Calculated by subtracting the cost of sales from the actual sales dollars. Gross margin percent is calculated by dividing the gross margin dollars by sales dollars.
Used equipment experts agree that there’s no silver bullet when it comes to a compensation plan. There are numerous variables, personalities and ways of doing business and no single program is a panacea. But like most things, as a manager, you get to choose which behaviors you most want to drive, and also the set of challenges that go along with them.
“Comp plans are never going to make a bad salesman into a good salesman or a good salesman into a great salesman,” says Shawn Skaggs, president/COO of Livingston Machinery, Chikasha, Okla. “But you can influence what they sell and how they sell. You can influence their behavior. You want to build your compensation plan around the things that you can influence and around the goals for your dealership. And for those things you can’t influence with that comp plan, you’ve got to find other ways to deal with it.”
“We’ve also got some employees who we’re still trying to figure out how to motivate,” says Jon Carlo, AgriVision. “And sometimes a program can make a goal seem a little bit out of reach. But as a whole, we feel that ours is driving some company results and rewarding our team financially.”
Another dealer noted that many salespeople would rather hear that their spouse was having an affair than to hear their commission structure was being changed. But when the right system is developed and fully communicated, dealers agree that change can be very positive for high performers, who after even a short amount of time, would resist returning to the “old way.”
In this article recapping a Dealership Minds Summit panel, AgriVision (John Deere) and Livingston Machinery (AGCO) explain their experience with various models, and the systems they’ve arrived at for motivating and moving their sales crews at their businesses.