There is a lot of talk going on about car dealership turnover. It seems that everyone has an opinion about it but not a whole lot of solutions. I am going to do some “REAL TALK” in this post because it is time that the sugar coating stops. I have spent a great deal of time between consulting dealers and working for dealers on a case by case basis. It is no secret that dealership turnover has been an issue for ages in dealerships but only has become a HUGE topic of discussion in recent times.
So, what’s the problem?
1. Management (or Lack of Proper Management): Managers get put into managerial positions without understanding the concept of what management is. I have noticed people get put into management positions that are willing to hold the title for half of what a good manager should be earning. Dealers need to have mandatory management training for managers that are being promoted and managers that are being hired into the organization.
2. Poor Recruiting / Interviewing Skills: In order for any business to be effective there needs to be an appropriate process for recruiting. This includes asking a specific set of questions, testing and evaluating a candidate’s personality, giving everyone a fair chance to interview that applies so that a proper hiring decision is made and most importantly, setting proper expectations from the very beginning.
3. Training (or Lack of Training): It is very sad that dealers will hire new employees or start a new department (like a BDC) without investing some time and money into training people the right way to do the job. Why do we hire sales people and throw them out on the sales floor to figure it out for themselves? This is because the “lack of proper management” does not consider it their duty to build a strong team for themselves. Is it pure ignorance or is it the fear that training costs too much money? Dealers, I got news for you! Every time a traditional company hires someone for a position they always train the new hires on everything from company policy to how to do the job properly. Why are we not doing this? Do you think that a training problem can help retain and grow good employees? Training does not have to be expensive but it needs to be effective.
4. Poor Work Environment: This goes back to “Lack of Proper Management” because that is the only way that a work environment can be poor. There are managers that bully or belittle their sales people. There are dealer principals that love to make employees feel scared that they might lose their job by constant warnings or threats. I have seen dealers interview managers behind their current managers back just to test the waters. They sometimes make a rapid change with hopes that they will soon sell more cars. 9 our 10 times that miracle never happens. A poor work environment is generally the product of all of the aspects of dealership turnover that I am discussing in this article.
5. Pay Plans: Stop trying to cut corners and save a couple bucks. Let your people come to work, train them, motivate them, help them, mold them, PAY them fairly for their performance. Keep the pay plan consistent. Everyone should have the same pay plan and opportunity to earn a decent living as long as they perform. Do not cut pay plans, as it does not add to your bottom line. It does hurt your business in the long run.
6. Scheduling: Give people a fair work life balance. Stop operating slave shops. I noticed that there are huge dealers in Michigan that are open shorter hours than most of us and still they do huge numbers. I personally think dealers should close at 8:00 pm during the week, 7:00 pm on Fridays and no later than 6:00 pm on Saturdays. Sunday’s all dealers should be closed. Great employees enjoy coming to work, produce and make you a lot of money when you give them a chance to breathe.
7. Lack of Patience: Stop panicking every 30 days! Start thinking about your whole year in general. There will be record months and sometimes there will be slower months. We have all seen it. It is the circle of life. We need to keep the momentum going by making sure that we doing everything we can in order to be profitable and maintain a great staff. The people that you employ are the backbone of the business. If you are not happy with someone is performing then train them, coach them and guide them before you fire them. Give people a chance to prove what they are capable of doing. Turning over a manager every 3-5 months is INSANITY! If you do not provide tools and training you cannot expect a replacement to do much better. Drop the ego. Stop being greedy. Start thinking about the people that work hard every month to help you stay profitable and how you can help them make you even more profitable.
8. Poor Communication: If you are not happy with something then start communicating. Create an action plan with meetings to discuss what the problems are and how the team should work to fix it. If you want to command everything and take full control of dealership operations it is important to start communicating. Stop dropping $10,000 on direct mail and wonder why your BDC department is not converting these sales calls into appointments. Stop wondering why your sales people have no clue what the customer is talking about when they show up with it. Successful dealerships communicate well with each other and in turn operate like a well oiled machined.
9. Investment vs. Expense: Stop treating legitimate and important business expenses (which by the way you all write off your taxes) as an unwanted or unneeded expense. You want to build a BDC? Hire the right people with the right expectations in the beginning and invest in the right training program to get the department off the ground. After the department is set up invest in an accountability partner that will continue to help the BDC stay on top of their game. Do you have a reassurance company that works with your F&I department every month? How much do you spend on that service every month? If that makes sense, consider investing in Sales, Internet, and BDC training for the same exact reasons. After everything, is the BDC still an expense in your mind? If it is then take a look at what your sales people are doing at work on a daily basis. Are they following up on leads? Are they making calls? Are they standing by the door waiting for UPs? Could they be doing the job of the BDC? It may very well be so that they can. If you will eliminate a BDC department then invest in training the sales people to do their job.
This is “REAL TALK” so take it for what it is. There is no magic formula for how to be a successful dealership. There is only common sense, a great attitude, well planned out business practices, a smaller ego, excellent training programs / methods and a general respect for the people that you employ. This is how your dealership turnover can at least get lower by a minimum of 50%.