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Car Dealers, Fire All Your Salespeople Today!

Can the argument be made that today’s car dealership would increase earnings if they fired all salespeople and implemented a new process from scratch?

Let’s start with creating a BDC. We would hire women between 35-50, pay them $20 an hour to set appointments. Most of these women would be moms with kids in school so getting to the dealership by 8:00am would be no problem.

After the BDC confirms the appointment and the customer shows up, they are welcomed with signs “putting the fun back into buying a car!” The signs also explain that no one is on commission.

We will also recruit women between 21-28 years of age to be “Ambassadors” of the dealership which consist of an attractive personal appearance, strong verbal skills for product presentation, enthusiasm, and interpersonal skills. These Ambassadors would take the customer through a detailed list of to do's including the vehicle selection, walk around, test drive, etc.

After the test drive, the “Ambassador” ask the customer if they would like to buy the vehicle. If they say yes, we just escort them over to the F&I manager.

I can see the happy faces now of the customers. No longer do they feel intimidated or controlled. They can finally relate!

If all this sounds familiar, that means you have read Kurt Baumberger’s book “Adapt or Die”. Not only does he suggest this formula, dealers are already doing it! Is it the right thing to do? Oh, by the way, it is suggested that the salespeople could all be moved to selling only used cars since there is more profit in used cars and “there is inherently less trust between buyer and seller anyway”. (Again, in the book)

The argument is that we automate to eliminate. With all the technology today, has the salespersons duties been eliminated?

Another book, Cars and People by Anthony Douglas Ziegler, the automotive salesperson is to perform the following duties:

• Meet and greet
• Qualify and conduct fact-finding
• Build rapport
• Vehicle selection
• Inventory walk
• Present product
• Demonstration drive
• Dealership tour
• Unmask and handle objections
• Write up
• Negotiate price
• Overcome price resistance
• Conduct trade-in appraisal
• Justify trade in value
• Present finance options
• Explain financing terms and conditions
• Up sell accessories
• Cross sell finance and insurance products
• Close deal
• Resell benefits
• And more>>>

The car business is so important to America. To push the automotive salesperson out is just a big mistake. The automotive salesperson is a professional who earns every dime they make. To fire them is like throwing the baby out with the bath water. Why not train them better or better yet, hire better in the first place? Look at professional salespeople like Robert Wiesman “Your Hyundai Guy”!  . You going to fire that guy? Does he not make buying a car fun again? 

What is wrong with Commission?  Put everyone in America on commission. You work at McDonald's? Commission... You want fries with that?  The "meal deal" gets you a nice, big, cold, refreshing soda with ice on this hot 105' day? Or, Senator? Commission... You cut the deficit, you get paid. City worker? The more roads you fix, the more you get paid.

Will technology eventually replace the F&I Manager? How about the Sales Manager? If you don’t have any salespeople, do you need a salesmanger? What about the GM? Just saying! Are we going to automate all ourselves out of a job?

Let’s say you?

Views: 4280

Tags: automotive direct mail, digital marketing, direct mail advertising, direct mail printers, mailers, todd, vowell


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Comment by David Sharp on March 10, 2013 at 9:29am
Well the conversation is certainly flowing on this one. I posted on this yesterday so I won't go through my entire train of thought again, but it seems clear that nearly every response to this point favors a performance based system. Clearly there are differing ways on how to implement this but as long as we stay with this system, in some form, the consumer wins, the salesperson wins and the dealership wins.

In the end the best thing for all of us is that all of us strive to maintain a high level of performance throughout our dealerships. It doesn't matter what department, we need to make sure we are equipping our people with best opportunity to succeed for our consumers...and for ourselves...or find another line of work.
Comment by Tom Gorham on March 10, 2013 at 8:22am

Todd, great article.  I gave an opinion on DealerElite that it was sexist and probably illegal given the talk about women.  BUT, I agree with Ralph that commission based pay is not a do or die proposition for good sales and sales staff.  You can take away commission and still have a performance based pay plan that rewards those who do well.  That means your staff still need to know how to sell.

Let's leave the "top dogs" out of it for a moment.  They are an exception (and exceptional).  Most sales people are struggling today with the commission based pay on New cars.  Many are making it or not making it based on volume bonuses and bonuses from the manufacturer.

I really like the plan Ralph presented below.  It emphasizes all the right things for today's dealer.  It encourages volume, but it also addresses great customer service, repeat business, and team work. 

We do something similar in our BDC and I love the effect it has, especially on the team work end.  I see them helping each other be successful everyday, doing videos, assisting each others customers (without splitting a deal) and yet each one of them still competes to be the top each month in volume.  

Sales is sales as long as it is performance based.  Commission ain't the only dog in town. 

Comment by Jason Mickelson on March 10, 2013 at 8:14am
Neil, that sounds like a nightmare I had once. Say it didn't really happen.

Comment by dennis g ferguson on March 10, 2013 at 8:06am

Hey this is an idea I have thought over   it has it's place in new car sales,  However,the personal touch is still needed.   People buy from people.   The proper use of the T O should be used if the close is not making it


Comment by Neil D.Hayes on March 10, 2013 at 8:06am
Very well done Editorial.I don't see a Apple "Siri" technology that can match the empathy and relating skills of a top notch Auto Sales Professional.
Yet I have seen the crippling and destructive end results of a Large Dealer Group that insists on a movement to CRM template behavior.From meet and greet to prepared replies to Customer questions.To monitor the results they use "BDC" Managers who review information from 100 miles away and critique the interaction.
It is no different than the Soldiers manning Drones in other parts of the world.Should a Manager get involved and present a rebuttal or different assessment they are reprimanded and
strongly told they are not permitted to
vary the authorized script.
These "Monitors" have never sold vehicles,have only walked through the Dealership in a 10 minute orientation and cannot be contacted directly about the assessments they generate.
Computers,telephones are monitored and calls in and out reviewed.Salespeople can't talk with a Client,they can only use a script of when the Customer is available for an
Comment by Big Tom LaPointe on March 10, 2013 at 6:21am
My time with land rover years ago was a salary / commission setup with mixed success. Absent an unlimited amount of leads or ups, it takes a full year for a salesperson to get traction and consistency. MOST industries invest REAL training and and a year of salary for a new guy. The car biz model ends up rewarding closers rather than professionals.

In a stint helping an autonation store I saw a good salesperson sell 20 units their second month only to get disenchanted making less than $2k commission for working 60+ hours a week. Boom, now they are gone. Add in the demands of the modern buyer who wants Nordstrom service at Kmart prices and it is obvious that owners / management need to reexamine pay structures
Comment by Ralph Paglia on March 9, 2013 at 9:49pm
Todd, in regards to what has been the auto industry's standard sales compensation model over the past 40 or 50 years... Commissions based on a percentage of gross profit, it is no secret to most people who have studied "Sales Comp" that the original model is no longer viable. Now, let me be VERY clear in stating that total compensation bundles which include a performance based variable component are an important part of automotive retail and I do not predict, nor do I want them to go away. Heck, in some cases, including stores I have managed, the pay plan for the sales team can become a competitive advantage.

What I see working really well in the future, and several components already in place at several dealerships around the country is sales professional pay plans that include the following:

1. Base Salary (I'm seeing a range of $1,000 to $3,000/month)
2. Customer Experience Bonus (CSI, Dealer Site and/or Web Based Reviews)
3. Unit Volume Bonus (12 mini deals gets you a handsome spiff) $1,000 to $3,000
4. Gross Profit Commissions (Lower %, but Based on TOTAL Deal, including back end and accessories)
5. Customer Retention Bonus; Repeat customers generate twice the salesperson income as fresh ups.
6. Team Gross Bonus: 5% of profit on every deal goes into kitty, split based on salesperson's units sold as percentage of team's total units sold... Best auto retail bonus ever devised! Creates culture of team selling and cooperation that pure solo commission plans destroy.

I could go on about a few others, but as you can see I am one of the many car biz veterans that understands that the days of $50 minis and $30 of the front end gross pay plans are gone... The OEM's assured the obsolescence of pure front end gross based pay plans when they started shrinking the profit margins at MSRP quite a few years ago. Despite the fact that I personally did VERY WELL in the glory days of straight sales, open floors, lease contracts that did not disclose the selling price and fat commission percentages, I say good riddance! There are far too many destructive behaviors encouraged by those old pay plans to ever want them back...
Comment by Todd Vowell on March 9, 2013 at 8:44pm

Bryan Brooks, trivialized? I don't think you read my entire blog... If you did, I bring this up because dealers are being told they can earn more money if they fire all their salespeople and hire "greeters". I am saying that is horse manure...

Comment by Todd Vowell on March 9, 2013 at 8:35pm

David Sharp, WELL PUT my man! Solid product, branding, and training. That is it. Entitlement?  I don't know how to curb it but it is running wild like the flu. If we don't cure millions of CAPABLE Americans from it, we are in big trouble. Thanks for your words, appreciate it.

Comment by Jason Mickelson on March 9, 2013 at 7:58pm

Todd, I am proud of you for asking the tough question to Ralph.  I also was asking myself the same question you posed.  The car business is proving that there are multiple approaches that will get the job done.  Every single dealership and market in this great country differ from the next.  One of the groups we work with proves that.  They are owned by the same people, in communities of about the same size, with similar processes and technologies in place.  However, they will sell vastly different units each month.  At the end of the day, we need units.  To me, it seems like there are many people who are trying to find a more efficient way to take the car from point A to point B.  From my perspective, four tires and a round steering wheel still works pretty well. 

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