A Shift in Dealership Management Best Practices

    By Desiree Homer

    Leveraging Tools for Better Hiring, Retention, and Operational Efficiencies

    Everyone’s talking about the new normal. What dealers used to consider to be management best practices have since morphed into something entirely different. Those pivotal shifts dealer owners made months ago, as a method of survival, are now proving to be the revolutionary way forward for good. Some of those changes might seem subtle or small in scale. But some of those shifts were more substantial and have led to a new operations landscape altogether.

    The challenge many dealer owners are facing now is deciding which old ways are worth going back to versus new processes and management strategies. What you first thought was a temporary fix is now the only position from which to manage. For example, dealers were forced to embrace remote working options for sales and administrative staff. Now that quarantines are lifted, many are still incorporating at least a hybrid variation of remote working schedules.

    In a recent Dealer News Today podcast, Chase Abbot, VP of Sales at Cox Automotive, talks about the “new school approach” for managing employees. It’s about building a management style around empathy and improving flexibilities that foster an environment of happiness. After all, happy employees translate to happy customers.

    What You Did Before May Not Work in Today’s Dealerships

    Hiring and keeping quality sales staff has always been a challenge for dealers. Nearly 80% of automotive salespeople turnover on average every year, well, every normal business year. And before COVID-19, you likely had a strategy to combat those rising turnover rates. Sales Managers would have strict policies in place to monitor and drive sales performance. You likely had monthly quotas and processes for sharing incoming leads with the teams. But some suggest some of those methods might not work in today’s workplace. Recruiting and sales retention have to be a top priority. Some sources suggest staffing problems and turnover can cost the average dealer owner nearly $7,500 in gross profit per employee annually.

    The Pay & Commission Strategy

    It’s no secret that one primary turnoff to auto sales roles is the pay structure. Some people feel pressured with a commission structure or a draw setup because they second guess their own skills and qualifications to do the job. But based on a host of surveys out there, surrounding auto turnover data, many employees experience burnout with the long hours and weekend schedules, as well. Sprinkle in a few instances of poor management skills, and you have an environment ripe for turnover.

    As a hiring strategy, some dealers look to find personnel who are already working an auto-related sales jobs. These candidates typically know the ropes and are less likely to be intimidated with a commission scale. Other dealer owners look for non-auto experience with people who work retail or within the restaurant industry. These workers are already accustomed to weekend schedules and evening hours, if necessary. But even these strategies didn’t always pan out, and dealers would routinely feel as though they were constantly hiring replacement sales staff.

    No Staffing Strategy at All

    Dealer owners don’t just struggle with finding a best practices management strategy; some don’t have a hiring strategy at all. Automotive News reported on Cox Survey data a few years ago that suggested nearly two out of every three dealers surveyed didn’t have an actual “staffing strategy.” And back in 2017, almost a quarter of all dealership facility employees planned to look for new jobs within six months.

    These turnover rates seemed to transcend both large metro areas as well as smaller, rural communities too. It’s not uncommon to see auto sales professionals jump from one dealer to another within the same geographic market, often chasing the better commission rates. From the perspective of the salesperson, leaving one dealer for another usually resulted because of a lack of training, too. Throwing new hires “to the sharks” in a sink or swim scenario seemed to be the benchmark for some dealer managers. If an employee can’t hack it, he or she must not be meant for a sales role. Only the top-sellers could hit the ground running, and it would be like an initiation strategy for building a sales team. Obviously, these strategies didn’t always prove successful.

    Another driving factor many auto sales employees look for is lead management. If a dealership has a robust platform for lead management, a hefty advertising budget, and a fair system for delegating lot traffic, sales professionals would expect higher pay opportunities. Those dealers who perhaps expected their sales teams to drum up the new car buying business entirely would tend to see even higher turnover. The commission could be substantial, but if the flow of car-buying traffic is non-existent, salespeople would quickly jump ship.

    The Whip and the Carrot

    Personnel management in any industry essentially boils down to two primary principles. Is your strategy and environment more conducive to the whip or the carrot? Some dealers focus more on the whip, a concept that continuously looks for poor performance and initiates a series of consequences as a result. Hit your quota or else. Make a certain number of cold calls each week or else. Alternatively, sales managers would make use of certain incentives as a way to dangle the carrot and inspire productivity. Bonuses for selling the aged units or monthly spiffs for overall sales are designed to encourage salespeople to produce results. 

    The difference in today’s post-pandemic environment is the employee values. Sales staff will always be motivated by money. However, they’re also looking for something entirely different from their dealership employers. And any dealer still operating with these old-school best practices might soon be seeing even higher turnover rates as professionals explore more rewarding employment options.

    What Dealers Are Doing Now

    Chase Abbott reminds dealers that “there is no out-of-the-box customer or employee culture” that dealers can simply install. People are motivated by different factors and agendas. The only way to know how to complement those goals is by asking. This is the “new school” way of managing that has to become the new normal for dealers to see success in staffing. It means creating a hiring strategy if you don’t have one and shifting your old methods to meet the new employee motivations. Keep the employees happy, and you’ll find your customers will also be satisfied. Happy customers buy more cars. In a way, taking care of your people will allow everything else to take care of itself.

    New Tools of the Trade

    Chase Abbott talks about the advances in technology that have put groundbreaking tools in the hands of the dealer owners looking to improve employee engagement and retention. In this latest DNT Podcast episode, Abbott shares information about a program he presented at the virtual NADA conference. Imagine being able to track how many customers return to your dealership because of a positive salesperson experience. It’s tools like these that can dramatically change how dealers cultivate their dealership cultures.

    In our Novel Thinking series, Randy Kobat of Cox Automotive talks with Dan Garwatoski, the Sales Manager at Nissan North in Columbus, Ohio, about how today’s dealerships are creating more efficiencies and, as a result, a more successful company culture. As Dan Garawatoski talks about how his dealership operations are doing, he shares some of the strategies he’s leveraged to boost sales, even during the pandemic. And one common thread to each unique solution is tapping into the various tech tools to find the path forward.

    If you haven’t heard this podcast episode, it’s a candid conversation you don’t want to miss. Garwatoski speaks openly about the challenges and success he’s seeing right now. But he also talks about solutions that have worked for his operations and management, including the omnichannel approach to stocking cars and turning a profit. He’s just started using tools like ProiftTime 2.0, a system that allows the dealer to know the most profitable price ranges for any used models. These efficiencies have saved time, money, and staff headaches. And, of course, he points out that not everything works all the time. But the success lies in building the momentum in a positive direction, and that’s where “you can really start to make good things happen,” he says.

    The New Best Practices Are Flexible and Customizable

    You don’t have to reinvent the dealership management wheel when it comes to managing staff or adopting new technologies for streamlined processes. Dealers still need to dig into their respective markets to learn about local and regional buying trends that matter. Sales goals are still a critical component of success, and the commission structure is still a relevant option. But there are new ways forward that create less of a whip and carrot environment and more of a self-motivating and growth-centered workplace.

    Much like you would develop and create customer buying experiences, you may want to consider the same approach with sales and administrative staff. Look to the latest software solutions and data-driven efficiencies that make selling a car easier on those who facilitate the sale. Your sales team is the heart of your customer experience. Keep the employees happy by laying in reasonable guidelines for performance basics, but allow them to communicate needs. Offer as much training and as many tools as they require to be successful in their roles. Then get out of their way and clear a path let them do what they do best.