Mark Franceschi
Managing Partner BSE-USA, Inc.

August 16, 2021

The Paradigm Shift

The discussion of proper training has been weighing heavily on us lately as we work with dealers nationally. The next few months will have the market pendulum swinging in the opposite direction. If every action has an equal and opposite reaction, can you imagine the dynamics of going from a seller’s market like the one we’ve experienced to a buyer’s market of equal magnitude? Are you preparing your staff now for going back to selling in a volume paradigm versus gross profit? When and if we do share the strategy with the staff, is it focused primarily on product/inventory updates and a four square? We love to say “we are not in the car business, we’re in the people business”, but how often do we talk about human nature and the psychology involved when working with customers?

Do you have 17 seconds to take our survey?  

Employees = Assets:

In the automotive industry our employees are our greatest assets, but have become our greatest challenge to manage effectively; even more so than inventory or advertising. We set targets and plan for all KPI’s (Sales, Inventory, Turn, ad spend, etc..), but we rarely use the same strategy when it comes to our people. An organization that builds a team that is engaged, informed, and empowered will be successful almost without exception. The product they sell or service they provide would not affect the overall performance relative to the competition. This organization would define its mission and collectively design a process to accomplish that vision. At the same time, they would assure everyone on the team knew what the mission was and the precise way they were to achieve that result, measuring it all the way to prosperity. When the staff is of the same heart and mind, they can not lose. So how do we achieve this unity of purpose? The answer is training, however “it sounds simple, but does hard”.

Historically, training has been seen as something of a necessary evil and has tended to focus on two things, Road to the Sale and product knowledge – often via shadowing a senior salesperson who will later be a competitor. In focusing training primarily on these two points we have created an untenable situation when it comes to personnel: high turnover, excessive stress on management, lack of cohesion between management and sales staff.

Cost of Turnover

The unnecessary cost of turnover and the difficulty in acquiring new hires can not be debated. Cox Automotive puts the cost of a new hire at $10,000; additionally, each salesperson who leaves your store results in lost revenue over time (we estimate $60 -70K). The number seems high, but if we examine the lost gross from the steady decline in the performance of an employee on their way out and the inefficient training process of a new hire we can see how quickly this adds up throughout the year. Now multiply that number by the instances of turnover experienced each year and we can see the need to manage turnover as a KPI. As an industry, we have consistently tried to hire our way to a top-performing sales team when the answer is that this team needs to be built and nurtured.

Management in Stress 

The physical toll created in a stressful environment is well documented, managers have learned to survive and occasionally flourish within its boundaries. The responsibility they have to satisfy factory objectives, profit statements, CSI scores set by dealer principals, and the gravity of working magic for their sales teams at every customer touchpoint is overwhelming. The simple fact is that whatever the focus of the day is, they depend on their salespeople to accomplish it for them. In short, the stronger the sales team, the more job security the manager has. If we all agree this is a keen grip of the obvious, then what are the reasons we don’t invest most of our resources building a better salesperson?   

Cohesion between Management and Sales Staff

Does your store have an “us against them” mentality between salespeople and managers as so many do? Is there a safe environment where a sales person can confidently become vulnerable by continually asking for help? If not, your salesperson will not ask for help, be less effective with each opportunity, and either leave or be terminated. A management team who understands the need to build a great sales team will invite the opportunity to help them improve. Offering a fresh and new training approach to the business puts your stamp on the culture you wish to build. It’s also the best way for a manager to earn the trust and confidence of a veteran who has joined the team.

Guidance: 

Each time we engage with a customer in our showroom, we’re ultimately looking for a transfer of money. The customer has a dollar bill in their pocket and I want that dollar bill in my pocket. Until that actually happens, what is more important: 

• My perspective or the Customers?
• The way I feel or the way they feel?

We need to retrain our thought patterns to focus on the feelings of the customer. The traits of human nature and the psychology of sales are profoundly more important than product knowledge and four squares. 

For those of us who were in the business back in 1989, do you recall the profound impact Lexus made when they redefined how we should be approaching our profession with the focus on our customer’s perspectives and not our own? You can have a similar and robust reaction in your market with a focused sales and management team who are of the same heart.

It is up to each of us to redefine the model we’ve built and look to the successful leaders outside the industry who have built engaged employees and flourishing environments. We can help you get started if you need guidance and direction. Please start soon, the market will be swinging in the opposite direction shortly. 

References:
Manheim Used Car Value Index
Jerome Powell Testimony
Cox Automotive
Comscore – Top Factors Driving Auto Recovery
Auto Remarketing