When I talk to dealers, which is daily, they say the biggest challenge in their variable departments isn’t profit-margin compression (which is awful), but their inability to attract talented Millennials salespeople, especially women.
This recruitment issue is only exacerbated by our economy being close to full employment. Industries with better reputations than we have also are struggling to find quality salespeople.
So by simply offering traditional auto industry jobs, processes, pay plans, and working environments, we’re falling into an insanity trap of expecting better results without changing anything. That is, expecting more talented and effective salespeople without redefining the job to be more in line with modern retailing.
While margin compression is certainly a front-and-center issue, the hidden costs of salesperson turnover, poor customer interactions and lack of commitment to the dealership, likely totals as much or more than any margin compression. (Think about how the talent issue affects lost plus hiring, training and marketing costs.)
Dealerships that experience high salesperson turnover can’t create high levels of competency, as they are constantly training the basics to new recruits. It’s a race to the bottom.
But there is reason to be optimistic. We may not control all factors squeezing margins, but we can certainly control who represents our products and services on the showroom floor and online.
To be more effective in salesperson recruiting and get different results, dealers need to eliminate hurdles such as:
- 45-hour or more work weeks.
- Compensation plans that are primarily commission-based (when there is no front-end gross).
- A lack of on-going, effective sales training.
- A lack of empowerment due to the controlling nature of the “desk.”
- Poor male and female Millennial management representation.
But the biggest barrier to attracting the people you want selling cars for you and representing you on the showroom floor is the negotiating culture. This is a hurdle young and talented people aren’t going to consider leaping over.
They don’t understand why, in an era of transparency, a dealership would put a customer who’s done hours of research through a process as though they were unknowledgeable.
When every study shows most customers dislike coming to dealerships to buy cars, why put up this barrier to recruiting talented people? Eliminate this impediment, and your window of recruitment will open wide.
As an industry, we’ve lost at least one generation of talent. How many salespeople do you have on your showroom floor who are in their mid-30s and have been with you for 10 years? How much do your managers reflect the age and gender of prospects that are walking in your door, especially women?
Building a future-oriented sales and management team no longer is an option. It is vital to sales growth and profitability.
The most successful businesses in every industry build customer processes around what the majority of customers want.
The auto industry might be the only retail business model still trying to force consumers to adapt to a retail experience that is becoming increasingly foreign to them.
Why? Because so many of our managers today only know what they learned before online retailing took over.
Further, most dealers are reluctant to make serious changes to a sales model that has made them financially successful. They are comfortable with what got them to their station in life: a traditional way of selling cars, even though it may be out of step with today’s general public and advanced retailing practices.(Wards Industry Voices contributor Mark Rikess, left)
Dealer can run their businesses the way they want. But don’t put up recruiting barriers and expect different results when it comes to attracting and recruiting a younger gender-balanced sales staff. Instead, become a modern auto retailer to attract the right stuff.
Mark Rikess is a former and a pioneer of no-negotiating dealership selling. He heads The Rikess Group, a dealership consultancy. He can be reached at [email protected] and 916-715-8129.