Introduction: What is the Best Service Advisor Pay Plan?
Gbrenna – Determining the best service advisor pay plan is crucial for ensuring business success and employee satisfaction. A well-designed pay plan not only motivates service advisors but also aligns their goals with customer satisfaction and profitability. With various pay structures available, including commission-based, salary-plus-bonus, and hybrid models, finding the right fit can be challenging. Each plan offers unique advantages and potential drawbacks, depending on factors like dealership size, market conditions, and employee performance. By exploring the most effective pay plan options, businesses can enhance productivity, retain top talent, and foster a positive work environment.
What is the Best Service Advisor Pay Plan?
When we teach Fixed Operations at the NCM Institute (NCMi), a lot of people ask us about how much service experts should be paid.
There are really only two important pieces of knowledge that can help you figure out the right answer: the budget and the culture.
Budget
When we talk about a KPI or a benchmark, the cash is always there. It varies by brand (domestic, importer, or luxury), but for service agents, it’s usually between 12 and 14 percent of their gross profit.
What’s wrong? You can’t just give your service reps 12% of the gross profit from their work and be done with it. That might not always get people to behave the way you want them to.
Whether you want to pay by hours sold, sales dollars, gross profit dollars, hours per RO, CSI, or some other measure, you need to add up all of those wages. Does that stay within the range of 12 to 14 percent of labor gross profit? If that’s the case, then change everything to fit that.
Culture
We all want to pay our workers what we think will make them want to do good work. This may depend on your business, your culture, and your overall goals. Other things that might come into play are the tasks and chores you want them to carry out. Are they also cashiers or sending their work out? What about the tasks or dispatching of the loaner car? When making the right pay plan for your service advisors, you need to think about all of these things.
Service advisors and everyone else who works at the store don’t get paid the same way. You should use your store’s budget and culture to come up with the best pay plan for your service advisors, keeping in mind how much your company values them.
What is the Value of a Service Advisor?
Think about how much time and training you give each service assistant. A good pay plan combined with education and training can not only help keep employees, but it can also improve job quality and performance.
Service Advisor Value
Benchmark data shows that the average service advisor makes about $49,000 a month in labor gross profit. This doesn’t include the related parts gross profit, which is usually about $24,500, which is about half of the labor gross profit. How much time and training do you give your service agents when you think about how much this helps the bottom line? Are you doing all you can to help them do well?
Training
How long does it take you to train? How much time do we spend teaching service advisors? Most people would say they train their sales teams every day. There is no doubt that most face-to-face meetings between an advisor and a customer will end with some kind of exchange. It doesn’t matter if it’s internal, insurance, or customer-pay. There are transactions going on in the service drive. Would some training in sales and process make those deals better? Would this also make customers happier and make them more likely to stay with the company? Of course it would.
This is a great place to start if your dealership has someone who could go back and work on easy sales training with your advisors once a week, if not every day. By giving service agents training, you can make them more comfortable with selling and interacting with customers in general.
Conclusion: What is the Best Service Advisor Pay Plan?
In conclusion, designing the best service advisor pay plan requires balancing budget constraints with cultural alignment and business goals. A well-structured pay plan, whether commission-based, salary-plus-bonus, or hybrid, should motivate advisors while staying within 12-14% of gross labor profit. Integrating metrics like hours sold, gross profit, and customer satisfaction can drive desired behaviors. Beyond compensation, investing in training enhances advisor performance and customer interactions, leading to better retention and increased profitability. By recognizing the value of service advisors—who contribute significantly to labor and parts profits—businesses can create plans that reward excellence, boost morale, and align with organizational objectives. Ultimately, a tailored pay plan paired with consistent training fosters a motivated team, improves customer loyalty, and strengthens overall dealership success.