Sears tests commission strategy - commissions for auto service writers

Discount Store News, March 21, 1994

HOFFMAN ESTATES, Ill. -- Sears is testing a way to resume paying commissions to its auto service writers so as to avoid a public relations fiasco like that of 1992, when California and New Jersey charged that Sears service writers were selling unneeded repairs to boost their commissions.

The key to its new approach is to link commissions to a contomer satisfaction index it has developed.

Since last November customers at each of the '784 auto service centers have been asked to fill out a card rating the service they received. An independent audit service then develops a CSI for each center.

In a test that began in September, auto service employees who take customer orders at 25 stores have been getting commissions that account for 21% of their total pay. A center's CSI represents 19% of pay, while the balance of 60% comes from a base salary.

In a second test in 24 stores, service order takers also get 60% of their total pay in the form of a base salary, while 40% of their pay hinges on the CSI.

The salesman inside all Sears stores who sell tires, batteries anbd shocks continue, as always, receive commissions. They were never involved in the customer cheating scandal that cost Sears $15 million in refund coupons and did immeasurable damage to its reputation.

In addition to linking the service writers' commisions to the CSI, Sears also expects that the way it has restructured auto service operations will help prevent any repition of what it called mistakes by overzealous service writers.

Before the scandal, customer service writers diagnosed a car's problems and recommend repairs. Now they serve only as liasions who relay customers' complaints about cars to mechanics, Sears said.

Machanics now diagnose problems and recommend repairs. Mechanics get no commissions, but can qualify in the 49 test stores for a bonus on top their hourly pay based in the CSI of their centers, spokesman Bob McHenry said.

To emphasize the new role of service writers, Sears now calls them "customer service consultants."

In 1992, automotives accounted for an estimated 9% of Sears' revenues. Without disclosing the actual percentage, MacHenry said it remains below that now.

Part of the decline stemmed from customer distrust after the customer cheating charges, when sales slumped 30%, but some of the decline also came about when Sears abandoned much of its auto service and parts business.

In 1993, Sears abandoned services such as tune-ups and oil changes to focus on its core business: battries, tires and tire-related services, brakes, shocks and front-end alignment.

In addition, the Sears auto parts and accessories departments slashed their offerings to tires, batteries, exhaust pipes, struts and shocks. Automatives customers now must buy everything else, including motor oil, anti-freeze, filters and spark plugs, elsewhere.

In the process, Sears fired 10,000 auto service personnel. cutting staff to 22,000. Sears thus cut expenses, as well as automotive offerings, McHenry said.