I used to work on marketing campaigns for car dealers. Car dealers are the best marketers out there, and you learn a lot about selling and pitching your brand to the public from these guys. From radio and direct mail to on-the-spot sales tactics, car salesman are the tops, even if they rank low on the the public trust.
I know better salesman than car salespeople though - and it's the dealers themselves. They work their magic and their margins with a variety of compensation plans so complex that the best accountants would have problems deciphering them.
The comp plan becomes a pitch for luring top salespeople to a dealership. If you're making 2% on the Revenue of each car sold, maybe you'll move for 10% of the Total Profit on the car. If you really want to move up, you'll go to a dealership offering 40% on the Actual Profit.
If you're savvy enough about car dealers, you'll know all three of those comp plans can yield the exact same amount of money. Dealer holdback, reconditioning, special fees, and draw can all affect a salesperson's comp - but when they're talking with friends, all you hear is 40%...
The same is true of recruiting companies.
Gross profit, gross profit margin, average gross profit margin, recruiter pools, position splits, and fees ranging from referral to administrative to Accounts Receivable to performance bonuses affect all commission plans.
I've been paid 40%of the average, 2.5% of the total, and 30% of my total Gross Profit. I've been salaried and commission, worked off a draw, and received bonuses for hitting quarterly targets.
So the question is, to what extent can a company claim the best compensation plan in the industry?
For comparison purposes, I'd be curious to see who really has the best compensation plan in the industry. If you're interested, e-mail me in confidence and we'll start to ask the tough questions. If you own a company or have the courage to match your plan against that of others, send your name and company and we'll offer a challenge to your competitors.
