What's the automotive retail industry's greatest challenge? According to several top selling dealers I've talked with recently, the answer is the negative perception the public has about car dealers.
Their concern isn't focused as much on what the customer thinks, but more so on what potential employees think -- or rather, what they don't think. The problem, according to the dealers I've talked to, is that top, qualified individuals graduating from universaties do not consider a career in automotive retail. The ones that do, usually end up working at a vendor, not at a dealership.
What college student today, when asked where they are going to work upon graduation, would be proud to say, "I'm going to work for a car dealership?" Not very many.
We all know why the negative perceptions abound -- much of them well-deserved, unfortunately. And that turns potential employees away. Vendors who insist on running commercials that consistently paint the dealer in a bad light (CarFax, Cars.com a couple of years ago, Edmunds.com's Confession of a Car Salesman article) don't help. As don't the histrionics emanating from consumer advocacy groups such as the Public Citizen, which almost always rely on unbelievably old data.
However, I think the problem is deeper than just some negative perceptions about how dealerships interact with customers. The overall structure of the business itself screams, 'DON'T WORK HERE!" Automotive retail can be a brutal business. A job in sales requires an ability to handle rejection. Long hours, often with boring bouts of inactivity as salespeople wait for "ups," minimal job security and benefits, and no real formalized process to move talented employees into management do not make for an attractive option for top flight graduates.
Other industries have either as tough or tougher hours. Wall Street, lawyers, doctors -- but those professions have been glamourized by Hollywood and the media, while car sales have been painted as an industry for sleazeballs. The industry desperately needs to start thinking and implementing ways to change that cultural perception.
And top dealers are trying. Dealers like Greg Penske of Longo Toyota and Greg Goodwin of the Kuni Automotive Group are focused on it, creating businesses that catch the attention of potential employees. But it's going to take the efforts of more than a few dealers.
Each dealership can start with some easy steps.
Dealership Consultant Mark Rikess, in a recent column in Dealer magazine, offers some intriguing ideas on how to attract today's generation of employees.
Rikess writes: One of the biggest generational challenges facing dealers today is how they can more effectively recruit and market to Gen Y. Due to their sheer size, this group in the very near future will dictate dealership profit and loss as the Traditionalists and Baby Boomers ride off into the sunset. The changes to the sales process, work scheduling and communications will cause the same amount of trauma and change as was dictated by the internet. Some options to consider in your efforts to more effectively recruit include:
Recruiting – A four pronged approach should be implemented to attract quality recruits:
1. A button on your website that gives perspective employees information about what it is like to work there, including training, benefits, and life/work balance.
2. Placards/signage in the customer lounge and showroom floor showing a woman stating that job opportunities are available.
3. Quarterly emails to your customer list stating that job opportunities are available.
4. Postings on craigslist for “customer service reps” with benefits such as training salary, flexible hours, opportunity to work with a great team, etc. Do not mention it is an auto sales job in your posting.
Flexible work schedule – Life/work balance is critical (notice which word they put first). Dealers must determine methods for creating a 40-hour work schedule with at least one weekend off each month. Flexibility can be achieved by staffing according to traffic flow. Our research shows that 70% of sales occur in 30% of the time the sales department is open. By staffing the showroom and prep center according to demand and employing lower cost staff, sales people can sell more cars in fewer hours. Examples of lower cost staff include document processors and delivery coordinators.
Revised pay plan – The traditional pay plan based on gross with random spiffs will not attract quality Gen X and Gen Y sales people who have never sold cars. They would rather be paid $14 per hour to work in sales at a Best Buy or Apple Store rather than take on the financial risk of a straight commission pay plan. Today, typically more than half the new car deals are “minis” and the other half require excellent negotiating skills, a skill lacking in Gen X and Gen Y. Gen Ys in particular do not have the thick skin required for aggressive selling, having typically grown up in a coddled environment where everyone is a winner (ala youth soccer). A pay plan that provides a good training salary, typically $2,500 or more for two months and then provides a combination of salary and compensation per unit sold (not gross) with bonuses works well.
Training – Training and orientation are absolutely critical to retaining Gen X and Gen Y. According to Lancaster and Stillman in their book, “When Generations Collide,” when asked “Have you ever left a job because of lack of training opportunities?” only 3% of Traditionalists responded, “Yes,” compared with 15% of Baby Boomers and 30% of Gen Xers.
Gen Ys want to be part of a team and your training program should recognize that by teaching about other departments. In addition, Gen Ys need more than a basic job description. According to Cam Marston in “Motivating the ‘What’s in it for me?’ Workforc,e” Gen Ys do better when their role is defined -- an overall picture of the job when executed properly and specific responsibilities. Finally, all managers and employees need training on feedback – how to ask for it, how to give it, how to receive it, and what is appropriate behavior.
Rikess' suggestions are just a start. Let's get the ideas flowing and maybe we can start turning this ship.