Quick… make a list of the top five issues that are negatively impacting your dealership’s profitability that also have little to do with sales team turnover.
If you’re like many of the dealers I’ve spoken with over the last year, your list probably contains items like these:
Hint: All of the above concerns – and virtually every other problem at your dealership – are the result of your team’s turnover issues. That’s why I say, “Solve dealership turnover issues, and everything else is a cakewalk.”
Sales Does Not Cure All Ills
If you examine the data, there were two puzzling industry trends that took place as the new car market was busy growing to 17+ million units. First, there was the continuing erosion of new car margins as a percent of selling price. Basically, we sold more expensive vehicles for more money, but we decided to let the buyers keep any new found profits.
Selling more for more and making less should be troubling to dealers, dealer groups and OEMs alike. It begs the question: What’s going to happen to margins in a flat market?
More troubling for dealers, however, should be the employee turnover trends. It seems that during this same growth market, retention decreased. According to NADA, the average dealer saw median employee tenure fall from 3.8 years in 2011 to 2.4 years in 2015.
This is concerning on so many levels, but most of all it means that any lasting improvements contemplated by the dealership must be continually put on hold because your managers are too busy recruiting, hiring and training, right?
But Steve, We Use Vendors For All of That!
Outsourcing your staffing or training needs does not mean you’re outsourcing your leadership. Unless, of course, your expectations of these vendors is that they’ll not only find you the right fit, but also hold that person accountable to your rules, expectations and processes while they groom that new hire into a happy selling machine who will never leave your employ.
Don’t laugh. Dealers might not say this out loud, but many of them expect their staffing and training partners to waive a magic wand and solve their leadership issues as well. I hate to write this, but most dealers who outsource their recruiting, hiring and training are actually outsourcing their leadership. (Or, at least trying to.)
Stop Outsourcing Your Leadership
The reason that grosses are down while turnover is up is not because you used bad staffing or training firms; it’s because no one in your dealership stepped up to truly lead those perfect hires who had just been expertly trained. The issue is not who we’re hiring or who is doing the training. The issue is who is leading our people once they join our team or after the trainer leaves.
Give me a great leader and 10 random Burger King fry cooks, and over the long term that team will outperform a bad manager and 10 “perfect” hires. (I know this, because the bad manager will blow out your 10 perfect hires in the first 90 days.) Ultimately, the great leader with the 10 fry cooks will end up with a turnover rate near 20%, while the bad manager will continue to hover above 100%.
Okay Steve, But What About My List of Issues?
Think about it, solving the turnover issues on your sales team means you’re not having to train and retrain the same rules, processes and expectations again and again. Among many other benefits, a well-trained, stable workforce means a superior online reputation, a reduction in discounting, market share growth, great follow-up, and dedication to proper tracking and CRM usage.
If we can all agree that negative employee turnover negatively impacts our list of top dealership issues, then we can better understand that in order to actually solve our issues, we need to solve turnover first. In other words, the top five issues you listed are merely symptoms of your dealership’s real ailment: an unstable workforce. An unstable workforce, not coincidentally, is a symptom of ineffective leadership.
Of course, rather than offer you yet another hollow “dealers need leadership” lecture, I’d prefer to provide you with a real solution to your turnover issues; which, when followed, will also turn your managers into leaders. (All without having to trot out an expensive leadership “guru” who regurgitates a bunch of meaningless slogans instead of just giving you a blueprint.)
The Blueprint: Six Simple Steps to Solving Dealership Turnover Issues
I really wish it was way more complicated than this so that I could make millions teaching dealership managers how to be better leaders (and thus solve their turnover issues); but it’s not. There really are just six simple steps you need to take:
First, write some simple, fair business rules. Don’t overthink this and create a 10,000 page company manual; think of these as your Ten Commandments. Simple rules that cover things like skating and the consequences of not following a written process.
Next, write some enduring, fair pay plans. The issue with most dealership pay plans isn’t that they change; it’s that when they change they can feel unfair to your best people. So, the goal is to write something your team feels is fair and that will only change when a major market disruption occurs.
Then, write some repeatable sales processes. Nothing fancy here, just some simple steps your managers can understand, enforce and easily teach. Of course, you’ll need different processes based on customer type (internet, new, used, trade – for example).
Now, you’ll want to test your sales processes to ensure they will be welcomed by both customers and employees. The ultimate goal is to ensure your processes can be described as “fun” by everyone from the first-time walk-in to your most seasoned salespeople. (Yes, fun. Given that almost everyone hates your current selling processes – including your own team – you should test and refine every process until it’s simple, repeatable and fun for all.)
Once everything is in place, you will need to enforce your rules, pay plans and processes fairly. Don’t worry about scaring off your good people with a measure of accountability. The fact is that good people like order and great people love structure; while slackers hate having anyone telling them what to do. But, be prepared. Enforcing rules and processes might mean firing those who refuse to comply; and this may include your favorite manager.
And finally, you just need to be nice. It’s no secret that people quit bosses, not companies. So, if you provide fair pay plans, good business rules, fun processes and structure – and all of this is delivered in a courteous manner with real respect for the individuals on your team – you will discover very quickly that your best people don’t want to leave; and the competition’s best people will want to come work for you.
You will also have discovered that your managers are now leaders…. Oh, and that everything is as close to a cakewalk as you can get in automotive retail.