Delayed Spiff Payments Can Dampen Enthusiasm

Spiffs are a common dealership profit strategy. They’re short-term incentives to encourage associates to recommend and sell certain products.

A dealership might have multiple spiff programs in effect in the sales, service and finance and insurance departments. That can create confusion.

Those internal, automaker- and vendor-sponsored spiffs can be hard to track. It requires monitoring and accounting for who’s selling and earning what and then reconciling and pushing it to accounting for paycheck adjustments.

For instance, in F&I one spiff might incentivize the movement of a particular product while another spiff program is a short-term effort to boost per-vehicle-retailed profits at the end of a month.

“I like the whole concept of spiffs as long they’re controlled,” says Ilya Shnayder, a former dealer and F&I manager and now president of Janus Automotive Administrators in Holyoke, MA. “But managing them can get like a juggling act.” Most dealers want customers to buy vehicles enhanced with F&I products, such as extended service agreements, that tie them back to the dealership, he says. “And if it takes an incentive to encourage those upsells, everyone wins.”

A company called Spiffit claims it has the answer to more orderly spiff management. Its cloud-based sales incentive application dashboard tool pulls F&I transaction data from the dealership- management system several times daily and matches it against the store’s ongoing internal, OEM and vendor spiffs.

“We’ve taken disconnected Spiff programs and centralized them by making sense of DMS data,” says Spiffit CEO and founder Sean Ugrin.

Shnayder says platforms cannot solve a core issue, though.

“The challenge, even where a platform manages the process, is who pays the spiff,” he says. “Does the dealer delay paying the staff the spiff money due them until he collects it all first from sponsoring vendors and OEMs, or front the funds so staff get paid more promptly?”

Delays dampen enthusiasm, he adds.

Ugrin agrees. “Although an automated dashboard streamlines the process and increases accuracy, fulfillment delays can suck the life out of these programs.” Communication, a clear driver, urgency, competition, recognition, and timely fulfillment increase program performance, he says.

While an F&I spiff is common in many dealerships, some dealers, like Brendan Hurley, president of Hurley Chrysler-Dodge-Jeep and Ram, DeLand, FL, do not use them. 

“Our F&I managers have pay plans structured to provide motivation to sell value products,” he says. “As such, I don't need to use spiffs.”