As an industry, we’re acutely aware of the high turnover that dealerships face amongst their sales staff. While JD Powers states that 67% of new sales hires left their dealership within 6 months, ESI Trends estimates that number to be much higher – closer to 80%! While this is a shocking statistic, even more shocking is that ESI Trends predicts it can cost an average-size dealership up to half a million dollars a year. That translates to billions of dollars we are losing as an industry. We need to do better for ourselves and for the future of the dealership structure.
It’s time we do a turnover when it comes to retention before it’s too late.
Reasons for Turnover
Turnover can be attributed to a number of causes, but regardless the end result hits the bottom line. Dealerships not only need to spend countless time and resources to recruit and train new employees, but the customer is negatively impacted through the lack of continuity and consistency of your staff.
One reason we find people are leaving is the pay structure in the dealership. Dealers by and large are still paying their staff a commission-based salary and for many entering the industry it’s a tough pill to swallow. While they may initially be enticed by the earning potential, this can quickly sour as they realize the hours and skill they need to reach their financial goals. Additionally, this commission structure doesn’t allow forgiveness in the beginning of a person’s tenure to allow them to get up to speed with the new culture, processes, product knowledge and training. In turn they lose confidence and the dealership loses another person.
Another reason people are leaving the dealership can be due to a lack of direction and a defined career path. This is largely attributed to poor dealership management and unclear expectations and goals for employees. The truth is many managers don’t know how to manage. More often than not, dealership managers were once the best sales people and one day were tapped on the shoulder and pulled into management. The reality is the skill set needed to manage and sell are completely different. Some of the best coaches in history never even played the sport they coach. Let’s take Bill Belicheck for example. Like him or not he will go down as one of the best coaches in NFL history. How many years of football playing experience does he have? Zero. He was actually a lacrosse player. On the flip side, we look at Wayne Gretzky, a National Hall of Fame Hockey player and arguably one of the worst coaches in NHL history. That’s because being a player and coaching a team are completely different. The same is true in the business world.
We can continue the list of why people are falling out of the car business – long hours that aren’t conducive to a family, reputation of being a car salesperson, or the impression that the business is a good old boys club. Any way you slice it, there are steps that can be taken to make it better.
How do We Move the Needle?
The first step to gain control of the exodus of salespeople from the dealership is to hire the right people. To do this you need to position your dealership appropriately to entice candidates to apply and then have the right process in place for hiring. What does that mean? Ensure you have a clear job description, consistent interview questions to determine cultural fit, and of course standard background checks. Often times, companies will even do behavioral assessments to pinpoint areas of strengths and weaknesses to make sure the job is the right fit.
Once you have the right people you will need to be able to retain them. We have found that one of the first lines of defense to slow turnover is to invest in your people. That means providing them with the tools and resources they need to be successful in the job. And that all starts with training. It’s our organizational obligation to train our employees – after all, they are our most important asset. So how can we do a better job of it?
Make training a priority. We have heard excuses across the board on why dealerships don’t train their staff. Some claim that it’s not in the budget or if they need to make cuts, training is the first line item to go. How can this be an area that we are skimping? You cannot afford not to train your people. Your dealership likely spends thousands of dollars on advertising, right? However, is your staff able to properly handle leads that come into the dealership and convert them to customers? Probably not. This is a huge area of opportunity and one that will produce immediate results with the right effort not making training a priority at your dealership is essentially leaving money on the table, or even worse, losing money.
Other times we hear managers complain that their staff won’t do the training. That is the sign of an inefficient manager and begs the question – who is managing who? This is not a choice for your salespeople. This should be part of the culture. Whenever you make it a priority to teach people to do their jobs well and do them the right way – you get high performers, better results, and happier employees.
When you invest in training and make it part of your culture you send the message to the employees that it is important to you and in turn for them. It’s not a huge time commitment but it has to be consistent. In our experience all it takes is 15 minutes a day to impact your bottom line.
Think back to when you started one of your first jobs, the one you thought would be the start to your career. Did you know what to do from the get-go? Of course not. You had to learn new responsibilities, the company culture, etc. There’s always a learning curve. Same goes for new hires – they need to know what to expect and the requirements for the job. Managers also need to hold their people accountable as they manage the activity that is happening on, and off the showroom floor.
Let’s Be Honest with Ourselves
Do your people know what they can and should be doing to proactively get customers on the showroom floor? After all, what your people do when there is a showroom full of customers is equally important to what they do when there is not. Providing them training and tools to be successful at their jobs will help them in making more money and be more devoted to your organization. Create a budget for training, and if you already have one, make sure you’re spending enough on it. This is a place you don’t want to minimize. It’s as important as your ad budget so treat it that way. Set a dollar per car or dollar per salesperson.
Practice, practice, practice
Getting educated on the principles of training is the first step. However, actually simulating client situations is key to take your training to the next level. I’m sure you would rather have your staff practice on each other rather than trying out their skills on a live customer. Think about what it takes to be a great athlete. Of course you need to know the rules of the game and have a basic understanding of the sport but you don’t become good by learning the theory behind it. You need to practice. You won’t become a great golfer by watching golf on tv – you need to get out there and hit some balls, in fact, thousands of them.
Hold your people accountable
Once you’ve got your training plan in place it’s up to you as managers to hold your people accountable. Make sure your people are utilizing the training effectively – by listening to your call monitoring, confirming appointments are set in advance, and that your staff is effectively capturing referrals.
Make training a part of your culture – so everyone knows it isn’t a suggestion – it’s something that happens every day at your store – it’s what you do. By working smarter not harder, you’ll be able to set them up for success and you will see the impact on the bottom line. By training your employees, you’re sending them the message you care about their development and in turn, they will be happier. It’s a given, people stay longer when they’re having fun and making money, and isn’t that what we’re all striving for?