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How to incentivize service technicians with pro forma compensation plans

On today’s episode of Service Drive, Don Reed, CEO of Dealer PRO training, talks about the overlooked process that still exists in our dealerships and how to put a plan into action to provide incentives for your service department staff to increase their productivity. 

Reed first poses the question—Do you measure your sales performance for all salespeople, do you measure the performance of your F&I people? Probably so. However, Reed encourages dealers to hold every individual accountable for their own performance. By doing so, dealers may then determine who is underperforming and how to provide them with more training. 

retail automotive service departmentsMore: 3 C’s to effectively manage and motivate your auto technicians

Sales and F&I personnel are documented by 100% of dealerships, whereas technicians are tracked by 20% of dealerships, according to one study comparing the productivity of salespeople and service technicians. However, if dealers employ hourly technicians, they are accumulating time for the repairs. The service department lacks urgency when management or dealers aren’t tracking these hourly techs.

Reed encourages dealers to create a bonus pay plan pro forma to incentivize low-skilled hourly technicians: For instance, according to Reed, “If tech performance is between 40 and 50%, then this method could encourage technicians to perform better.” Every dealership should implement these metrics to encourage not only the technicians in the service department but also the dealers to achieve the objectivity of daily, weekly, or monthly goals. 

Pay Plan PRO Forma: 

  • Level 1: Technicians performing at 50% should be performing at 65%. The incentive boost pay by $2 an hour, transitioning the $15/hr to $17/hr. The monthly incentive would be not applicable at the 50% pace, but a $193 increase at 65%. 
  • Level 2: Will take the 65% performers to produce 80%. Increasing the bonus to $4/hr and a monthly incentive of $447.
  • Level 3: Takes the 80% performers to 100% which will then transition techs to get paid at a flat rate to improve overall profitability.

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Don Reed
Don Reed
After 26 years in the automobile business as a dealer, GM, sales manager, service manager, service advisor and salesperson, Don began a new career as a consultant and trainer. As CEO of DealerPro Training and founder of The Don Reed PRO Training Network, he has worked with hundreds of dealerships and major dealer groups across the U.S., Canada and the U.K. to increase profits in their fixed operations. He was rated a Top 10 Speaker at the NADA convention for four consecutive years. Visit the firm’s website at DealerProTraining.com.

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