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Using Tech Tools To Cope With The Recession
Posted by Marianne Kolbasuk McGee on Jan 20, 2009 04:06 PM
While many companies these days are focused on squeezing out extra value from existing IT investments, some are deploying new technology tools to help their businesses adapt to and survive the economic downturn.
That's the case for AutoSmart America, a mostly family-run dealer of preowned autos in the Detroit area. AutoSmart recently turned to software-as-a-service tools from Makana Solutions to revamp compensation programs for its sales staff during this especially tough time for all players of the auto industry.
In the past, most of AutoSmart's salespeople received compensation that included 40% salary and 60% commission. But now AutoSmart is using Makana Motivator Pro web-based tools to calculate and "test run" various compensation models that can still motivate staff even as the company trudges through the weak economic environment -- and extremely slow car sales, says AutoSmart manager Linda Stillwater.
AutoSmart used the Makana tools several months ago in developing its new compensation model, which Stillwater says has been particularly well-received by the dealer's sales reps and is helpful to the company, especially as the economy worsened in the fall and financing became more difficult for customers to obtain.
Moving ahead, the tools will continue to help AutoSmart adjust compensation programs if necessary. Now, nearly all of the dealer's sales reps are paid 100% by commission -- and the few not on the Makana-based system yet have asked to go on it, says Stillwater. The tools help calculate those new commissions, based on varying levels of units sold, down payments, and other factors.
Traditionally, sales reps are compensated for a percentage of gross profits, which means they're frequently "punished for selling lower-profit vehicles that have been sitting in the lot longer," Stillwater says.
Now, AutoSmart sales reps also are rewarded for encouraging customers to make bigger down payments, which also helps customers who are "credit strapped" and can only get approved for smaller loans. In the long haul, these larger down payments have a positive effect for customers because people are less likely to default on a car for which they've already invested a sizable amount, she says.
Besides using Makana tools to tailor its compensation plans, AutoSmart also taps Manaka to calculate each salesperson's monthly commission. Those calculations use data imported from other applications, such as order information about vehicle sales, as well as info about who gets credit for the sales transaction, etc. "Commissions that took me four or five days a month to calculate and process now take only about a half hour," says Stillwater.
Best of all, the Makana tools are very affordable for the small business, says Stillwater. AutoSmart is using the Makana tools for these commission-related processes of four salespeople at a monthly cost of only $100 to $120, she says. "It's a great investment."
To see how larger companies are dealing with the downturn, check out this story.
In the meantime, tell us about the technologies that are helping your company weather the recession.
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