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Word has it that many dealers are still having problems finding and keeping 'good' salespeople. According to the 2016 NADA Dealership Workforce Study, the average turnover rate for salespeople is 67 percent, and as high as 72 percent at non-luxury dealerships.
High turnover rates in the auto industry are not news. But is the problem really the lack of 'good' salespeople, or is the problem with the way dealerships are treating their salespeople? It's an important question and something that dealers should figure out, because consulting firm ESI Trends estimates that employee turnover costs the average dealership half a million dollars every year.
The fact is, sales consultant turnover rate won't change until these two things change:
1) Pay Plans
The average starting salary for college graduates today is $52,569 according to the National Association of Colleges and Employers (NACE). The average salary for car salespeople is $31,000, according to Glassdoor.com. Sure, there's a chance you can make a lot in commissions; but there's also a chance that you won't make a lot in commissions.
And let's face it: selling cars is a stressful job. Why put up with the stress and long hours when you can go pump gas and make almost as much, without all the stress?
Some forward-thinking dealerships are addressing this salary gap with higher salaries and smaller commissions based on CSI scores or other factors. Unfortunately some dealers believe that without commissions as incentive, salespeople won't do the work. This belief is misguided because there are plenty of ways to hold salespeople accountable. When you hire an accountant, are you worried that they won't do the work because they're getting a salary?
Until dealerships rethink their pay plans and come up with packages that compete with other companies in other industries, they're going to have a really hard time finding and keeping the best talent.
2) Workplace Culture
Auto/Mate currently has over 180 employees and a turnover rate of one to two percent. It's a big deal if we lose two or three people a year. This is no accident. Creating a workplace culture focused on employee engagement and happiness is the top priority of upper management in our organization. And when I say top I do mean top. We care about it more than revenue and more than customer satisfaction.
I see the eye-rolling skeptics out there, but here's how this works. Employee engagement is our top priority because happy employees take great care of customers. Happy customers become loyal customers. This has a positive impact on the bottom line, so ultimately the shareholders are happy too.
I have written extensively about how to increase employee happiness. But the one, core nugget of advice is this: your employees have to believe that you really care about them. This can't be faked. If you don't know your employees' spouses names, or their kids' names, or you don't know which of your employees are going through a difficult personal challenge, you don't really care. And your employees know it.
When you care about your employees, they care about you and your company. They care about the company's mission and vision. They will feel part of something and be motivated to help make it a success. And they won't want to leave.
So if employee turnover is an issue at your dealership, address pay plans and focus on workplace culture. What are your tips for reducing employee turnover?