Friday, October 25, 2013

Hey, That Person Who Owns Your Customers Makes Minimum Wage

by David P. Carlisle

I love this industry. It’s the passion that I thrive on. We sell beautiful, drop-dead gorgeous products that have more computing power than some Fortune 500 companies had in the ‘80s. Outside of a home, the stuff we sell represents the single largest thing people typically buy. Beyond the physical beauty and value of these products, they seem to last forever because we measure and manage finished quality more than any other industry. We thrive on happy customers because they are the life-blood that sustains our future. In fact, more so than any other industry, again, we measure our success by all those smiles, and when we detect a frown, all hell breaks loose.


Our customers are kings and queens and we have fistfuls of programs for them when they come to the throne rooms we have built to serve them. That’s because these original new-vehicle customers hold on to their cars and trucks for about five-and-a-half years and, sometimes, come back to our dealers for service. Used? Heck, we pretty much never see them.

We call our guardians of the throne room “Service Advisors.” Carlisle & Company just completed its inaugural Service Advisor Survey in which approximately 4,000 Service Advisors participated. Here are some interesting facts about these guardians of the throne, these keepers of customer satisfaction, and masters of customer repurchase loyalty.

Service Advisor base pay is close to minimum wage, or about what they pay a cashier at your local Kmart. Call it $10 an hour.
  • About 11% of their total take-home pay is based on customer satisfaction-related bonuses. Here’s the image you need to put into your mind. You are a cashier at Kmart1 making about $10 an hour, and the store manager says that you can make an additional $3 an hour if your customers all say they are happy. He says he does not give a damn if they are really happy; he just wants them to say they are happy. After work you go out for a couple of Buds with your friends and figure out how to make even pissed off customers “say” they are happy. Heck, you just fill out the damn ‘happy’ survey for them! After a six-pack more of brainstorming you come up with a bunch of other sure-fire ideas. That $3 an hour is pretty much in the bank!
  • It gets better. Approximately 55% of a Service Advisor’s take-home pay is based on selling commissions.
    So, you are at Kmart and make $10 an hour, plus another $3 for your customer satisfaction bonus. Your boss comes over and says that he’s got a great deal for you. He says that you can make another $15 an hour based on commissions. You say to yourself, “Holy crap, that’s more than my base plus my happy money! Hey, man, I’m all ears!” So, your manager says, “Great kid, just go out and sell more crap!” So, Maria Alvarez pushes her loaded cart up and she’s got an $11 coffee pot. You say, “You know these things break all the time, I can sell you an extended warranty for just another $5 that will cover you for two years!” She says “Yes please!” Old Mrs. Casey is next and she’s got a load of $3 towels. You tell her that you saw her car as she drove in and it sounded a little rough – You tell her it needs a new battery. Cha ching!!! Yes mahaaaaam. You’re a Michelob guy now!

Recently I held a focus group of automotive Service Managers. We talked about Service Advisor compensation. They think we are stuck with it.

Bottom line: I love this industry. I love it because the OEMs are brilliant in product development. But they are simply stupid when it comes to the basic things associated with execution. It makes me feel like I have a life purpose. I can’t develop a new car, but I sure can tell them what’s idiotic about the care and feeding of their customers – and some of their employees – when they’re bringing those products to the market.


1 I am using Kmart just as an example of a local tarnished brand that is everywhere. Any pay levels or programs in these examples are more a reflection of the motor vehicle industry than Kmart.

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