True Stories From A Former Car Dealer #34: Spiffs

Written By: Jerry Reynolds | Sep 17, 2018 12:00:00 AM

Spiff may not be a word most people know unless they've been in the car business. This term was around before I got into the business. Typically spiff was used in conjunction with up, as in spiffing up something, but in the car biz, it was a term for bonuses paid in cash.

Salespeople loved cash bonuses, money that they could get the same day they performed a task. Commissions were paid on a weekly basis, but much depended on when the car deal was processed. For instance, there was a Wednesday cut off for Friday checks. If a salesperson had a deal not clear (meaning everything was not in perfect order) until Thursday, it would not show up on his or her check until a week from the following day.

Cash spiffs gave them "walking around" money for lunch or dinner, or going out after their shift was over. It was a big deal to them, and I was always mindful of that. Strictly commissioned salespeople had a tendency not to plan ahead. If the salesperson had a big month or even a big week, it was typical that he or she did not put anything away in case the next week wasn't as good. Often, if a salesperson got a big check, it went to paying bills that were due or overdue.

I knew that feeling of going to my sales manager to work out a deal, needing that deal to make my mortgage. I was constantly reminding my managers of this, to remember that feeling and to make sure they did everything possible to help our salespeople. Selling cars is not an easy life. To make good money, you had to be there on holidays, put in long hours, and miss family events. Cash spiffs would often supplement the commissions, plus your best salespeople loved the instant gratification.

As a manager and later an owner of a dealership, the challenge was to keep spiffs fun and exciting. We had some spiffs that were constant. For instance, a hat trick any day of the week paid $100 in cash (bear in mind this was 12-18 years ago). A hat trick was the term for selling three cars in one day.

We had sales meetings every day at noon, which was the time both shifts were there. The morning shift worked 9 AM to 2 PM, late shift was noon to closing, and that alternated every other day.

On Saturday morning, everyone had to be there by 9 AM. This was the only sales meeting I attended, and I was always the last to speak. I handed out cash to those who had good customer satisfaction surveys. Everyone got $25 for each good survey returned to Ford, and for the volume sellers who took care of our customers, this could sometimes be several hundred dollars of cold, hard, cash to start the biggest sales day of the week.

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From my standpoint as the owner, I wanted to try to find that fine line of motivating people but getting a return on my investment. Spiffs that were paid were no different than pulling money out of my own wallet, and I sure didn't want to waste it.

One of my favorite spiff programs was putting envelopes on the wall in the sales office. On a typical Saturday, that would be 50 envelopes, and every time a car was sold, the salesperson got to put his or her name on an envelope. Inside those envelopes were varying amounts of money, from $5 in most of them, to $25 in quite a few, there were several $100s, there were vouchers for a tank of gas, and one envelope had $1000 in it.

The kicker was if all the envelopes were not filled, nobody got to open them. If we had an off day, it didn't cost me anything. On some holidays, like Memorial Day, we would put up 100 envelopes. It also insured nobody snuck out early, you had to be there at the end of the night to open the envelopes or you forfeited it.

Other Saturdays, we would do similar things, except for every car sold the salespeople would put a business card in a fishbowl with his or her customer's name on the back and at the end of the night, we'd draw for the amounts, saving the biggest one for last, of course.

Then some days, we'd just keep it simple. Sell a car, at the end of the night, get $25 cash for each sale. From a paperwork standpoint, spiffs were a bit of a nightmare. Every dollar had to be accounted for. My business office would give me several thousand dollars in cash every Friday to pay out on Saturday. I would, in turn, give money to the sales manager to hand out on Saturday night. He would have to sign for the money, every salesperson had to sign a spiff sheet showing the amount they received. We would reconcile the money every Monday morning.

The worst thing that could happen is not having enough cash. That would knock a salesperson down in a hurry, headed to his or her only day off, so you had to make sure there was enough cash.

Then there were the tax implications. Spiffs were income, so the salespeople who got spiffs paid income tax on their next checks. The amount of the spiff would be added to commissions, income tax applied, then the spiff would show as a miscellaneous deduction. It often took new salespeople a while to understand that.

One of my favorite spiffs was to send someone to the gas station next door to the dealership to get 100 $1 scratch off lottery tickets. The sales managers would hand the salesperson a scratch off for every car sold on a Saturday. If we didn't get to 100 sales that day, we'd carry them over until Monday and keep giving them out until they were all gone.

Talk about return on investment? I could spend $100 but give the salespeople a chance to win ONE MILLION DOLLARS just for selling a car. That only worked a few times, then everybody figured out most of the tickets paid nothing and that particular spiff lost its luster.

One thing many people do not know is I had a bit of a practical joker side from way back. I loved playing jokes on people I liked. I would take someone's phone (the desk type) and rub the earpiece on an ink pad so when he or she answered, his or her ear would be covered in ink. Things like that, and I had a million of them. It kept things light and made a lot of people smile. After all, attitude has a lot to do with sales productivity.

I found out about some fake scratch off lottery tickets. They were $5 each, and looked extremely real-until you read the fine print on the back.

After one of our lottery giveaway Saturdays, on the following Monday evening, I walked to the sales office, briefcase in hand to see how many cars were sold so far, a practice I did every day. I had the fake lottery ticket in my hand with some papers and my briefcase, and I looked for the right victim. Walking behind me was a salesperson named Anthony.

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Anthony was a tall guy, a sharp dresser, with a big smile and he was often at the top of the sales board, meaning he sold the most cars. Anthony helped many of my personal customers, like Kevin McCarthy, and he always did a good job making sure everything went well.

As I walked into the sales office with Anthony behind me, I "accidentally" dropped the fake lottery ticket. Anthony picked it up and politely handed it to me. I said: "you can have it, I never have any luck with those things."

Like I had hoped, Anthony pulled a coin out and started to scratch the lottery ticket. As I recall, it was a tic-tac-toe game with nine hidden numbers or it said one million dollars. Match three up, down, or diagonally, and you were a winner.

I pretended to be doing something while looking down, but my eyes were locked on Anthony standing right in front of me. I could tell when he got to the second million-dollar square, and when he hit the third one, his eyes got as big as saucers.

Now the moral dilemma going through his mind: Do I say something, or keep the million dollars? He contemplated for thirty seconds or so and left the sales office, lottery ticket in hand. He briskly headed for his office and got on the phone. I could see it unfolding. He called his wife I'd later learn, to give her the good news. Rumors were he told his wife to quit her job.

Then he went to his best friend, a guy named Tyrone, and the two of them got in a car and left. I figured they were going to verify the ticket next door at the Conoco. I waited, I knew they wouldn't be gone long.

They both got back in about five minutes and Anthony walked into the sales office smiling, laughing, and shaking his head. He said: "You got me."

Of course, I had to ask: "Were you going to tell me?" and he answered: "Of course!"

We'll never know.

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