Keeping Your In-Dealership Agency Compensation Balanced
There are a number of Compensation Plans to offer a Licensed Sales Producer in the insurance industry. The three top ways are 1) Straight Salary 2) Straight Commission and 3) Salary plus Commission.
In order to decide the best option for your agency, I would first like to explain the 3 and point out pros and cons.
1) Salary – This can be hourly or fixed. The biggest advantage of this option has to do with knowing you fixed expenses. You can set your budget and know your payroll expense is fixed. You also have complete control over the employee. If you want them to do an errand for you it will be done without question. The main disadvantage is that the employee lacks ownership of their work. Since they know that they will get a fixed amount of income they treat the position as a job and not a career.
2) Straight Commission – A true sales representative should like this option. It gives them the ability to earn as much income as they want. It gives them ownership and rewards them for their role as a salesperson. At first glance it would seem a great plan for the agency. The more that is sold the more that the agency makes. If the producer does not produce the agency does not compensate. That is a positive factor of the plan. However, the agency loses control over the LSP. They may want to take a day off, the take it off. They want to come in late, the come in late. You get the picture.
3) Salary plus Commission – Now when I say “commission” I mean “incentive.” This method will pay the LSP a smaller base pay (hourly or fixed) and an incentive based on production. This allows the agency to have a better handle on fixed payroll expense and also rewards the LSP to produce business. The agency can expect the employee to sell but also help out with none sales related work.
So which method should you use in a Dealership Agency? Personally, and based on my years of in-dealership agency experience, I think the best option would be salary plus commissions. A Dealership Agency has a strong retail component, unlike a normal Agency. You are getting your business from the car dealership. The LSP is expected not to just sell but also keep the car deal moving smoothly: Golden Rule #1 “Never screw up a car deal” and Golden Rule #2 “Always refer to Rule #1”. There will always be (non-sales related/very customer service oriented) work that will need to be completed such as verifying the customer’s current insurance, adding the new car to their current policy and more. These tasks are what the salary portion of their pay is for. The LSP is still expected to sell and will get paid commissions for that work and therefore the employee gets compensated fairly and the agency can expect all work to be completed, all the while keeping the agency’s comp in line and under control.
©Copyright 2018, All Rights Reserved. This article was written by Bruce A. Kestenbaum, C.I.C. (Atlas Dealer Services) and with permissions – edited, published and forwarded by Kevin Bradberry – Atlas Dealer Services