When I talk to dealers, which is daily, they say the biggest challenge in their Variable Departments isn’t margin compression (which is awful), but their inability to attract talented Millennials, especially women, to their sales departments.
This recruitment issue is only exacerbated by the fact that our economy is close to full employment. Industries with better reputations than we have are also struggling to find quality salespeople. So by offering traditional auto industry jobs, processes, pay plans, and working environments, we’re falling into an insanity trap – expecting better results without changing anything. That is, expecting more talented and effective salespeople without redefining the job to be more in line with modern retailing.
While margin compression is certainly a front-and-center issue, the hidden costs of salesperson turnover, poor customer interactions, and lack of commitment to the dealership, likely total as much or more than any margin compression. (Think about the lost sales + hiring and training costs + marketing you must pay for to replace the positive word of mouth and reviews.)
Dealerships that experience high salesperson turnover can’t create high levels of competency as they are constantly training the basics to new recruits. Sadly, the combination of margin compression and the cost of not having highly talented sales people can only mean a race to the bottom.
But there is reason to be optimistic. We may not be able to control all the factors squeezing margins, but we can certainly control who represents our products and services on the showroom floor and online.
To be more effective in salesperson recruiting and get different results, dealers need to eliminate hurdles like:
- • 45-hour or more work weeks
- • Compensation plans that are primarily commission based (when there is no front-end gross)
- • A lack of on-going, effective sales training
- • A lack of empowerment due to the controlling nature of the “desk”
- • Poor male and female Millennial management
But the biggest barrier to attracting the people you want selling cars for you and representing you on the showroom floor is the negotiating culture.
This is a hurdle that younger, talented people aren’t going to consider leaping over. They don’t understand why, in an era of transparency, a dealership would put a customer who’s done hours of research through a process as though they were unknowledgeable. When every study shows the majority of customers dislike coming to dealerships to buy cars, why do you put up this barrier to recruiting talented people? Eliminate this huge hurdle and your window of recruitment will open so much wider!
As an industry, we’ve lost at least one generation of talent. How many salespeople do you have on your showroom floor who are in their mid-30s and have been with you for ten years? How much do your managers look like prospects that are walking in your door, especially women?
Building a sales and management team that is future-oriented is no longer an option – it is vital to your continued sales growth and profitability.
The most successful businesses in EVERY industry, build their customer processes around what the majority of customers want. The auto industry might be the only retail business model still trying to force consumers to adapt to a retail experience that is becoming increasingly foreign to them. Why? Because most of our managers today only know what they learned before online retailing took over.
Furthermore, most dealers are reluctant to make serious changes to a sales model that has made them financially very successful. They are comfortable with what got them to their station in life – a traditional way of selling cars – even though it may be out of step with the general public and advanced retailing practices.
As a dealer, you have the right to run your business the way you want – but don’t expect different results when it comes to attracting and recruiting a younger, gender-balanced sales staff by putting up hurdles to recruiting salespeople with the right stuff and becoming a modern auto retailer.
The Rikess Group can help you craft a strategy to knock down hurdles and dominate your market. manderson@rikessgroup.com – 404-805-5009