College Grads Don't Want to Work in a Dealership -- How Can We Change That?

What's the automotive retail industry's greatest challenge? According to several top selling dealers I've talked with recently, the answer is the negative perception the public has about car dealers.

Their concern isn't focused as much on what the customer thinks, but more so on what potential employees think -- or rather, what they don't think. The problem, according to the dealers I've talked to, is that top, qualified individuals graduating from universaties do not consider a career in automotive retail. The ones that do, usually end up working at a vendor, not at a dealership.

What college student today, when asked where they are going to work upon graduation, would be proud to say, "I'm going to work for a car dealership?" Not very many.

We all know why the negative perceptions abound -- much of them well-deserved, unfortunately. And that turns potential employees away. Vendors who insist on running commercials that consistently paint the dealer in a bad light (CarFax, Cars.com a couple of years ago, Edmunds.com's Confession of a Car Salesman article) don't help. As don't the histrionics emanating from consumer advocacy groups such as the Public Citizen, which almost always rely on unbelievably old data.

However, I think the problem is deeper than just some negative perceptions about how dealerships interact with customers. The overall structure of the business itself screams, 'DON'T WORK HERE!" Automotive retail can be a brutal business. A job in sales requires an ability to handle rejection. Long hours, often with boring bouts of inactivity as salespeople wait for "ups," minimal job security and benefits, and no real formalized process to move talented employees into management do not make for an attractive option for top flight graduates.

Other industries have either as tough or tougher hours. Wall Street, lawyers, doctors -- but those professions have been glamourized by Hollywood and the media, while car sales have been painted as an industry for sleazeballs. The industry desperately needs to start thinking and implementing ways to change that cultural perception.

And top dealers are trying. Dealers like Greg Penske of Longo Toyota and Greg Goodwin of the Kuni Automotive Group are focused on it, creating businesses that catch the attention of potential employees. But it's going to take the efforts of more than a few dealers.

Each dealership can start with some easy steps.

Dealership Consultant Mark Rikess, in a recent column in Dealer magazine, offers some intriguing ideas on how to attract today's generation of employees.

Rikess writes: One of the biggest generational challenges facing dealers today is how they can more effectively recruit and market to Gen Y. Due to their sheer size, this group in the very near future will dictate dealership profit and loss as the Traditionalists and Baby Boomers ride off into the sunset. The changes to the sales process, work scheduling and communications will cause the same amount of trauma and change as was dictated by the internet. Some options to consider in your efforts to more effectively recruit include:

Recruiting – A four pronged approach should be implemented to attract quality recruits:

1. A button on your website that gives perspective employees information about what it is like to work there, including training, benefits, and life/work balance.

2. Placards/signage in the customer lounge and showroom floor showing a woman stating that job opportunities are available.

3. Quarterly emails to your customer list stating that job opportunities are available.

4. Postings on craigslist for “customer service reps” with benefits such as training salary, flexible hours, opportunity to work with a great team, etc. Do not mention it is an auto sales job in your posting.

Flexible work schedule – Life/work balance is critical (notice which word they put first). Dealers must determine methods for creating a 40-hour work schedule with at least one weekend off each month. Flexibility can be achieved by staffing according to traffic flow. Our research shows that 70% of sales occur in 30% of the time the sales department is open. By staffing the showroom and prep center according to demand and employing lower cost staff, sales people can sell more cars in fewer hours. Examples of lower cost staff include document processors and delivery coordinators.

Revised pay plan – The traditional pay plan based on gross with random spiffs will not attract quality Gen X and Gen Y sales people who have never sold cars. They would rather be paid $14 per hour to work in sales at a Best Buy or Apple Store rather than take on the financial risk of a straight commission pay plan. Today, typically more than half the new car deals are “minis” and the other half require excellent negotiating skills, a skill lacking in Gen X and Gen Y. Gen Ys in particular do not have the thick skin required for aggressive selling, having typically grown up in a coddled environment where everyone is a winner (ala youth soccer). A pay plan that provides a good training salary, typically $2,500 or more for two months and then provides a combination of salary and compensation per unit sold (not gross) with bonuses works well.

Training – Training and orientation are absolutely critical to retaining Gen X and Gen Y. According to Lancaster and Stillman in their book, “When Generations Collide,” when asked “Have you ever left a job because of lack of training opportunities?” only 3% of Traditionalists responded, “Yes,” compared with 15% of Baby Boomers and 30% of Gen Xers.

Gen Ys want to be part of a team and your training program should recognize that by teaching about other departments. In addition, Gen Ys need more than a basic job description. According to Cam Marston in “Motivating the ‘What’s in it for me?’ Workforc,e” Gen Ys do better when their role is defined -- an overall picture of the job when executed properly and specific responsibilities. Finally, all managers and employees need training on feedback – how to ask for it, how to give it, how to receive it, and what is appropriate behavior.

Rikess' suggestions are just a start. Let's get the ideas flowing and maybe we can start turning this ship.

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Comment by George Toth on July 10, 2011 at 9:37pm: I grew up in a dealership, so here is how I see it. First too many hours, dealers need to either pay higher rates for the weekends and holidays or have an A/B schedule. I missed too much of what my children did growing up as I was at the dealership. A forty or forty five hour week, no more.

Second the day of commission pay plans is over, who wants to sell a new car for 50 to 100 dollars each? Here is what I see, a volume pay plan with a salary. Bonus CSI. Think about it, a pay plan that the salesperson determines volume and sales managers determine gross. We did this in our store in the 90's, and isn't the sales/manager relation supposed to work this way?

Third, training teach the green peas how to sell in a consultive manner. The biggest obstacle is that the perception is dealers beat you up until you buy. Percetion is reality, think about it.

Fourth treat the sales staff like they are part of the team. Too many delaers look down at the sales people and feel they can replace them at the drop of a hat. Not so today.

Until the dealer body does this there wil be no interest in the automobile business. Right now I train in dealerships and I see either older sales people or very young sales people the middle aged sales people are no longer there.

We need to make the business fun again and the atmosphere more upbeat, give sales people a reason to be engaged. Neither the customers or sales people are happy with business as usual, the time has come to be innovative. Introduce new age concepts technology that is new and cutting edge. Unless you offer these types of new technologies we will not be able to attract college grads much less young people that have high school diplomas.

Comment by Jim Hughes on June 27, 2011 at 7:02pm: The simplest answer to your question is that dealers need to evolve to meet the standards of today’s college grads/Gen Y’s. The typical dealership sales process isn’t appealing to them.

College students want technology – they know it, they’ve grown up with it, and they use it every day. If you put them in a room to read training manuals for hours on end, don’t expect them to absorb much. Gen Ys are quick learners and can be trained in a flash but they need stimulation and interaction to do so. Technology is their BFF so evolve your training to capitalize on that. Some dealers train using an iPad while walking around the cars. Studies show that people will comprehend and retain 2x more when they are engaged and interacting. Sure beats the old school ways of trying to keep new hires awake in a conference room.

Gen Y is the mobile generation – put the tools in their hands! Thanks to smart phones, the younger generations are used to having unlimited access to information in their hands at all times. They need that resource. Give them a mobile device to use during the sales process and they will be much more comfortable and confident... and constantly well-informed.

Transparency is key - The current Verizon commercial captures the Gen Y sentiment well: http://www.youtube.com/watch?v=cwyJKKWiqpQ. After the teenager "tests" the salesman for his mom to make sure he is telling the truth, he ends by saying: "He's clean. My job is done." For many of us that have Gen Y kids, we understand that absolute transparency and authenticity is key or you'll lose them quick! Unfortunately, transparency and authenticity are not always the model of the “typical” auto dealership.

The dealership evolution needs to begin now - within 2 years Gen Ys will account for 40% of dealers' business. And as potential employees, the time is NOW.

Comment by John Fuhrman on June 27, 2011 at 5:18pm: If you want the results that "other" companies are getting, why would you run the same ads you've been running since 1979? College students often get their first job at the job fairs on campus. Now, the Armed Forces are recruiting there with great success. The school systems are also filling positions. Neither of these are high paying jobs and there are others.

The reason for their success is they have the opportunity to explain the whole package. People set up booths there and look a potential candidate right in the eye, spend all the time in the world with them, answer all of their questions, and then ask for a decision. Those organizations are hiring for the long-term. And unless and until dealers stop hiring to get through the busy season, or to finish the month, nothing will change.

Once hired, there should be a pre-set program of progress that includes training and real customer opportunities. Whether you go to an outside concern for training or have someone dedicated to it in house, it's a requirement of all new hires. There should be some training time in a classroom environment and then some on the job training with your best sales people mentoring these young trainees. Give them something to look forward to and respect rather than someone who they feel like warning customers about.

Treat them as any othr successful corporation and you'll see similar results, reduced turnover, and better morale. You might even change the way future grads feel about our business.

Comment by Alex Schoeneberger on June 27, 2011 at 2:32pm: Sharon hit the nail on the head. Two statements made by Rikess conflict:

1. "Postings on craigslist for “customer service reps” with benefits such as training salary, flexible hours, opportunity to work with a great team, etc. Do not mention it is an auto sales job in your posting."

2. "Gen Ys need more than a basic job description. According to Cam Marston in “Motivating the ‘What’s in it for me?’ Workforce,” Gen Ys do better when their role is defined..."

The well-defined role begins when you're trying to get people to apply. Defining the role as "customer service" and performing a bait and switch is misleading, a waste of time, and will not help you. I have been on interviews where a sales job was advertised (vaguely) as a marketing job. It was unbelievably frustrating to show up and waste my time and theirs. Even if you manage to convince one of these applicants to come work for you, when sales is not their first choice as a job, how fast do you think they'll leave for what they think is a better option?

Instead, try telling potential applicants:

1. What the job responsibilities are

2. What the compensation plan looks like

3. What the benefits of working for you are

4. How your training program is structured

5. Most importantly, because these are college students interested in a career and not just a job: what are their opportunities to advance and grow?

After you write that out (even if you don't use the entire thing as your job posting, it's still helpful to understand the value proposition of working in the position you're hiring for so you can explain it to an applicant), show it to a few Gen Yers with no experience or knowledge of the auto industry and ask them if it's appealing to them - and if not, why not?

Comment by Brian Pasch on June 27, 2011 at 1:56pm: Cliff

One aspect of this discussion is how to attract Gen Y into the automotive industry for job roles that include digital marketing and social media and not just sales. Dealers are realizing that they can't outsource 100% of the digital/social strategy and be a market leader.

The most common message I get from dealers is that they don't understand the medium and processes good enough to attract, train, and retain Gen Y and Gen Z. So they would like to offer automotive internships through local colleges but they don't have the bandwidth.

In May we started the Automotive Internship Program (AIP), a 12 week course that includes weekly live instructional webinars and a private community for full-time Q&A. The response from the students in the program has been amazing. We are training existing employees as well as new interns and Gen Y employees on digital marketing and social media.

We are offering these courses three times a year: May, September, and January. We will be expanding training offerings in September. Dealers who are looking for hands on training, mentoring, and support for their team can get signed up for the September training start.

Dealers can contact Christine Rochelle at 732.450.8200 for more information or they can visit: http://www.automotiveinternships.org/

Comment by Keith Shetterly on June 27, 2011 at 1:24pm: @ Mark, I guess I think of all this a bit differently: When dealerships start running themselves as businesses, rather than OEM outlets, then things will change. I think there are many, many great dealers. I don't believe for a minute that the only way out is to wait for the OEMs. If we're waiting on that bus, it's just getting bigger, what with compliance now starting to reach even further into the websites and dealers' business. They're just not going to make these changes, so dealers will have to make them in order for them to happen.

Comment by Cliff Banks on June 27, 2011 at 12:46pm: Mark, Great insight. There is a big difference between the Container Store and dealerships. The Container Store is a national franchise with resources to implement that kind of human resources effort. Many dealerships, despite the huge revenue, really are small businesses and often operate as such.

However, the Container Store -- and others like it -- have plenty that we can learn and adapt. Now about those manufacturers -- I doubt they'll ever learn.

@Tom -- thanks for the kind words.

Comment by Mark Dubis on June 27, 2011 at 12:38pm

Cliff, there are no mysteries here. Most dealers are great folks and sincerely want to do a great job but dealers like sales people will work their pay plans.

Until the manufacturers change their tactics and the nature of their relationships with their dealers, nothing of substance will change. The dealer and their managers will "play the game" and work the system to give the manufacturers what they want to see.

When the OEMs:

abandon their chase for the monthly sales volume
get rid of bogus CSI programs,
develop reasonable incentives that do not devalue the price of their products
develop dealer incentives for employee retention,

then and only then will you see some changes at the dealer level.

Until that happens the changes at the retail level will be modest and our challenges as an industry will continue. In my mind, most dealers are doing a great job with what they have to work with today.

Now lets just look at training in our industry versus other retail operations.

Consider this. Employees of the Container Store(where they sell empty boxes) go thru an average of 9 interviews before they are hired and receive over 200 hours of training before they are allowed to be on their own speaking to customers in the store. They also get about 160 hours of training on an annual basis after one year.

Compare that to the 40 hours of training a new car salesperson gets before they can talk to a customer about that $35,000 vehicle. Oh forgot to mention that retail sales person in the Container Store gets a base salary of approx. $44,000 a year, + benefits and 401k.

With the tools, technology and processes available today any dealer can double or triple their sales, severely reduce their employee turnover, boost fixed operation profits and connect with customers in a fashion they could only dream about a few years ago. It becomes a question of commitment to becoming a "world class dealer" or maintaining the status quo.

Comment by Tom Gorham on June 27, 2011 at 12:18pm: Thanks Cliff. So true. This is a "must-read"! I'm passing it around.

Comment by Cliff Banks on June 27, 2011 at 11:41am: Great comments and ideas...

Sharon, your comment about how to advertise the position is dead on. However, I didn't provide enough context to what Rikess was saying. Mark Rikess has spent years trying to get dealers to look at management and sales positions differently, and if I'm representing his position properly, he advocates turning the sales position into more of a consultative-type role. So I think his idea would jive here.

Some of his views regarding one-price selling are controversial, but I think he has some great points (and what I provided in the blog aren't even the tip of the iceburg) regarding changes we can make as an industry.