The way dealerships make the decision to bring on more salespeople and how they replace underperforming salespeople has always baffled me. I’ve seen countless formulas, statistical data and seasonal hiring decisions, but very few of these models make any sense. I’ve even had managers tell me they need four salespeople, and when I asked why four, they respond by saying, “That’s how many desks we have open!” Or "That's what we typically run with"

Law of Diminishing Return

The Law of Diminishing Returns in terms of hiring employees at a dealership can be simplified into three stages:

• Stage one is the addition of more salespeople, which allows for specialization of job responsibilities and increased production efficiency. The result is a larger output return for each additional unit of input.
• Stage two is where inputs equal outputs. Each new salesperson added will continue to increase production but only at the same rate as the increased input of labor.
• Stage three is when additional salespeople will start to decrease production efficiency because the work environment is fixed in the short-run. This results in returns that are much less than the labor input.

Do dealers have any idea where that third stage is for their dealership? The ideal outcome at the dealership should be to have as many people as possible buy the dealer’s products and services at the highest possible profit margins and deliver 100 percent customer satisfaction. Dealers can’t achieve that outcome unless they’ve maximized the quantity of quality, properly recruited, screened, interviewed and trained salespeople.

I can hear a dealer or general manager object and say, “I don’t want to flood my floor.” That’s admiral, and I applaud their moral judgment in trying to make sure their salespeople all make a good living. However, how many times has a dealer invested in having a special sale, and they look around on the day of the event and notice that several of their salespeople decided to come in late. How many dealers have invested millions into their store and sales staff just to see them leave for a hot, new store that opened up down the road? 

Take a minute to write down how many hours a salesperson is currently scheduled to be at the dealership. Would an additional shift or shifts allow them to work fewer hours and be more effective?  Would working fewer hours allow sales professionals to have a better quality of life, if that is what would make them more loyal to the store?

Would a more robust staff scheduling model also help dealers deal with talented sales professionals at the dealership who have occasional “manageritis”; employees who have threatened to leave if they don’t receive a promotion?

Is More Better?

How much time do salespeople have to create more business when they’re at the dealership bell to bell? Did the dealership sell more cars when it had more sales staff?

Some rural dealers are selling 5 to 10 times more cars than dealers in major metro areas. While there are several factors involved in this, the definitive answer is this: Dealers need better recruited and trained salespeople. I want to share my insights on how dealers can achieve world-class results through better recruiting and training.

Judy B. Margolis, writes: “Employees who grow too comfortable and complacent lose their edge. The more they know, or think they know, about how their particular slice of the business world works, the less likely they are to challenge their old tried-and-true methodologies and to innovate. The same holds true for companies that fail to embrace change, and instead have it foisted upon them, often when it is too late.