On Going Commission... Forever?

I’m trying to figure out a way to pay my sales rep an on going commission on the sales he makes without having to keep paying him if he stops making sales. Here’s the deal.

He’s going to sell listings to auto dealers on my auto site for $10 a listing. I want to pay him $5 for each vehicle listed. So if he sells 10 auto dealers who each list 60 cars a month (600 vehicles) he makes $3000 ongoing as long as the dealers keep listing. But if he quits selling for me, how do I NOT keep paying him for the next 7 years or whatever. There’s only so many dealers locally and say he’s sold them all, now he has nothing to do but keep getting paid. I’m trying to figure out something that’s fair for him and me.

Any suggestions?

Thanks You,
Jason
http://SpokaneCars.org

[GordonJ]

I guess I don't understand.

Once a car is sold, the listing expires, right? So wouldn't attrition solve the problem? Tie his dealer listing to current inventory or put an expiration date, one year, on his contract with you.

Gordon

Originally Posted by Jason Hatchett

I’m trying to figure out a way to pay my sales rep an on going commission on the sales he makes without having to keep paying him if he stops making sales. Here’s the deal.

He’s going to sell listings to auto dealers on my auto site for $10 a listing. I want to pay him $5 for each vehicle listed. So if he sells 10 auto dealers who each list 60 cars a month (600 vehicles) he makes $3000 ongoing as long as the dealers keep listing. But if he quits selling for me, how do I NOT keep paying him for the next 7 years or whatever. There’s only so many dealers locally and say he’s sold them all, now he has nothing to do but keep getting paid. I’m trying to figure out something that’s fair for him and me.

Any suggestions?

Thanks You,
Jason
http://SpokaneCars.org

To add to Gordon's comments...

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Phil

First a question;

1) WHY would an Auto Dealer pay you anything....to list their cars on your site?
2) WHY would an Auto Dealer pay you $10 for each auto listing? Why not $5 per Listing or $1 per Listing?....or $20 per Listing?

Now...here's one of my experiences with Commission Salespeople selling a product realated to Autos;

I was selling a "Gift/Referral" program to Auto Dealers where....the Dealer would have someone at the dealership (one of the secretaries or Sales people) take a photo of their Car Buyers at Time of Delivery.

Every Monday morn the "designated person" would email me the jpegs (along with the Names of the Car Buyers)

I would then enlarge the photos and place them in my MSPub Graphic program (Car Dealer Name & Logo at top...Photo....year at a glance Calendar)and print out a Full Color, 8 1/2 by 11 FRIDGE MAGNET....on my Inkjet and send backto the dealer for him to give to Car Buyer as a Gift.

Car buyer would place Fridge Magnet on their home fridge (because they were PROUD of their purchase and wanted to show EVERYONE who entered their Kitchen)

People entering New Car Buyer's kitchen would see Photo of Car Buyer standing by their new purchase AND....see the Name of the Dealer that sold them the vehicle....thus making this Fridge Magnet a "Referral TOOL" for the car dealer...who GLADLY paid my fee for the fridge magnets.

Now....here's the "Commissioned Salesman" thingee;
After I got a few dealers into this (to use as REFERRALS for ME)....I then went to Auto Dealerships....pulled onto the lots and sat in my car until a salesman came over to me (Car Salespeople take turns going to visit people who drive onto the lot, looking for a vehicle. These prospective car buyers are referred to as "UPS")

When a salesperson (some are female) approached I would hand him/her a few of the Fridge Magnets I had done for other dealers....and ask; "Would you be interested in making some easy, part-time money?"

They'd usually respond with, "Hey! Yeah! Whatcha got?"....or something similar.

I'd tell them I needed someone to SELL the dealership on my "Gift/Referral" program.... using my Fridge Magnets. I'd explain what the Fridge Maget was and how it would benefit the dealership and....if he/she would "SELL THE DEALERSHIP" on my program....I'd give them $3 for EACH and EVERY Fridge Magnet ordered ...for the Next 3 years.....irregardless of whether the salesperson was with the dealership or not.

All I was after was someone to "Sell the Dealership"...and that person would have "Residuals" coming in for the next 36 mos.

At that time...the average car dealers was selling 20 cars a week....80/mo so, this meant the Sales person could be receiving 80 x $3 =$240 a month for the next 36 mos ($240 x 36 = $8,640)

Would it be worth the salespersons TIME....to sell the Owner or GM on using my "Gift/Referral" program....with a potential income of $8,640???

Most said...."You Betcha!" When somone said no....I'd find ONE Salesperson at THAT dealership who DID say "Yes!"

So....I was able to get sales at many dealerships....sending me photos and orders for my Fridge Magnets.

Now....it made no difference to me whether that salesperson stayed with the dealership or not....as long as the dealership KEPT ORDERING....I'd keep paying $3 for each Magnet.

With your program....you could do the same thing. If you feel Dealerships WILL pay $10 per Listing....pay a salesperson 30% ($3ea) up to 25 Listings/mo ($75/mo)....40% of 26 to 49 Listings....and...50% of all Listings 50 and above, per mo.

And....I'd agree to provide this commission rate for 36mos...afterwhich you can re-negotiate. Or....run it for 12 mos....then sit down and take a look.

Don Alm

Waaayy baack in 1998 a salesguy at a radio station came up with an ingenious idea for making money from car dealers.

He got his radio station management to agree to run ads promoting HIS "Auto" website called...www.MinnesotaCars.com

He would charge each dealership $200 MINimum per month.....(up to $1,000/mo... depending on how many cars were listed on the site)

He would then pay the radio station $50/mo for each dealer on the site.

When he got his 25th dealer (averaging $400/mo = $10,000/mo gross less 25 x 50 = $1,250/mo to the radio station)....he hired a salesman....and paid him $50/mo (plus bonuses) per dealer sold (The guy went out and sold over 100 dealerships. I know because I knew the salesguy who did this)

Now.....I lost contact with my salesguy however...."Minnesota Cars.com" is running better than ever. You can look in the "Dealer" area and count the participating dealers.

If you're in Southern Minn you will also see BILLBOARDS promoting "www.MinnesotaCars.com"

There are other radio stations AND TV Stations (in other states) tied in with "Auto Dealerships" where the dealers pay a Flat Fee to the stations. Some of these deals were set up by the Stations and others were set up by Individual Sales people who also set up a website for local car dealers.

Don Alm...wondering why I didn't start one of these when times were good.

Hi Jason,

I ran a website for a couple of years and sold advertising to used car dealers. I offered the dealers a special of 8 cars for $150 per month and $10 per car (per month) after that. But we updated the cars every week.

These guys go to auctions every week. So there is always work getting the pictures and data for the new vehicles they acquire and then the database needs to have the ones that have sold removed, and updated with the new ones. You won't get a lot of repeat traffic if people keep clicking on cars that have been sold or no longer available. Even though we updated the database weekly, we still had people complaining that cars they saw on the website were already sold by the time they called the dealer.

My website had a backend so that sales people could update the cars themselves. I could even assign used car dealers their own account so they could do the updates themselves -- which was a big mistake. (Don't fall into this one)

My problem was getting sales people who could sell. Good sales people always have lots of offers, and trying to train someone new to close sales isn't the easiest task. I spent a lot of my time riding around with the sales people closing sales for them.... which almost killed my web development business -- I wasn't putting the time into it.

On Gordon's suggestion I wrote an eBook about my experience. You can see it here: http://carsite-marketing.com

Don't buy it though. I don't promote this any longer, and the information is old and not up to date with today's standards. If you want a copy of it, email me and I'll send it to you at no cost, if you think it might help.

Best Regards,
Steve MacLellan

Here's a guy who's been working with Used Car Lots since 1996. 15 yrs.

http://www.NWAutoPage.com

He visits 12 dealers a week...same time every week....4 dealers a day...Mon, Tues, Wed....takes photos of vehicles they got in....updates their database and website.

He charges a flat fee per week and x$ for each car over a certain number. I'm sorry, I've lost the info on what he charges. The reason I know this because he wanted me to handle dealers in Southern Oregon. I just couldn't tie myself down to visiting car dealers every week.

There is also another guy who visits car dealers every week and prints out the "Info Sheet" that goes on the "Left Rear Side Window"....giving price and specs on each vehicle. He gets the data from the dealer computer and prints out the sheets on his "portable printer" and sticks them on the vehicles.

He gets $12 per vehicle.

Don Alm

Here's an idea I've been toying with which will make me $15 to $20 more per car than I'm making now from my touch up service. Giving them free listings on my site and free paint chip repair. Then selling them my free pizza cards. Check out the flier. http://www.spokanepaintchips.com/fullservice.html

Thank For All Your Help.
Jason