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

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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    
  
  
   
   
   
   
   
   
   
   
   
   
   
 

*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.

 

Bice Chrysler Dodge Jeep Ram Transforms Operational Efficiency with Traffic Conversion Analysis (TCA)

FCA DEALER CASE STUDY

Bice Chrysler Dodge Jeep Ram (Bice CDJR) had no way to accurately assess the performance of both their lead sources and their individual salespeople. In order to refine their sales and follow-up processes, they needed a solution that could measure their true success by looking at how many vehicles they sold, as well as the sales they lost to competing dealers.

Click below to see how AutoHook helped this dealer increase their closed sales by 89% in just 90 days using a consultative approach combined with science-based technology. Check out the complete set of results!

Morrie's Brooklyn Park Nissan Cuts Defection in HALF with AutoHook’s Traffic Conversion Analysis (TCA)

NISSAN DEALER CASE STUDY

Morrie’s Brooklyn Park Nissan wanted to prove a particular lead provider was consistently delivering high defecting leads to their showroom. They needed a way to validate their decision to cancel this service by showing incremental improvement in their sales operations after removing the lead source from their marketing mix.

AutoHook's Traffic Conversion Analysis (TCA) validated their suspicions and then some. Not only did they see a 61% average increase in salesperson performance after removing the lead source, but they were able to free up 40 man-hours a week and reallocate that budget towards their bottom line.

TCA didn't stop there. The solution helped the Morrie's Brooklyn Park Nissan see a significant improvement in their operations based on where they were losing the most sales, leading to a 50% reduction in defections to their #1 competitor.

 

See the complete set of results and how we did it. Click below to read the complete case study!

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.

Route 46 Hyundai Sees Substantial Uptick in Sales with AutoHook's Add-On Solutions

HYUNDAI DEALER CASE STUDY

After recognizing success with the national Hyundai Test Drive Program, Route 46 Hyundai was looking for additional ways to drive even more showroom traffic and incremental sales.

  1. AutoHook+: In addition to the incentives offered on Hyundaiusa.com and their website, Route 46 Hyundai added the AutoHook+ solution, giving them the ability to incentivize existing, unsold leads in their CRM. They leveraged the Triggered Links function within AutoHook+ to deliver incentive offers via email and attribute showroom visits and sales back to this initiative.
  2. Post-Lead Solution: Route 46 Hyundai used AutoHook’s Post-Lead Solution to maximize their incoming leads from their other sources. The Post-Lead Solution automatically scored their existing leads to identify and target the highest intent-to-buy customers with a test drive incentive via email.
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Click below to see all the results and how we made it happen! 

Hyundai Dealer Case Study: Rogers Hyundai Sees Drop in Defection

ROGERS HYUNDAI SEES SIGNIFICANT DROP IN DEFECTION ACROSS OPERATIONS WITH

AutoHook’s Traffic Conversion Analysis (TCA)

Rogers Hyundai needed a way to make sense of their CRM data to expose inefficiencies in their sales process. They had no way of knowing which sales and marketing efforts were tied to the highest number of lost opportunities. They needed a solution to pinpoint operational areas of high defections in order to implement changes to reduce lost sales and close more deals.

Using AutoHook's Traffic Conversion Analysis (TCA) and the resulting action items AutoHook recommended, Rogers Hyundai successfully decreased their overall defections, while significantly increasing the performance of their lead follow-up process in just three months. In addition, TCA was able to prove the dealership's sales staff decreased defections during this period, with one undercover rock star who increased their closed sales by a whopping 118%!

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CHECK OUT HOW WE DID IT!