Chrysler Dealer Rewards Program Explained. Sort Of.
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.
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.
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"We need to see the full breakdown of incentives and the scoring system to judge definitively" And there is the crux of the matter, including whether 600 out of 1000 is really a D. The system could be setup such that 1000 is virtually impossible to attain, no matter how good a dealer is. Unlike school grading systems, an incentive system should have a high end that almost always leaves room for a dealer to continue to aspire to improvement. "the differences in cash payouts based on volume seems to be pretty significant" And the difference in volumes involved are pretty significant as well, >1800/yr vs.
That old system was a joke...I shopped a "five star" dealer once and it was like a scene from the movie "Used Cars." These morons were haggling and asking me whether I would buy the stupid car if the price was right before I even drove the damned thing.