Mopar
Great Ideas
DEALER Insights for greater Profit
and customer Satisfaction
IV
Authentic Accessories
C o m p e n s a t i o n & Acc o u n t i n g
Mopar
Great Ideas
DEALER Insights for greater Profit and customer Satisfaction
C o m pT ei np ss a t& i oT ne c& h Acc
n i q ou ue ns t i n g
I n d e x
Introduction
Section I: Compensation and Rewards
A.The Accessory Champion
B.Sales Staff (New/Used)
Section II: Internal Accounting
A.Sharing the Profits and the Costs
B. Sales Department versus Parts Department Profits
C. Sales Department versus Service Department Profits
Section III: Higher Profits are the Bottom Line
A. Profit Calculator
Mopar
Great Ideas
DEALER Insights for greater Profit and customer Satisfaction
C o m pT ei np ss a t& i oT ne c& h Acc
n i q ou ue ns t i n g
This document gives you ideas about compensating your staff and allocating the profits generated
by accessories sales. These suggestions, gathered from the nation’s most successful accessoryselling dealerships, should “fit” into your dealership’s accessory program.
Mopar Accessories and Performance Parts are a real opportunity for your dealership to bolster
the bottom line while also increasing customer satisfaction. However, for your dealership staff to
become excited about accessory sales, there has to be “something in it” for them.
This document will discuss compensation plans that are working well for successful dealerships as
well as their methods of dividing profits among departments.
SECTION I: Compensation and Rewards
Compensating your staff for accessory sales is important and can be addressed in a number of
ways. A good accessory compensation plan creates a team mentality among Sales, Service and
Parts where everyone shares in the success. While there is no one best answer to the question,
“How should I compensate my people?”, successful dealerships have developed a variety of
effective solutions.
In most dealerships, the Sales Department wraps up the accessory sale at the end of a vehicle
purchase. In other dealerships, accessory sales are handled by an F&I person, a Parts or
Service Advisor, or by a special Accessory Champion. You will need to structure your accessory
compensation to accommodate your dealership’s unique selling system.
A. How to Compensate an Accessory Champion
Details: The primary responsibility of an Accessory Champion is to increase accessory sales and
profits. The Accessory Champion is also responsible for:
• Training Salespeople on accessory features and benefits
• Coordinating participation with Mopar & Business Center promotional programs
• Ensuring that all customers (new/used) are given Mopar Accessory sales presentations during
the vehicle purchase/lease process
• Ensure that an accessorized vehicle (s) is on display in the showroom
• Tracking aging accessory inventory and offering spiffs and promotions to sell these items
• Keeping track of new products being launched throughout the year.
Compensation for an Accessory Champion resembles that of a Sales Manager. At the dealerships
we researched, compensation typically consists of a salary and percentage of accessory sales
or profits. This provides incentive to increase accessory sales — the very reason for hiring an
Accessory Champion.
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B. Suggestions for Compensating Sales Staff
1. Offer a Commission on the Total Sales Price
Details: Add the selling price of the accessory to the selling price of the vehicle, and pay the
normal percentage commission. This is a very popular method because it is easy to implement.
Ways to Make It Happen
• Announce the new compensation policy at your next sales meeting (new/used)
• Clearly explain the pricing and commission calculation to your staff
• Create your Salesperson commission system with sufficient remaining profit allocated to
compensate and motivate your Parts and Service Departments (See C: How to Compensate
a Parts Manager.)
• Pay your Salespeople in the same manner as you would for car sales, by rolling the accessory
sale into the vehicle sale price total. Salespeople already have a clear understanding of
commission calculations
2. Offer a Commission on the Accessory’s Price
Details: Some dealers would rather not pay the same commission on Mopar Accessory sales as
they currently pay on vehicle sales. That’s when paying a percentage commission based strictly
on the value of the accessory sale makes good sense. This straightforward approach motivates
Salespeople.
Ways to Make It Happen
• Pay the Salesperson a percentage commission on the selling price of the accessory
• Pay up to 10% of the sales price on an accessory only, or up to 5% on the accessory and labor
• Offer a bonus of 2% of retail price on accessories, which goes into the Salesperson’s account
for redemption on Mopar Sportswear
• Offer spiffs for the achievement of set goals (See 3: Offer Spiffs as Compensation or as
Extra Incentive.)
Pay a percentage commission based on the item’s gross profit:
• Clearly define what you mean by “gross profit.” Does it include profits from the installation,
or only from the part itself? Some dealers use the selling price of an accessory, less dealer
net, to calculate the gross profit figure
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DEALER Insights for greater Profit and customer Satisfaction
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3. Offer Spiffs as Compensation or as Extra Incentive
Details: Fixed dollar amounts per unit sold, or spiffs, are another popular way to reward people for
their accessory sales efforts. Its advantage is simplicity.
• If desired, spiffs can be targeted to boost sales of particular items
• They can also be offered to anyone in your dealership who sells Mopar Accessories, not just
those who are normally paid on commission. For example, one dealership pays spiffs to the
Body Shop and Service Advisors for selling accessories to owners in the store for service work
• Distribute your accessory commission checks and spiffs at the weekly sales meeting. This will
motivate your Salespeople, develop a little team competitiveness, and help inform staff of the
benefits of including accessories as part of their vehicle sales
Ways to Make It Happen
• Develop a tiered system of spiffs, so that you don’t pay the same reward for selling low-priced
items (such as floor mats) as you would for higher-priced items (such as running boards or
navigation systems)
• Provide limited-time spiff incentives on selected items, such as a $10 spiff for each Bedliner
sold in a particular month
• Announce to your staff that Salespeople must sell a minimum of $500 worth of accessories
at time of sale to receive a $25 check. If the sale is $1,000, then the Salesperson would receive
$50, and so on
• Direct your Accessory Champion to equip a display vehicle with an extensive accessory
package. The Salesperson selling the vehicle is awarded special recognition at the sales
meeting by the Accessory Champion
• Stage a “spin-and-win” or “dartboard throw” for cash at the weekly sales meeting to generate a
little accessories excitement
• Reward the Salesperson with the highest quarterly accessory sales with a $100 gift certificate
• Have your Accessory Champion offer spiffs on aging inventory and use the weekly sales
meetings to present the bonus checks
• Have your Parts Managers run monthly specials and provide bonuses to Sales personnel
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Great Ideas
DEALER Insights for greater Profit and customer Satisfaction
C o m pT ei np ss a t& i oT ne c& h Acc
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SECTION II: Internal Accounting
A. Sharing the Profit and the Costs
A topic related to compensation concerns the sharing of profits from accessory sales between
your dealership’s departments. Two primary questions come up:
1. Does the Sales Department (new/used) deserve to share in accessory profits? Or should profits
stay in Parts?
2. Should the Service Department forego some profit by providing lower internal labor rates for
accessory installation?
There is no one best answer to these questions. You’ll need to decide which approach is best
suited to your dealership and your market. Many dealerships we have researched found that this
dilemma is best solved out in the open, with all departments in the dealership agreeing on the
profit structure.
Your challenge is to create a solution that everyone can live with, because an unhappy participant
will not work to his or her full potential, and that will limit the success of your accessory sales.
Ultimately, it is an issue for the Dealer Principal to decide as it is the entire store that benefits
from the overall profit.
B. Sales Department vs. Parts Department Profits
Details: Most dealerships believe that the Sales Department deserves a cut of the accessory
profits in return for selling accessories; therefore, they mark up the cost of accessories. Others
believe that accessory profits should be kept in the Parts Department (with Salespeople receiving
individual compensation.) They sell to customers at prices established by the Parts Department.
Here’s a short list of some of the various methods used by dealerships to account for the profits
on accessories (excluding installation):
• Parts Department sells to Sales Department (new/used) at a percentage over cost. Sales then
marks the accessories up to customers*
• Parts Department sells to an Accessory Department with a markup. Accessory Department
sells to customers with a markup*
• Parts Department sells to Sales Department (new/used) at retail. Sales Department does not
mark up accessories, but Salespeople are paid spiffs by Parts Department*
• Parts Department sells to Sales Department (new/used) at retail. Sales Department does
not mark up accessories, but Salespeople are paid a percentage of the total accessory price
(parts and/or labor)*
*These are ideas only. Dealers are not required to use any particular pricing method shown.
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Ways to Make it Happen
If your parts department is maximizing their dealer rewards, they can be earning up to 10% off of
the dealer net price of accessories. In addition, if your store is enrolled in the “AHQ Club” there is
an additional 4% discount on any accessories recommended by ARO.
C. Sales Department vs. Service Department Profits
Details: To enable your dealership to offer Accessories at a competitive price, the Service
department must be efficient when installing Accessories. For example, when installing running
boards on eight new trucks, there is little efficiency in having eight different installers do the
job. Using a dedicated Accessory installer will allow that person to become efficient at installing
Accessories. Paying that installer at an hourly rate allows the Service department to charge
a specific dollar amount for each Accessory. Accessory installations often incur lower costs
than other service work. There is little need for shop materials or hazardous waste disposal, for
example, and some accessory installations are simpler than others to perform.
Keeping all installations within your service department will lead to higher overall profits for
both the service department and your dealership. Sending Accessory installation work down the
street only moves profits down the street! The Service Department should consider the Sales
Department a large customer, and offer them a discount as they would any other large customer.
Ways to Make it Happen*
• If the Service Department has unused capacity, use lower rates to help increase sales and,
therefore, installations
• Installation can be charged out by the Service Department, with installation performed using the
lowest-cost method. If a $12-an-hour employee can install the accessory (such as a bedliner),
a $30-an-hour technician needn’t be used
• Have your Service Department use Mopar Accessory time standards to bill installation
labor time. You may choose to revise the Mopar Accessory time standards to reflect
your dealership’s service experience, and print up your own time standards to bill Service
Department rates
• Set up a separate Accessory Installation Department with technicians who only install
accessories and are paid a flat rate. The customer labor rate for accessories could be, for
example, $30 an hour and you can set your own time standards. You may charge more for
installation by a using a separate department with pricing based on the competition in your
area. Technicians would again be paid a flat hourly rate
• Use your prep department to install all pre-loaded accessories. The Sales Manager considers
this part of his “cost-of-sales” expense, absorbs the labor hours into the sales budget and
installs all accessories on a “no-charge” basis
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Great Ideas
DEALER Insights for greater Profit and customer Satisfaction
C o m pT ei np ss a t& i oT ne c& h Acc
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• When prepping a vehicle for the used car lot, you might check the floor mats for excessive wear,
or consider adding a Remote Start in place of a lost key.
• Have your Parts Manager assign an Installation Person to his department and budget. This
hourly Parts Department employee installs all accessories (with the exception of complex
installations), resulting in competitive installation rates and times. The retail installation charge
is then determined by actual installation time. This tactic can then be marketed to new-vehicle
customers as a discounted rate specifically for new-vehicle owners who purchase accessories
• Use the Body Shop to install pre-loaded accessories at the lower Body Shop labor rate.
Dealerships that have used the Body Shop to install accessories determine actual retail
installation rates by using Mopar Accessory time standards, with some exceptions for more
complicated installations
*These are ideas only. Dealers are not required to use any particular pricing method shown.
SECTION III: The Bottom Line is Higher Profits
It’s well worth your efforts. Customers see their vehicles as major investments and want to get
the most utility and enjoyment they can for their dollar. Accessories enable them to maximize
their vehicle’s recreation, vacation and work potential. Accessories are also tempting to
customers who just want to “personalize” their vehicle.
A. Profit Calculator
Use the Profit Calculator (located on this CD) to determine the profits you could be making by
actively selling Mopar Accessories.
MoparMOPAR
Accessories
Profit Calculator – Accessory #1
ACCESSORIES PROFIT CALCULATOR - ACCESSORY #1
®
1 Premium Carpets
Floor Mats
Standard Wholesale/Retail Margin Calculation
Suggested List
U.S. Dealer Net (wholesale) Cost
$
$
Standard retail dealership profit $
(Fill-in yellow cell)
(Fill-in yellow cell)
77.00
55.00
22.00
4
Sales Department
Retail Cost To Consumer at Purchase
Retail Accessory Selling Price
Retail Labor Cost
$
Add $
77.00
13.00
Total Retail Price to consumer
$
90.00
$
64.42
Sales Department Cost of Sale
Parts Department Price to Sales Department with markup
Salesman Commission
2
Premium Carpets
Floor Mats
Parts Department
Accessory Factory Discount Calculation
U.S. Dealer Net (wholesale) Cost
6
Dealer Rewards/ Discount %
(Zero-if everyday low price)
(fill in, above)
Parts Department Markup Calculation
Markup (of dealer net)
3
Percent Marked
Up
20
$
55.00
Dealer Rewards/ Discount
$
Final Net
Dealer Net
Cost $
53.68
Parts Profit
$
10.74
64.42
5
Service Department
3.78
13.00
$
81.19
Sales Dept. Total
Profit $
8.81
Departments Profit Summary
Aggregated Total from all Departments
$
Add $
Add $
Parts Department Markup
Service Department installation labor profit
Sales Department profit
10.74
9.10
8.81
$
28.64
50 units = $
1,432.24
Total
Total Labor
0.2
(fill in, above)
Labor Profit
$
$
Total Dealership Profits per unit
Installation Cost Calculation:
Labor (hours)
on Sales Department
accessory profit
Total cost to Sales Department
(1.32)
Final Price to Sales Department $
(fill in, above)
30
Retail Labor cost from Service Department with markup
70
X labor rate:
$
65.00
$
13.00
$
9.10
Net (wholesale) Labor Cost $
3.90
(fill in, above)
percent X Labor cost
(fill in, above)
6
Annual Profits
(Total Dealership Profits per unit) x (# of Units) = Annual Dealership Profit
$
28.64
$
2,263.00
X
# of vehicles required to sell to achieve annual gross
profit level
8
0.63
16155
08112.75M © 2011, Chrysler Group LLC. All rights reserved. Chrysler, Jeep, Dodge, Ram and Mopar are registered trademarks of Chrysler Group LLC. Printed in U.S.A.