Keep your hourly rate competitive and implement fresh incentives daily and monthly.
BY BILL WITTENMYER
A friend of mine says all the time that “Our pay raise becomes effective when we are.” It is his way of saying that we earn more when we do more, when we become more productive. Sounds simple and logical enough, but devising a productive pay plan actually is one of the more challenging undertakings at a dealership, especially where business development centers are concerned.
Many different thought processes and operational considerations are involved when it comes to paying BDC representatives. It is not easy – in fact, it can be monumentally difficult – for a dealer to balance optimal efficiency and BDC production vs. cost and ROI.
Concede That This Is A Tough Job
In discussing the broad options for compensating BDC reps in this article, let’s first face the obvious: Running a BDC as a manager, or working as a phone agent, is difficult. Very few people aspire to make calls all day, every day. It’s a tough job that most of us would regard as repetitive and mundane.
Also, dealers should recognize that the skill set a good BDC agent must possess is not commonplace. Just think about the number of different phone scenarios he or she must executive properly, especially from the service department’s point of view. With those calls, the BDC rep becomes the voice of fixed operations and must understand and maintain numerous operation codes and technical information; juggle scheduling constraints, tech levels and hour optimizations; and meet customer service and experience expectations.
Finding people with those talents isn’t easy; retaining them is even harder. However, high labor turnover is detrimental to the BDC’s expense structure and negatively affects customer experience. To run a successful BDC, a dealer must implement a pay plan that is attractive enough to recruit and retain talent, but that also maximizes operational efficiency and productivity.
With those challenges as a backdrop, let me add that every dealership’s culture is unique. So, a “one size fits all” pay plan for BDC agents is ill advised. Dealerships in heavily populated metro markets have different challenges than those in rural areas, including BDC compensation. The keys to success for any BDC lie in performance and monitoring of production, which includes tying monthly activities and goals to the pay plan.
Pros And Cons For Hourly Plan
When developing a pay plan for BDC agents, a dealer must consider both structures: salary or hourly rate. If each approach didn’t have many advantages and challenges, the choice certainly would be easier.
While salaried BDC staff means no overtime and (presumably) improved retention, job stagnation, lack of performance and disproportionate costs-to-revenue-generation ratios can become problems. Hourly wages enable dealerships to employ more agents, reduce per-person base compensation and control benefit costs. Dealers also get more flexibility in hours of BDC operation. However, overtime expenses can climb, and reps sometimes become less productive during their regular hours in order to ensure they work overtime.
Don’t Cut Corners On Base Wage
Dealers must weigh several important provisions in considering an hourly pay plan for their BDC, but the most significant is to pay agents an hourly wage above the average for all industries in their region and for comparable local markets. I believe if they pay more, they will attract a higher-quality talent base.
Choices diminish if a BDC agent will make no more per hour than at the fast food restaurant down the street. That person will be inclined to take the fast food job, which is easier and carries less responsibility. Thus, the talent from which you can choose just dropped a grade level – maybe more.
It also is crucial to aggressively manage the BDC rep work schedule and hours, with the goal of avoiding overtime. Of course, you will always have employees who “call out” and need their shifts covered, but the dealership can prepare for that event with a deeper agent bench. If overtime is unavoidable, dealers need to make sure it is tied to call-outs and not to reps not completing their original tasks during regular hours.
The Kinds Of Bonuses That Work
A BDC that utilizes an hourly pay structure cannot thrive without incentives. Some of the best I see come in the form of contingency bonuses.
First, the dealership should implement a unique goal for a single daily bonus opportunity. For example, you could add in a one-day bonus (for a set dollar figure) for every vehicle detail upsold when scheduling a service appointment.
That incentive should be implemented as a “daily difference bonus,” and incorporated into agents’ word tracks. For every upsell executed, give the rep a bonus on top of the hourly pay. Change the goal and bonus amount each month; variety will keep the targeted goal fresh and provide an incentive for increased performance in targeted areas of production.
Also, a dealer could institute a monthly bonus based on less-defined concept, such as the “call of the month.” The criteria should be set each month, based either on a scoring system or on the general goals for that call. Criteria should stem from the goals set for your BDC, and all phone calls that fit that month’s criteria would need to be analyzed or reviewed.
At the same time the bonus is awarded, you should take advantage of the opportunity to review the call and to mentor the entire team. The bonus needs to be substantial in a BDC agent’s eyes – say, $200. You could include other monthly call quality bonuses for second and third place.
I have seen such bonuses promote a happier and more satisfied workplace and let BDC agents showcase their skills. They don’t always have to be monetary; restaurant certificates or event tickets accomplish the same purpose.
To summarize, these are the key considerations to maximize the effectiveness of a BDC agent hourly pay plan:
- Offer above-average pay. If you pay average hourly wages, expect average talent and performance.
- Set performance goals, and align incentives. The goals your dealership has for its BDC must be established and clearly understood – number of attempted dials, successful contact ratio, survey completions, average call length, number of script variations throughout the day, etc. Then, the pay plan needs to incent those goals judged as most crucial to the dealership.
- Keep directions simple and concise. Employees who don’t understand the incentive or how to achieve it will lose belief and focus, and fail to accomplish the goal. Don’t overcomplicate the qualifiers or the scoring methodology for the incentives and call reviews.
- Change things up. Keep monthly goals and bonuses fresh. Reward different skill sets by changing the goals every month. This gives BDC agents more opportunities to succeed and works on their areas of deficiency.
- Measure performance and provide feedback. It’s critical to measure every day the important BDC activities that your dealership manages. Provide reps with feedback on success, and coach them on items that need improvement.
Regardless of what BDC pay structure your dealership implements, the mission always is to define clear goals and manage activities and expectations throughout the day, every day. A pay plan is merely a guide to achieve the goals that your dealership has set for the BDC.