Chrysler’s long-disfunctional “Five Star Dealer” program may be on its way out, reports Automotive News [sub], as a new Fiat-created dealer rewards program rolls out to a Chrysler dealer body that’s fighting for survival. The new program, which may still be merged with Five Star, addresses several longstanding dealer complaints about Five Star, perhaps the most important of which is third-party verification [to be done by the Swiss audit firm SGS Group]. Given the deep mistrust that exists between Chrysler dealers and the mothership, bringing in outside auditors to perform certification was probably a prerequisite (and brings the Chrysler program in line with Ford’s practice of independent dealer rewards program auditing). But the biggest change also helps explain why Chrysler employees will no longer judge dealerships: instead of a mere star rating system, now there’s money at stake.
According to Automotive News [sub], the new program works along familiar lines:
Dealerships will be measured on how they receive customers, negotiate loans and leases, deliver vehicles, follow up after sales and treat service customers.
Outside auditors also will measure dealers’ business operations, including working capital, floorplan line and financial statements.
The difference is cash. Dealerships which sell over 1,800 vehicles per year will be eligible for up to $200,000 per quarter if they score above a 600 on the new program’s 1,000-point system. Not bad for a D-grade. Dealers who sell fewer than 50 vehicles per year will be eligible for up to $4,500 per quarter if they achieve the same 60 percent grade.
Needless to say, the cash is the only reason the dealers are actually excited about the new program. After all, other than outside auditing and cash, the new program doesn’t seem much different than Five Star, and indeed it might be rolled into the old program. “This is like Five Star, but there were no rewards for Five Star, so it didn’t make anyone want to do anything,” one dealer explains. Chrysler’s new Dealer Council secretary concurs, adding to the damning postmortem of Five Star by saying:
This program by far is the best program I’ve seen. It brings serious money to compensate people for the investments they make in these processes. You have an outside independent auditor. You can’t screw this program over.
In fact, the only problem we see with the new program is that it appears to incentivize volume over customer service. We need to see the full breakdown of incentives and the scoring system to judge definitively, but the differences in cash payouts based on volume seems to be pretty significant. On the other hand, a 60 percent score is not exactly an inspiring goal for Chrysler’s dealers. Chrysler clearly needs to improve its dealer performance, but this program seems to be as much about incentivizing volume as rewarding excellent service. For a guy who is constantly knocking the incentive game as bad business practice
, Sergio Marchionne seems to have no problem writing checks to dealers if the move enough of his volume.