The Auto Industry Needs a New Type of Sales Manager

Planning for Tomorrow, Today

I apologize in advance, as this column is going to upset a number of sales managers.

The biggest challenge most dealerships face is recruiting the Millennial generation who have the right skill sets to become true salespeople.

There are a ton of qualified Gen Y’ers who could sell cars but choose less lucrative positions because they don’t like the traditional sales process and aren’t provided enough training to be successful in auto sales.

On average it takes four months to get hired for a call center position at Zappos and there is a line of applicants for a $14.00 hourly position at Apple stores. These are people who have the same skill sets you need to sell automobiles. So why do job-seekers reject our business?

Let’s start with what the majority of sales managers actually spend most of their time doing. They are closing deals for so-called salespeople, who are basically product presenters. They are “deal managers” as opposed to “people developers.”

If I were a Dealer today, my overarching goal would be to create an “empowered” sales staff that isn’t reliant on sales management to close their deals – which leads to happier sales people and happier customers. When you see a manager at any retail establishment, other than automotive, it is because there is a problem, not because the sales person is reliant on them to do their job …

But in today’s traditional sales model there is a “disincentive” for sales managers to develop sales people. If they create an “empowered” sales staff there will be less for them to do! An “empowered” sales staff also doesn’t need management to close their deals. So, why should a manager challenge the traditional sales model that allows them to be handsomely rewarded for their negotiating and closing skills?

So, if you as a Dealer want to eliminate your biggest challenge to recruiting a young, diverse, gender-balanced sales staff, you’re going to need to recruit some new managers. Managers the Millennial generation want to work for. Managers who have the right skill sets, or can be trained in the necessary skills to develop an empowered sales staff. Not an easy task!

Once you get these managers in place they will add much more value to your dealership while also reducing expenses.

An empowered sales staff will be able to take prospects from the meet and greet to close. This will allow for the next iteration of sales management. There will be “hybrid” managers who will be responsible for appraising trades, handling F/I and training their sales staff. This will allow you to operate with significantly less management while creating a more productive sales staff that leads to greater true CSI. The next iteration will be to develop your sales staff to take the process “A-Z,” which includes handling the financing.

I have about forty dealership clients that employ the A-Z model with great success. Besides newly focused Managers and Salespeople, they also use Document Processors to handle the compliance related regulations. Their management ratio is around 1:5-lessening their expense to sell a car in half compared to the traditional sales model – with higher customer satisfaction and much better personnel retention! Pretty compelling!

To reiterate, there are two fundamental issues that need to be addressed in the new model if you’re going to become a “modern auto retailer.”

The first is cost / efficiency. Today there is one manager for every 2.5 sales consultants (this includes F/I; BDC; etc.) In an era of margin compression you can’t afford to keep using the traditional auto sales model. One of the reasons there are so many managers is that sales consultant turnover remains very high. With a relatively new and/or poorly trained sales staff, someone has to go in and close deals.
The second issue is skill sets. Most of today’s sales managers don’t have the right skill sets to develop and maintain a young crop of sales people. If you’re going to thrive in the long run you’re going to need managers who are great at training, coaching, providing recognition, and more.

The model I’m describing above is inevitable. When sales volume slips slightly and interest rates creep up a bit while on-going margin compression continues, you’ll be forced to change to a much more efficient, customer friendly, sales model. Why wait till you’re forced to change?

If you’d like to discuss new sales models and management development in more detail, send me an email (markrikess@gmail.com) or give me a buzz – Mark Rikess at 916-715-8129.

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Comment by Big Tom LaPointe on April 8, 2016 at 12:24am: I think the business is a vicious circle - there is a line of $14 an hour apple applicants because they get paid $14/hr - not minimum wage or less. Salespeople need to be 'managed' because they're not $30-50k per year independent salespeople with initiative to work the phones. and let's be honest, when's the last time you met a manager who earned his keep 'working the phones'. tech is critical to communicate with ALL generations, but when the next recession hits, the dealerships - and salespeople - with the best relationships survive. that isnt going to happen as long as the traditional manager AND comp arrangements are in place.

Comment by Michael Abrams on April 5, 2016 at 9:03am: Mark:

Terrific article. Efficiency in processes is probably more important than efficiency in any other part of the dealership. Empowerment of the sales staff not only makes the process more efficient, it should have a profound impact on turnover. Several of my blogs deal with this empowerment issue. Here is one for your referrence. http://wp.me/p1lzak-2C

Comment by Robert Nolan on March 31, 2016 at 12:34pm: Mark: Great insight. There is nothing more frustrating than spending time (sometimes too much) with a salesperson only to have them leave for the "close" to take place with the sales manager sitting in a protected booth across the room. As the customer's stress level increases their desire to leave also increases know they will have to negotiate with the "ghost manager".

Nothing makes a new sales person less credible than to hand a new customer a business card with someone else's name scratched off and the new person's name scribbled in.

Sales managers aren't born they're developed based on knowledge of their traits and personalities and more importantly how they communicate. Too many times the teaching moment sounds more like: "This is way I did it, it worked great for me, just do it my way and you'll be just like me". News flash, they will never be you!

It's not that sales managers need to replaced they have a value to the employer and their sales team, just make sure they know how to do their job a little better. Then the "fun" can begin.

Comment by Pat Kirley on March 30, 2016 at 2:31pm: I think Mark mentioned fun near the end. The fun has gone out of the business, it now a much more pressurised environment for sales people. Has the pressure driven up profits or volume, I don't think it has achieved the desired results. Currently less and less people are choosing car sale as a lifelong profession, it is a stop gap job till something better comes along.
Yes the time as come to look at the chain of command and function of various staff to reduce not productive activity and free up employees to do their prime roll, ie dealing with the public. I see issues here in Ireland and I'm sure it's not far off what is happen in your country.
Like all change it will face opposition as change is feared.

Comment by Mark E Fish on March 30, 2016 at 1:51am: Yes it is true that a sales manager should be a coach, mentor, facilitator, a teacher. But most are not good teachers. That's a special trait.Most managers of our industry,have come from back grounds that you learn in the ditches, streets, and are trained in the art of great acting, stage presences. Managers are people watchers, detectives, by getting the facts, Knowledge of the art of a deal. Some are drill Sargent's,name takers,name callers, and patient people "wow" and then some aren't ! Yes the industry will be changing and will have to change. Most automotive people didn't grow up saying they wanted to be an automotive sales person :(?) There really wasn't a college course for Auto sales "101" . If we are looked at as a career choice growing up, then we will move forward into the future. We need to try to recruit from high schools, colleges and present our self as "THE FUN INDUSTRY" that you can make a great living helping our fellow people with their transportation needs and some a dream.