The Key to Effective Service Advisor Pay Programs

The Key to Effective Service Advisor Pay Programs

As with any compensation program, the first thing you'll need to do is conclude what you want to accomplish with any change in employee behavior. Where most shop owners get into trouble is they'll immediately say they want to see higher sales when it comes to their service advisors. So they'll put their advisors on a commission program that's based on sales, and as you can imagine, their sales typically go up. Unfortunately, so do their expenses and customer complaints.

By Bob Cooper

As with any compensation program, the first thing you’ll need to do is conclude what you want to accomplish with any change in employee behavior. Where most shop owners get into trouble is they’ll immediately say they want to see higher sales when it comes to their service advisors. So they’ll put their advisors on a commission program that’s based on sales, and as you can imagine, their sales typically go up. Unfortunately, so do their expenses and customer complaints.

The reason for the unintended consequences is simple. The advisors will typically try to generate a higher income by increasing their sales, but at the same time will pay less attention to controlling your costs, and in many cases, less attention to customer satisfaction.

The answer? All that you need to do is be clear about the behavior you are looking for, and take the unintended consequences into consideration. When I was still operating shops, I always looked for my service advisors to generate three things: sales, gross profit, and happy customers. Everything else was secondary. So here is what you need to do…

Set clearly defined sales goals for your advisors, and put a fair and equitable commission schedule in place. If your advisors have flexibility in pricing, or if they have any significant control over your direct labor costs, then let them know that in order to earn the added sales commissions, they have to reach a predetermined gross profit goal (as a percentage of your total sales), and they’ll need to reach a predetermined customer satisfaction goal as well. By taking this approach, your advisors will realize that with each and every sale they’ll need to consider the profitability of the job, and they’ll need to ensure 100% customer satisfaction as well. If you take my advice, your sales, profits, and CSI scores will go up!

For additional help running a more profitable, successful auto repair business, learn more about Elite’s auto shop management solutions.

 

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