CURB THE CHURN: How to Identify & Retain Your Best Salespeople

by David Metter, Co-Founder and President, AutoHook powered by Urban Science

Dealership employee turnover rates are notorious for being amongst the highest out of all retail sectors. Unfortunately, dealers have been forced to absorb the spiraling costs associated with a lack in salesperson retention, which only appears to be getting worse. NADA’s latest Workforce Study reported salesperson turnover rates are at a record high of 74% - up 7% from last year.

What we don’t often talk about is the broader implications high employee turnover can have both on dealers and on the industry as a whole. Consequences of losing good salespeople can transcend beyond an individual dealership level, as any significant reduction in customer retention or customer loyalty has the potential to damage the reputation of an entire brand.

Dealers aren’t shy about communicating the adverse effects high churn has on their business, both in their operational processes and when it comes down to their bottom line. Wards Auto says, “The impact is significant, causing decreased sales and profits, and diminished customer loyalty,” which we know can be detrimental to the health of any business.

MAXDigital recently surveyed nearly 400 dealers in the U.S. and found 78% struggle with issues related to high staff turnover. The root of the problem is two-fold in that good salespeople aren’t just hard to keep, they’re hard to find in the first place. Ninety percent of dealers surveyed said “Hiring good salespeople is hard,” and finding candidates with previous sales experience let alone automotive sales experience is even harder.

*Source: 2018 MAXDigital Dealership Process and Salesperson Turnover Survey

Over time, chronic retention problems add up and can cost dealers hundreds of thousands if not millions of dollars a year. A study by Driving Sales and Hireology determined the average cost of recruiting, training, and lost productivity for each salesperson is $45,000 (and that was back in 2016). In my last blog, we defined the value of a good salesperson over the course of one year to be more than $325,000 in pure gross profit. Add that to the cost of recruiting and training and dealers are losing out on over $365,000 per salesperson, per year.

The need for dealers to be able to identify their best salespeople in order to retain them is more critical now than ever before.

Why? Because people still heavily rely on face-to-face, personal interaction - especially when it comes to making big purchase decisions. The larger the purchase, the more inclined customers are to buy from someone they trust. Despite the abundance of online vehicle research tools at their disposal at any given micro-moment, relationships will always take precedence. And people naturally gravitate towards both consistency and what is familiar to them. They’re also much more likely to buy a second and a third car from the same person they already know and trust.

So how do we solve this industry-wide employee retention problem? There are three components that we know make up the formula for properly assessing your salespeople in order to help curb the churn:

1.     Know What You’re Losing

When it comes to evaluating the true performance of your salespeople, having the ability to view CRM data through a scientific lens is essential. CRM companies do what they do very well, but they only show one dimension of a highly multidimensional story – the wins. But what about the leads your salespeople touched that defected? Without that defection data, it becomes near impossible to properly identify the best performers on your team based on the opportunities they’re working.

In order to see who the real winners and losers are representing your dealership, you need a way to visually compare the number of leads each person sold each month in addition to the ones they lost and who they lost them to. Only then can you see who is really the most effective or ineffective because you have the complete story. You can make much better decisions on who or what needs to change based on a real visual of what you’re losing.

2.     Leverage the Right Technology – Rooted in Science

What we’ve never seen before at the dealership level, is science taking a leading role in how we evaluate our sales staff. If science-based technologies can tell you the people that consistently prove to be growing in a positive direction, or reducing their defection rates over time, then science can play a role in helping dealers implement compensation plans that serve and reward only their best people.

Keep in mind, it’s important to give newer technologies or data-driven solutions time to build, learn and improve. The more sales and defection data we can collect over time, the more accurate and actionable the tools that leverage this data will be at identifying your best (and worst) employees.

3.     Play to Your Strengths

I’ve been in this business for 27 years. If there is one thing I know without a shadow of a doubt, it’s that the chances of a salesperson closing a sale are greatest when the customer is physically in front of them. So, in addition to leveraging the right technology to evaluate your staff, leverage technology that will support what we know to be the greatest strength of any person that knows how to sell a car… get the customer in the showroom.

If the goal is to improve your lead follow-up process and eliminate inefficiencies in the way you operate (which by the way is always the goal) then it’s absolutely vital to have the tools in place that can pinpoint both the strengths and the weaknesses of your team. When it comes to retention, dealers are much more likely to foster an environment of happy employees if they play into their peoples’ strengths instead of wasting money, time and energy attempting to fix what they’ll never be good at. As stated in the national bestseller, StrengthsFinder 2.0, “People have several times more potential for growth when they invest energy in developing their strengths instead of correcting their deficiencies.”  

The takeaway here is to place a heavier focus on solutions that are proven to get people physically in the door, where you have a much higher chance of getting them behind the wheel for a test drive, building a personal relationship, selling them a car, and retaining their business. Test drive incentives are one tactic we know works. Pair that with a bulletproof lead follow-up process and what you’re left with is a prescription for lowering defections tied to your salespeople, higher close rates, and better-rewarded, happier employees.

In summary, everyone wants to retain salespeople and everyone wants to retain the right salespeople for their respective business. So many dealership compensation plans are set up to benefit the underperformers – which is completely counterintuitive to reducing turnover. Until now, it’s been impossible for dealers to adequately compensate their all-stars and overperformers because they’ve had no way to identify them. Moving forward, dealers can take this information and adjust their compensation plans to retain the right salespeople and make the necessary changes to get rid of the rest. After all, it would only make sense to reward the people that are rewarding you.

What's the REAL Cost of a Bad Salesperson?

| by David Metter

If you think good salespeople are expensive, try bad salespeople. In 2017 alone, dealership employee wages totaled over $66 billion and “auto retail continues to boast one of the highest average salaries of any industry,” according to NADA’s annual report. Combine infamously high turnover rates with a decently-compensated workforce, and I’d argue the ACTUAL cost of a bad salesperson in the car business is a lot more than you think. As someone who spent my first seven years at a dealership on the selling floor, I was always frustrated when it seemed like our comp plans served the worst salespeople, not the best ones. 

To attach a dollar amount to what a bad salesperson could be costing your dealership, we first have to define the value of a good salesperson by doing some simple math. According to Automotive News, last year’s average retail gross profit per new vehicle sold was just over $2,000. Let’s call it $1,500 to be on the conservative side. So, a good salesperson selling 15 cars a month at an average gross profit of $1,500 a car is generating $22,500 in gross profit a month for your dealership, or $270,000 a year.

But that’s really not their true value, and this is why…

A salesperson selling 15 new cars a month equates to 180 customers a year. Then you have to factor in the lifecycle of the vehicle and the potential service revenue associated. Let’s say out of those 180 customers, half of them serviced with you. And, of those 90, each returned for service five times over the car’s lifespan. That’s a total of 450 service visits. According to Urban Science, the cost of an average service RO is $128.88. Do the math, then add it to the gross profit and you get $327,996. (My math is below for anyone in question).

·      450 Service Visits x $128.88/RO = $57,996 + $270,000 = $327,996

So in reality, for a year’s worth of customers, we’re talking a value of over $325,000.

That number sets the stage for what a bad salesperson could be costing you – because you can apply the same logic to 15 lost sales, or defections to competing dealers. If you have someone you think is one of your top performers selling 15 cars a month, but they lost 20 quality opportunities, that’s the equivalent of $30,000 a month, or $360,000 a year in LOST profit. Are you willing to lose a third of a million dollars from employing just one faulty salesperson?

If that cost isn’t enough for concern, there’s also the fact that there could be multiple people under your rooftop disguised as your “best” performers. But when you overlay all the opportunities they touched that we know defected – or purchased from a competitor – on top of what they sold, the story shifts and their actual sales effectiveness comes into focus.

The takeaway here is it’s not just about the 20 cars you could have sold. It’s about the dollars attached to those sales and the potential future profit in service revenue and repeat buyers. We all know the closing ratio on a customer is higher if they’ve already purchased from you. Selling a second and third car to someone who already knows and trusts you is a lot easier than selling the first. It becomes easy to watch the total worth of a single good salesperson exponentially expand when you know their number of closed opportunities consistently exceeds what they’re losing – but you need that defection data to get the REAL story.

Beach Balls, Limos, and Hip Hop: Not Your Typical NADA Experience

By The AutoHook Marketing Team

If AutoHook wanted to blend in with the other 700 auto vendors at NADA 2016 in Las Vegas, we would have followed suit and done the typical exhibitor space - complete with a booth, signs, gimmicks, prizes, and cute girls to welcome you. But in true AutoHook fashion, we took the road less traveled in order to provide a unique, more personal experience for our clients, partners, prospects, and friends.

In case you missed it, below is a recap of the DriveAutoHook NADA 2016 Experience.

• The Beach Ball Experience: We wanted to offer more than a sign and a booth. We wanted to offer an escape. The AutoHook team took over three cabana lounges at the Foxtail Pool at SLS on Friday, April 1st and Saturday, April 2nd. We had a great two days of meetings, fun, and bonding with clients and friends. Thank you to everyone who came out to see us!

• The Old Skool Hip Hop Experience: AutoHook kicked off a hip-hop-themed Friday night in Vegas at the Sayer’s Club at SLS. The party featured complimentary drinks, appetizers, a super fly DJ, and a tricked-out photo booth that was the hit of the evening. As you can see below, everyone had a great time while representing the AutoHook HQ in Detroit, MI. 

•  The Limo Experience: AutoHook was the exclusive limo sponsor of NADA, making our limos available to the public (not just clients or prospects) but to everyone. The goal was to create an atmosphere that facilitated sharing and connecting, while riding in style.  

Check out what our valued followers had to say...

• Let’s Not Forget the Winning Experience: PCG Consulting’s annual AWA awards ceremony was a night filled with automotive’s best of the best, all in one room, sharing in sweet, sweet victory. AutoHook brought home our fourth-consecutive AWA, recognizing our Marketing Solutions. Thank you to Brian Pasch and the entire PCG team for this honor.

Year after year, the NADA convention center redefines chaos. Dealers are bombarded with information and newly released products left and right – not to mention the hundreds of companies claiming to have the latest tech that can do what no one else in the industry does. What AutoHook did for NADA mirrors what AutoHook does in everyday business. Meaning, we offered an experience for people to remember. This year, we wanted to be synonymous with the words ease, fluidity, and fresh air - as opposed to hectic, crowded, and stuffy. MISSION ACCOMPLISHED!

4 Parallels of the Auto Industry and the NFL

By David Metter

The 2016 NADA conference in Las Vegas proved connections are the single most important factor of this business, and any business for that matter. To lead, you must be able to connect with a team, and from there an audience, and beyond that, the world. The focus should always be on that first fundamental building block – the team behind the vision.

Former NFL quarterback, Peyton Manning took the stage at this year’s convention and proved his understanding of business is quite on par with his athletic reputation. What he uncovered was the undeniable parallels between not only business-to-business connection, but also human-to-human connection, and how that translates into profitable success across any industry.

The leading players in automotive did not get to where they are today alone. They got there with a dream, an unbreakable team, partnerships, and connecting the right people with the right technologies. Real success is when a single great idea aligns with the individuals capable of making it a reality.

The following are four essential elements of success as they relate to both football and the car business – revealing the automotive industry may have more in common with professional sports than we ever thought possible.

1. Leadership: Whether you’re selling cars or competing for the Lombardi Trophy, risks, challenges, and losses are inevitable. It’s those companies and individuals that resurface when they fumble that show true strength. Leaders have a certain attitude that welcomes a challenge with open arms. Competition is embraced and sought after. Leaders are prepared for opposition and they manage problems with extraordinary effort. They are rarely, if ever, 100% satisfied and are in constant desire of taking an idea and making it bigger, faster, better, simpler, and more efficient. According to Manning, “Strong leaders must have the audacity to believe there is something more out there to reach for.”

The single dominating force that lives within all leaders is their ability to influence others. Leaders inspire individuals with their opinions. In any business, and really in life in general, fear is inescapable and it can paralyze a dream. However, leaders view fear as simply another challenge to overcome. Like potholes in the road, there will be obstacles that slow you down, or that may require a new tire, but they do not stop you. Manning says, “When the leader puts aside his or her fears and believes sometimes in the unimaginable, it stokes belief in others. Thinking like a team, but ultimately being able to deliver as one, raises everyone’s performance.”

Leaders in every business excel in their trades by unearthing and experimenting with new ways to compete, change, and ultimately win the game. Leaders have to be all in or all out. They must lead by example and a five-time NFL MVP winning quarterback reminds us that doing so “is not the main tool to influence others, it’s the only tool.” 

2. Teamwork: Just as a car cannot run without fuel, a leader cannot run without a team. Rather than allowing fear to get in the way, Manning recommends replacing apprehension with goals, and to “let your dreams lead you and work to cultivate that attitude in the people who work with you and for you.” To lead a team, you must be a present, active member of the team. You are not above your team and in reality you are always aware that you would not be where you are today without your team.

Honest communication with yourself and with those you work with is critical. When people work cohesively together and trust one another, magical things happen - and that applies both on the field and the showroom. “It’s about experience, taking all departments and all levels of a dealership and making communication easy for the consumers and the people that work in the dealership,” says Manning.

Like clockwork, great teamwork in business will lead to great experiences for consumers. A great experience does not end with your website, and it also doesn’t end in the showroom. It must resonate throughout your digital and traditional campaigns, your service departments, your finance departments, and your customer relationship management during the days, months, and years after a sale.

No company, no team, and no individual can advance without setting goals and implementing a unified approach to get there. Everyone needs to be on the same page for growth to occur. Team goals must be directly in line with your personal goals. There should be one vision; one path, one road and everyone involved needs to steer straight and keep their foot on the gas until that road ends, or until the goal is seized. Manning reminds us to “never underestimate the power of the team that made it possible for you to compile those results and stand apart from the best competitors in your business.”

3. Adaptability: No one has ever gotten ahead in this industry by doing things the same way forever. Like fear, change is inevitable and should be welcomed and embraced. The first rule of adaptability is a possessing a keen awareness of your strengths and weaknesses so that when change knocks on your door, you’re armed and ready. Manning notes, “Being keenly aware of yourself, your team, and your competitive landscape is vital for any strong leader. When you’re taking inventory, first focus on identifying the real strengths of your team. Where are your weaknesses? Now flip that to your competition and ask the same questions.” In addition, to be adaptable requires the ability to turn inward and focus on what you as an individual can bring to the team.

Manning reminisces on his career during the 2015 season. He was faced with a new team, new coaches, new systems, and with that new obstacles. He had no choice but to adapt his leadership techniques yet again. “When the environment changes drastically around you, no one, including the leader, can take anything for granted. There is a ferocious need to communicate more clearly, concisely, and probably more often and hopefully without a middleman in the process.”

NADA chairman, Bill Fox was quoted in DealerMarketing.com recapping this year’s convention and recognizing how incredibly adaptable the auto industry has been for the last 99 years. He said, “If NADA is to be the voice of the dealer for the next 99 years, then we must recognize change, confront change and adapt to change. And that’s exactly what we’re doing.”

4. Endurance: The auto industry is cyclical and in constant transition. Each month is accompanied by both opportunity and unpredictability. Last year was one of the greatest and most profitable years we’ve ever seen. Today, we face a decline in growth rates in comparison to the last five years. The competition we now face is unprecedented. But let’s not forget that throughout history, dealers and manufacturers have survived wars, recessions, and bankruptcies. Endurance is something that runs deep in the veins of all who know and love the car business.

Manning emphasizes the importance of a system for a quarterback. He says, “In your business, that equates to the corporate culture and standard practices. When you’re in a system for a long time, you master that system.” Undoubtedly, endurance defines the automotive industry in the same way that it dictates the best teams and players in the NFL. This industry will remain vibrant as we always have because of this inner, indestructible tenacity.

Peyton Manning’s NADA address did more than just captivate an audience of 28,000 dealers, 700 vendors and countless automotive enthusiasts. He connected two drastically opposing billion-dollar industries in a way no one has ever recognized before – which is what being a game changer is all about. Progressive transformation doesn’t happen from running the same play over and over again. It happens when a new play is created that changes, and ultimately wins the game.

NADA 2016: Driving Connections

March 31-April 3 | LAS VEGAS

By David Metter

The theme of this year’s NADA Convention is defined by one very powerful word: “connect." I couldn’t imagine a more perfect term to define this industry. Everything is connected. From the individual parts, materials, and entities that unite to build a vehicle, to the methods dealers use to connect with their customers. The ultimate goal for manufacturers, dealerships, and marketers is to simply find a way to connect with potential buyers.

The avenues of connection are endless and constantly expanding. Real-time data analysis has connected probability with human intent, allowing us to better connect the dots that will ultimately drive more showroom traffic in 2016, which will also lead to more opportunities for human connection. Digital advertising doesn’t sell cars - people do. Experiences sell cars, and that applies to the online experience you offer all the way to the human-to-human interaction in the showroom. We need to leverage tools that will validate digital to showroom connectivity. It is equally important for our sales staff to be able to connect with customers in person when they arrive at the dealership. People buy cars from people they trust, that they share values with, and that know the ins and outs of their inventory.

Last year, NADA Chairman, William Fox mentioned in his keynote address, “Dealers are the face of their manufacturers in every town throughout America.” Which brings me to the point of how important it is for dealerships to have their digital strategies aligned with their OEMs and third-party partners. All messaging should relate to one another across all channels and be consistent at every level. It’s more important than ever for us to bridge the gap in the relationship between manufacturers and dealers. We’re all traveling along the same railroad. All initiatives should follow a single track as we ride the rails towards a single goal: driving buyers into dealerships.

NADA is so incredible because it provides endless opportunities to connect with and learn from other automotive leaders. This industry thrives on both competition and change, and this event is the cultivation of innovation, growth, and collaboration for all. 

3 Ways to Connect with AutoHook at NADA 2016:

1. Ride in Style with our Complimentary Limo Transportation: Thursday, March 31st - Sunday, April 3rd, AutoHook will be providing free limo transportation from the convention center to all your Vegas destinations. Just text “NADA” to 55678. 

2. Attend our Old Skool Hip Hop Party: Channel your inner table-turning party-starter at the freshest cocktail reception at NADA on Friday, April 1st at the Sayer’s Club at the SLS Hotel and Casino. Why have a three-hour boring dinner when you can enjoy food and bottle poppin’ at Vegas’ newest hotel? Take our complimentary limo service to and from the party. Regroup with your team and rest from the grind with a drink, or get jiggy to some Run DMC. Don’t forget to capture all these moments on camera at our exclusive hip-hop photo booth. Click here to request your invite.

3. Escape and Relax at our Poolside Cabana Lounge. When you are ready for a break from overcrowded exhibit halls, join AutoHook poolside at our VIP cabana lounges located at the Foxtail Pool Club at SLS. Have a meeting, receive a demo, or just hang out and have lunch or a cocktail. The lounge will be open Friday and Saturday from 10:00am-5:30pm. No meeting required, all are welcome.

For more details, please visit DriveAutoHook.com/NADA16. We can’t wait to connect with you!