Sales Performance - Sharpening the Saw

J.D. Power and Associates and the National Automotive Dealers Association estimate that almost 10% of all dealerships have converted to one-price selling over the past three years.

It is apparent that our industry is under a major restructuring phase and serious consideration needs to be applied in the area of training our automotive salespeople.

It is estimated that there are some 125,000 car salespeople working in the U.S. The study found that employees are “an under-managed asset” because well-managed employees – those in whom the dealership has invested time and energy – stay at the dealership and return the investment by contributing to the dealership’s improvement. Good management is distinguished by a dealership’s attention to attracting, developing, and retaining employees.

Top quartile dealers have roughly 54% turnover of their sales force, whereas the bottom quartile dealers have 71% turnover. Top quartile dealers have a higher level of employee involvement in improvement activities – of the top 10% of dealers surveyed, 70% agreed that employees proactively engage in process improvement activities within the dealership.

The theory is that some of the realities of the business drive dealers and their employees in a vicious cycle.

The hours are long and the pay is relatively small. Although a talented salesperson can make out well, the average annual income is about $30,000. Since 50-hour work weeks are the norm, the average salesperson makes about $11.00 per hour.
Stress is common, and not just the stress of rejection. Sure, a retail salesperson is about ten times more likely to hear no than yes, but that’s standard for most high ticket items. From the stress comes confrontation. The guest doesn’t like or trust salespeople, and sometimes neither do the manager.
Income is cyclical. Unpredictable compensation discourages stable, family-oriented people.
The pressure to perform creates tension which in turn creates high pressure sales tactics that most managers want their people to avoid. Since the salesperson receives mixed messages it creates uncertainty. Uncertainty results in the salesperson’s inconsistency. The result is a vicious circle.

Individual performance is the responsibility of everyone associated with the sales department. Salespeople and their managers need to take action to improve skills, reduce turnover and proactively engage in process improvement. Responsibility to sharpen skills and strengthen knowledge resides with anyone associated with selling automobiles.

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Comment by Jim Hughes on April 18, 2012 at 1:41pm: I love it, Michael. Yes, MOST dealers don't have that type of commitment...or RESULTS from that training commitment. I just sent your comments to our team to have them develop a suggested training plan to give IntellaCar dealers to help ensure their success/sustainment. It's a STRONG step in helping raise the professionalism and success in our industry!

Comment by Michael Brown on April 18, 2012 at 1:20pm: A critical issue is training. We have all heard us say,"You are a professional ... what do proferssional athletes and military do? They train!" The difference is that many managers have come up in the industry and do not have the skills and experience in in planning and conducting effective training. It's not talking on a topic for 10 minutes each Friday. I worked for a forward-thinking Dealer/Principal who conducts a Monday morning training session of 30 minutes and a Saturday morning refresher on the topic. With training teams and activities during the week. Each week. Right down to a week on the meet and greet. To get the most out of people they need to be trained, and that training must include role-playing and repetition. I don't see that type of commitment at most stores.

Comment by Jim Hughes on April 18, 2012 at 12:00pm: I second that "Wow"!

Since many sales people "fell" into their jobs after being fired from a series of previous jobs, there can be a lot of pain, distrust and discouragement swirling around. Few people aspire to be a car salesman when they grow up. Yet, we are seeing some exciting glimmers of hope for an evolution. Some dealers are beginning to hire Gen Y's with no prior auto experience so that they can train them in positive, encouraging ways. We're seeing some promising results! We're passionate about helping increase the professionalism and success of sales consultants by training them on how to engage with customers in positive, transparent ways using iPads throughout the sales process. We have a GREAT industry with BEAUTIFUL vehicles to sell. It's time to evolve our industry and the dealership experience - helping dealerships create an "Apple Store-like" sales experience to "wow" customers and exceed their expectations. Let's help each other step it up!

Comment by Kurtis Smith on April 18, 2012 at 8:41am: Wow....
Joe this is a wake up call for not just the leaders, but the salespeople as well. The harsh reality that most refuse to face is that they can change the direction that their lives are going in at any moment. Many in our business continue to conduct themselves as if this is the car business and their is nothing that they can do about the results that they are getting. However, if they could see the facts as you have stated here, they would finally come to the conclusion that change is no longer an option when extinction is the alternative. Great article.

Comment by Craig Lockerd on April 18, 2012 at 8:34am: Great insight Joe,Like I say "Did We Hire Them Dead,or Kill Them After We Got Them?"

Comment by Chris Irwin on April 18, 2012 at 7:21am: How are you calculating turnover?

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