According to NADA the average salesperson’s productivity is slightly less than 10 units per month. The Rikess Group works with two of the largest volume dealerships in the country, and they need to have a minimum of 80 salespeople on staff to hit their volume targets. With customers physically shopping less than two dealerships, it would make sense that productivity per salesperson should be rising; but it isn’t! Why? It’s because of a vicious circle anchored by high turnover and low productivity:

 Unappealing Work Environment

• The negotiating culture in many dealerships is a clear obstacle to hiring empathetic, “customer obsessed” salespeople. Why would someone who likes people want a job where s/he has to manipulate and take advantage of them? Furthermore, an entire generation of Millennials raised on Amazon.com don’t understand why a dealership would employ a negotiating sales model when consumers have all the information they could possibly need.  A lack of real quality salespeople who have the right interpersonal skill sets are not being attracted to our industry.  

Wrong People

• So who is attracted to traditional dealership selling environments? Old warhorses who enjoy battling with customers and people desperate for any position until they can find a “real job.” The first group make sales difficult and time-consuming because consumers buy cars in volume from salespeople whom they like and trust; and the “sales gunslingers” aren’t that kind of people. The second group are not committed to a career in auto sales, so they don’t invest the time and energy to learn the product or nuances of the sales process. This group also extends the time it takes to sell a vehicle because they don’t have the knowledge or skills and therefore have to rely on a lot of management support.

Inadequate Training and Development

• The lack of a thorough and comprehensive on-boarding process is another productivity obstacle. When salespeople are put in front of customers before they have been thoroughly trained and immersed in the dealership’s culture they may never have the opportunity to be highly successful in selling volume. They get frustrated with their lack of productivity, including not earning enough to meet their financial needs. In many if not most, cases they quit before they can reach their full potential.

Managers Desire for Control

• In dealerships with high salesperson turnover, management tries to control as much of the sales process as possible due to the inexperience of their sales staff. This calls for mandatory “desk trips” and some form of a “liner-closer” model. This model hurts productivity as there aren’t enough managers to effectively try to “close” deals for an inadequate sales force; it just takes sales management too long to start deals over while trying to develop some form of relationship with the prospect. NOTE: In virtually every dealership there is one manager for every 2.5 sales people (this data includes GSM; SM BDC; F/I.) A very expensive model in an era of margin compression.
• When it takes easily 3 hours or more to sell a car in this kind of environment, salespeople have less opportunities to make sales as time is being wasted in the process. Also, the process can be pretty exhausting for all parties lessening the likelihood that salespeople want to start the process over with a new prospect, especially near the end of a shift.

A Disincentive for Managers to Empower/Train Salespeople

• An empowered culture where salespeople own the responsibility for true customer satisfaction and don’t have to rely on managers to “desk” or close their deals is what both customers and people-focused salespeople want. But empowering salespeople works against sales managers wanting to maintain both their status and incomes. So there is a built-in disincentive for managers to empower and train their sales staff; the more empowered the sales force the less managers you need.
• Because they are required—and incentivized—to be deal managers, most sales managers ignore people development. So even if you have some high potential salespeople, no one is focused on developing them.

Low salesperson productivity generates at least five important costs:

• Lost sales due to a low closing ratio
• Sales management/personnel costs – you have at least one manager per 2.5 sales consultants. You pay your sales managers a premium because they have a unique skill set (negotiating) and there is a lack of supply of excellent sales managers further raising their compensation
• Less than stellar customer reviews due to the lack of value added by the dealership in the sales process
• The general overhead expenses/benefits to under-performing sales people
• The cost in time and energy of constantly needing to recruit new salespeople

The good news is there are a number of fairly straightforward ways to boost salesperson productivity:

1. Offer a minimum salary – not draw! – of $2,500 per month
2. Schedule 40-hour work weeks
3. Provide at least one month of on-boarding/training before letting new salespeople greet prospects
4. Eliminate negotiations from the sales process and empower your sales staff
5. Utilize tablet technology to further empower your sales staff
6. Have a significant portion of your sales managers’ compensation tied to salesperson productivity; this forces them to develop their sales staff
7. Change the definition of your sales manager’s role from being “deal managers” to “people developers.” This means they need to be trained to become better at coaching, leadership and training.
8. Put in a minimum sales performance standard. After the first 60 days of employment put in a minimum of 12 units per salesperson on a 60-day rolling average. If they can’t meet that threshold they are terminated.
9. Dedicate resources to accurately measuring closing ratio from all lead sources.
10. Never recruit salespeople out of need; always be recruiting!