Planning for People in Retail Automotive:

How to Staff for Any Economic Climate

The State of the Retail Automotive Market

The automotive industry has experienced a sales boom since 2013, as more jobs, low interest rates and low gas prices have fueled car sales. In many cases, customers have also chosen vehicle upgrades from sedans to SUVs and a slew of infotainment and other premium packages. In fact, leading up to the 2017 New York International Auto Show, automotive sales were predicted to decline to between 17 million and 17.2 million units in 2017, down from a record high of 17.5 million the year before.
If new car sales decrease, you might think you can simply cut headcount to address the diminished revenue.
But in the event of an economic downturn, your team is the only thing you can control and can help differentiate your dealership from the competition.
Organizational design should focus on planning for people no matter the economy – the economic downturn simply offers the opportunity to reevaluate to make sure your organization is effectively structured.
In this eBook, we’ll outline how you can plan for people – including how to elevate star employees, why you should rethink automotive sales pay plans, and how customer knowledge is changing the role of salespeople.

Download a full PDF of Planning for People in Retail Automotive or continue reading below.

Elevate Your Star Employees

One option to keep your dealership thriving is to elevate your best employees. As the economy gets tighter, it becomes more important identify your top employees and ensure they’re in the right place to move your business forward – but this should be part of your organizational design regardless of the economic conditions. Such organizational design has long been in place at the enterprise dealership level.
Once you’ve identified a star employee, you have several options:
  • Find the right seat for the employee – in some cases this means remaining in a sales role as one of your strongest sales team members, or it might be in a position of influence, such as a team lead or corporate trainer.
  • Move the employee to a new store or geographic location where his or her talent is needed.
  • Backfill the employee’s role simultaneously to avoid lost productivity from an open role.

Practice Intentional Retention and Purposeful Turnover

Promoting or moving star employees are examples of intentional retention, meaning you have a strategy in place to keep your best employees. If you overlook star employees, you might end up facing regrettable attribution, meaning you lose a strong employee to a more compelling opportunity.

On the other hand, to maintain the best team possible at your dealership, you should also practice purposeful turnover, meaning getting rid of employees who do not contribute to the bottom line, such as a salesperson who doesn’t move at least 10 cars a month. In some cases, dealers with a purposeful turnover model and high commissions-based pay plans in place are among the best in their markets. This is because they run really tight ships and losing some salespeople at the bottom of the funnel is part of their plan.

In addition to measuring sales and overall results, during slower sales periods, businesses also need to look at – and manage – activity. Dealers need to create and define ways to measure daily activity of each employee and discuss ways to do so more consistently.

Shift Pay Plans to Address Decline in Volume

As automotive sales begin to decline, traditional sales plans based heavily on commission are no longer attractive to prospective employees. And the economy isn’t the only contributing factor.

Why Commission-Based Pay Plans Aren’t Working

  • Economic conditions: A decline in sales means a decreased opportunity for commission.
  • Customer knowledge: In the past, the opportunity for commission was higher because the sales role meant educating customers on makes, models and vehicle features. But today, customers often walk in the door fully educated on their options and the competitive landscape, leaving less room for negotiation and commission.
  • A competitive job market: Many other companies across industries are competing for entry-level sales candidates and luring them away from the automotive industry.
  • Shifts in the labor market: Millennials are now the largest generation in the workforce and they value stable pay with lower earning potential over variable pay with higher learning potential

Practice Intentional Retention and Purposeful Turnover

How can you rework your pay plans to appeal to today’s job seekers, particularly millennials? Consider introducing a base pay plus bonus plan.
A $3,000 minimum monthly base pay is a solid, livable wage to get started. Beyond this baseline wage, a “good” salesperson can expect to make more than this $3,000 monthly minimum, earning between $40,000 and $45,000 annually before OEM spiffs and bonuses. But while this is a livable wage, the 70% turnover rate from these roles show the potential to make higher compensation alone isn’t keeping people in dealership sales roles.

Motivate Employees While Keeping Your Dealership Profitable

Guarantee that you’ll pay each member of your team a base salary of $3,000 per month ($36,000 per year), with the opportunity to earn an additional $10,000 – $15,000 for additional units sold to keep everyone motivated.

Benefits of the Base Plus Bonus Plan

What are the benefits of dealerships using this new compensation model?

  • Increased collaboration, competition and productivity by setting a baseline for each salesperson to sell a minimum of 10 units each month to stay with the dealership.
  • Increased profitability by providing guidance, managing activity and holding employees accountable for units sold and letting go of low performers.
  • Attract high-quality candidates from outside the retail automotive industry who have great sales experience.
Shifting to a more consistent pay program will give your team a strong piece of mind. Instead of the stress of worrying about their bills and performance, they can focus their energy on selling to customers without being pushy or overly hostile. But to ensure success, your dealership must provide enough onboarding and training so your teams feel confident to meet their monthly quotas and provide great customer service.

Evolve the Role of Your Salespeople

Similar to customer knowledge causing commission-based pay structures to decline it also means the customer experience is changing as a whole. Digital retailing has led to a shift in automotive sales and by the time a customer walks into a dealership, salespeople take on more of a fulfillment role than a sales role.
Customer research and knowledge doesn’t mean the sales role is becoming obsolete. Rather, salespeople have the opportunity to focus less on the sale and more on the customer experience. This is especially important given the advanced technology in today’s cars. During a sale or test drive, or even after a customer buys a car, a salesperson can build a strong relationship with the customer by making sure he or she fully understands the technology. By providing the best customer service, dealerships are more likely to retain customers for any future service in their shops – rather than going to a competitor.
Some examples of modern car technology that may have a learning curve include:
  • GPS/navigation systems
  • Touchscreen or voice-activated entertainment systems
  • Automated parking
  • Lane-assist and vehicle safety features

Case Study: The Retail Automotive Genius

In the past few years, several OEMs have began rethinking the sales and customer experience with the addition of Retail Automotive Geniuses.
These new professionals are similar to Apple Store Geniuses in that they serve as customer advisers, helping customers connect and configure their phones with their vehicles, program the garage door opener, set up voice commands, and more.
Today’s Retail Automotive Genius is a separate role than than the salesperson, as more customers know what they want before walking into a dealership and automotive technology becomes more complex, sales staff will likely continue to take on a customer service role. And by serving as a customer adviser, rather than focusing on negotiation, salespeople and dealerships will have a better chance of building a customer relationship and encourage loyalty.

Read more about the retail automotive Genius on the Hireology Blog.


Practice Intentional Retention and Purposeful Turnover

A decline in automotive sales paired with the evolution of digital retailing are significantly impacting the role and compensation plans for your automotive sales staff.
No matter the state of the economy, your people are your most important asset – and hiring and retaining your best team should always be a top priority. Tactics like rethinking compensation structures as well as the overall organization of your sales floor can help you build your best team no matter the economic conditions

See how Hireology can help you build your best team.

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