Having been in car sale side of the industry for the better part of the last decade, it seems to me there's a huge problem with dealer personnel turnover - or, at least a problem seems to have developed over the last few years, especially as sales have dried up.
The problem for some dealers is this: bring in a new group of salespeople; train them; turn them loose on the public, and three months later repeat the process with only one or two of the original bunch still around. On the surface, it probably looks to the dealer like he's getting the best of the deal; he's getting fresh sales help that can be trained; he's paying a reasonable wage - for the car industry its almost princely - for only a few months, and he doesn't have to provide any benefits until the salesperson has survived 90 days or his 15th car sale or whatever the metric might be.
In this situation, about the only incentive the salesperson might have to do a decent job is the realization that if he doesn't do the job, he'll just be another unemployment statistic. The car business is mired in a commission-based sales syndrome of another era. Back in the 70s, it was a dream. The commission rates were high; car salespeople - even if they were half-decent - still sold lots of cars per month and it wasn't unheard of for a salesperson to bring home a six-figure check (not a manager, either).
Today, that situation has changed markedly, as we all know. With the economic slowdown, people are holding onto their cars for all they are worth; some are even skipping needed maintenance to make sure they have food on the table. It is probably the result of the credit binge the entire economy went on during the 90s, but now, as the old saying goes, the piper has to be paid. And, one area that's taking a real beating is the car business.
Cars, you see, are the ultimate in discretionary spending. You don't need a new one every year, although dealers would love you to think that way. With a little care, you can probably get 10 or 15 years out of the old buggy. All it takes is regular maintenance and careful attention to the maintenance schedule. This is a little-known fact the car industry would rather gloss over. Dealers make their money selling and servicing cars that's the bottom line to them and there's no other way to look at it. Yes, they would like to make you their customers for life, but given the practices that some auto dealers have used in the past, it's highly unusual for a customer to come back a second time, especially if the customer thinks he's been put through the mill the first time.
Here's a case in point: driving up to a dealership and seeing a bunch of salespeople concentrating around the front door waiting to pounce with some even running up to your car before it has stopped rolling. If I were a customer at this dealership, I'd keep on going and let the salesman trot alongside as I headed for the out exit.
Today, this is not the way to win friends of retain customers. The model is - and should - of necessity be changing. The first realization the car business has to make is this: it's just a commodity business like Wal-Mart or Kohl's or Home Goods. You are greeted pleasantly at Wal-Mart and helped to find what you need and there's no need to haggle about the price. The salespeople are there to help you out - of course, they aren't paid huge salaries - but you don't have to play the negotiating game with them either. If you want a blue Ming-style lamp at $22.75, you find it and pay $22.75.
Wouldn't this be nice in the car business? Of course, we're talking about huge differences in cost, too - cars do cost a lot more. But, why can't we take the Wal-Mart model and apply it to the car business? It would certainly eliminate lots of stress for people and it would make customers a lot happier.
Imagine driving onto a car sales lot, armed with the information you gathered from the Internet or magazines or wherever, finding the vehicle you want, finding the price you want and then - figuratively heading to the checkout line with your purchase. What's so difficult about that as the basis for a business?
It's true that there are a few more steps in the car-buying process and I am vastly oversimplifying things, but, at the end of the day, car sales are really no more different than sock sales at Macy's. You see what you want and you pick it out and pay for it.
Car dealers would like you to think there's a real mystique to the car sales process - and there are steps in car buying that you don't have in sock buying - but when you get right to the bottom of it, the process is the same.
So, why is the car business suffering, if, at its bottom, it's just a sales job? You can call it inertia or pride or supposed knowledge, but for whatever reason, traditional car dealer management thinks it is selling a product that is somehow different than the package of hotdogs you just put into your shopping cart. It is true that cars are bigger and more expensive than $3.99 hotdogs, but the principal is still the same. You just put it into the bottom of a bigger cart before you check out.
Instead of using this simple sales idea to keep customers happy, car sales management is still under the impression that you have to negotiate the price and that people are just so much sales fodder to be stuffed into any vehicle that might remotely look like what they originally came in looking for. In the current market, the buyer is king and it shouldn't be that way. Car sales should be no more difficult than buying socks.
There's nothing mysterious about the process. It should not require a whole afternoon to buy an item. It should not require multiple trips to a sales manager's office, multiple visits from dealership management or multiple back-and-forths over $500 or $100 to seal a deal. All the sales manager should be doing is looking over the paperwork, making sure it's in order and signing off. A buyer should be able to go into a car dealership and buy a vehicle for a price, just like you buy a melon a Kroger's. You wouldn't expect the produce manager to come over to negotiate a price for that melon, would you? So, why do car dealerships think that customers should have to face this in buying a new vehicle? The answer is easy: they shouldn't have to.
At the root of the problem for the dealership are the way car salespeople and managers are paid. -- Commissions and bonuses. If you don't sell you don't eat and, as was earlier pointed out, you are also likely gone in three months. In reality, if you work for a dealership and you are a newbie or new manager, you are just a number.
As a car salesperson you are the "number" that is supposed to be selling X numbers of cars and making Y amount of profit per vehicle. If you don't meet the figure, you're gone. The same is true if you are a manager.
And with slow sales, it's little wonder that salesmen act like you're a wildebeest that is being tracked by a pride of lions. As you arrive at the dealership, they begin to move in your direction, each one hoping the first to greet you and make you "his/her" customer. They have to act that way because it's the only way they can make a living, unless they've been around for some years and have a continuing following who buy cars only from that salesman.
This is not a healthy atmosphere for the customer, the salesperson or the manager. It is needlessly stressful and, let's face it, unless you are fortunate to get a customer with whom you strike it off right away, the chances are if you are the "winning" sales - the one who gets the customer - this will be your only sale to the customer.
This is an atmosphere that also doesn't engender much respect for the customer, either. Since you are "the number" who is selling the car to "the number" who is also the customer, you really don't think of the customer as anything more than "a blank," something to be dealt with and then you move on.
Back in the day, many salespeople took the time to get to know their customers and their children and birthdays and such. They would send out birthday and Christmas cards and service reminders and the like. These salespeople would become the face of the dealership to the customer and the customer would become a long-term friend of the salesperson and continually buy cars from him or her. The chances are good, too, they would refer others to salesman and a legend was born, as was a salesperson's career. (True anecdote: There is one long-time salesperson at a dealership near here who hasn't don't phone prospecting for years, yet every month he's at the top to the sales report. Why? He's from the old school and all his business is repeat. This is what happens when you treat a customer with respect.)
Now, it's just "get-'em-in-sit-'em-down-behind-the-wheel-and-negotiate" a deal and "sell-'em-the car!" That's pretty cold-blooded and if there are too many salespeople on the floor, it's also a guarantee that you have the hunting pack at the front door, people shying away from the dealership. And, if you have an "old-school" sales manager who believes that all customers are just negotiations and not real persons then you have what could be an unhappy situation. Of course, if everything does come together, then you have a good situation and a sale.
So, let's suggest a new sales paradigm for the car business. We know it's a real shocker and it may cut into what the dealer expects to be his "rightful" profit, but it's something that has to be done.
Let's realize that like Wal-Mart or Kohl's a car dealership isn't anything special. It's just a store where cars are sold. It's the original "big box" store. A car dealership isn't anything special, as they would like to believe. (Lowe's does more for localities than do some car dealerships so, in a way, they are more special.)
Next, let's price the cars at what they should be sold for. You don't buy a chair at Wal-Mart and walk up to a salesman to negotiate the price and then have a sales manager who must okay the price you've set or find a new price that will build in profit. Let's look at the figures, build in a certain amount of profit per car for the dealership/dealer; cover advertising costs and other overhead and then let's put the non-negotiable price on the vehicle. If it comes out to $12,500 - with the dealer getting a good profit, the department realizing it's goals and the salesman and manager also being covered - then that's the price. Folks, this isn't rocket science. It's basic economics 101. Car buying shouldn't be up there with pulling teeth for customers. It should be a positive experience for all concerned.
So, then, dealerships should pay their salespeople a good, living wage. Selling on commission is a recipe for one of two things:
- Under aggressiveness
- Over aggressiveness
This might seem like an oxymoron, but think about it. If, an otherwise, competent salesperson is having a bad month, then the chances are good the salesperson will work to a point and then begin to shutdown as he considers himself in a slump. It may not even be the salesperson's responsibility as sales may be lost in the business office or in a manager's office. It has happened and will continue to happen. This type of salesperson will either do the minimum to get buy or will just pack it in and wait for the axe that will surely follow.
The other behavior is overgressiveness that leads the salesperson to literally jump on every fresh customer through the door and try to put together deals that shouldn't even be approached. Sure, you may get a deposit on a car, buy it's not the right car for the buyer and it may work out that the buyer doesn't even have credit to purchase it. All you are doing here is wasting time and setting false expectations.
Normally, both of these salespeople were competent, but each responded in a different manner. If each was on a real salary (no commission/maybe year-end performance bonus) of say $1,250 per week, then he would know that he could take his time with the customer; find the right car, if one was available, and then take the proverbial test-drive and tie the ribbons on it. The salesmanager could bless the deal (remember, there's only one price and he's also getting a fixed income) and then the buyer could head to the finance office where the paperwork is signed and that's it.
Let's even go so far as saying the business manager should receive a living wage, too.
Wouldn't that take the stress out of car buying? And with cars priced fairly it might even bring those who have been on the sidelines back into the market.
True, this is a radical departure from standard practice, but these aren't normal times in the car business and dealers should be trying any model to make things work.
Imagine this: a dealership that knows its fixed costs; its fixed overhead, and its sales and imagine, further, that this dealership doesn't use the traditional methods of selling, but realizes it is really just another retail strip mall store, it's just that the products aren't handbags or mixers or food processors, they are cars. Once this sinks in, you'll have a new attitude and, possibly, new respect for dealers and more sales.
