidenced to be paid. Every salesperson on your sales floor knows who they have sold to this month, and if you don’t pay them on a deal, they will absolutely let you know about it. The BDR should behave in the same fashion. They should keep records on appointments that show. If a customer was scheduled to come in and the floor team did not record it, you can bet the BDR who set that appointment will be researching to resolve it. This little layer of accountability will also improve the proper recording of all store traffic, meaning no more unrecorded ups.<br />BDRs can market themselves with a good “elevator pitch” that gives everyone who asks them what they do for a living a reason to call them for an appointment for themselves, their friends or family. A good sales representative is always prospecting so why shouldn’t a good BDR? It will only increase their income (and the dealership’s profitability).<br />Team leaders (TL) should be paid a base salary plus an incentive. However, the TL will not set as many daily appointments as BDRs due to the additional responsibilities of overseeing several BDRs. Therefore, their incentive should be based on the activity of their team. They help to push performance by showing, rather than just telling. What I mean is, TLs should be capable of posting consistent numbers while helping their team do the same and should be rewarded accordingly.<br />Depending on your local market, business development managers (BDM) should be paid a base salary of $26,000 to $49,000, plus a bonus. For many dealers, the BDM is the only member of the BDC who should have their bonus tied to sales. The BDC’s responsibility is to create traffic that generates enough sales to more than pay for the BDC department.<br />The biggest mistake made regarding BDC compensation is to overpay base salary. There has to be enough performance incentive for your staff to be motivated to earn the most that they can.<br />In addition to the basic compensation plans, there should be motivational incentives from time to time to keep the BDC “pumped up.” For example, if you have a large enough BDC to have more than one team, occasionally run a competition for a week or month. The team that maintains the highest average number of appointments, kept above an expected base, earns a bonus.<br />Before you decide on a plan or even the value of each component of the plan, you need to research your market so that you are offering competitive wages. Without that, your BDC will likely suffer higher-than average turnover.<br />As I mentioned in the beginning, there are many variations of pay plans. You just need to find the one that works best in your market and dealership. How many cars do you want to sell and how profitable do you want to be? When investing in the right people to work leads and follow up, remember the old saying: “You get what you pay for.”<br />Twitter: New Vision Sales Inc.1670 Hwy 160 West Suite 206Fort Mill, South Carolina 29708803-802-2124Toll Free:<br />