How To Solve Dealership Turnover & Staffing Issues Forever (PART 8)
TRANSCRIPT: Those were five guidelines, but let me give you a bonus guideline when you’re writing your pay plans. This one I feel compelled to tell you. Nobody makes too much. I see this a lot. I especially see it with vendors, but I’ve seen it in dealerships too. Top salesperson on your team made more money than your sales managers in a given month. What do you do? Right? What do you do? I’ve seen owners and general managers reduce the pay moving forward. You’ve just lost your top salesperson. You know what I’d do if it’s my dealership and I got a top salesperson who made more than my sales managers?
I make it a point to go to a meeting, introduce him to everybody again, make sure everybody knows he made more than the sales managers. Congratulate him on that and then I give him an extra $1,000 because I want everybody making more than the sales managers. Heck, I want them making more than me because I’m going to build great pay plans that are fair to me and fair to the employee. If they maximize those pay plans and they start making more than managers, fantastic because it means at the dealership we’re making more money. Let me give you the bottom line on pay, okay?
Generally speaking people don’t quit over pay. Your salespeople, they make more than any other industry, yet turnover is still an issue, so why are they quitting over pay? I’ve said it before. One, it’s the perceived unfairness in your pay plans, in your changing of pay plans, in your surprises that you do and your exceptions. Here’s the second reason they quit over pay, is that your managers don’t pull them from being an eight car a month person to a 20 car a month person. It’s sink or swim in our business and it always has been, and you have to stop that. You have deskers where you need leaders. You have deskers where you need people who are managers, so let’s take a side bar.
This is a leadership crisis. When we talk about turnover, we’re talking about a leadership crisis. When we talk about the fact that your team isn’t making their phone calls, it’s a leadership crisis. Let’s take a quick side bar in this and ask yourself, “Are my sales managers leaders or are they deskers?” Now it is possible to be both, but it’s pretty rare and many dealerships still need deskers. I get that, but every dealership needs leaders. Why are we calling them managers? Let’s call them deskers. Why are we letting them lead people? Let’s let them desk and let’s get one person to lead the team.
Let me give you a few questions or thoughts back to pay plans, all right? Do you pay on total gross or just front gross? This is rhetorical. Obviously you can’t answer this, but I want you to answer it for yourself. Do you want higher F&I grosses? Do you want your salespeople explaining F&I products in advance? I know a lot of dealerships, I was telling about the one, when they put in the LoJack … You know, if you sell five or more LoJacks, here’s what LoJack is, here’s the brochure. If your cars go out, five or more of them go out, a LoJack, you get a spiff on every LoJack. Your team can do it. They can explain these things. If your team explaining these products in advance, then pay them a little bit on the F&I grosses. At some point, let’s be clear, salespeople are going to be handling your F&I.
There’s going to be a single point of contact in your dealership. Maybe not next week, maybe not next year, maybe not in five years, but I know dealerships today like Schomp BMW in Colorado that for years, I think maybe more 10 years, they haven’t had F&I managers, they haven’t had desk managers. They’ve been a one price store and a salesperson handles it from beginning to end. That happens in lots of stores today and it’s going to happen in your store someday, so maybe now it’s time to start getting them involved in F&I, involved in the F&I products, involved in introducing these things and then paying them a little bit on that. Again, in a well-written pay plan, written in advance, that is expected to endure.
All right, how about this, another question. Is a flat per car better than a percent of gross? I’ve heard arguments on both sides, but I want to be clear that you understand this. Today’s buyer, they know what they want and how much they want to pay before they arrive on your lot. Stats show they do more than 20 hours of research. They look at more than 20 different sources of information before they come to your lot. In fact, today they’re only visiting, what? McKenzie says 1.6 dealerships before they buy. The average buyer doesn’t even visit two dealerships before they buy.
Auto Trader said that 77% of new car buyers last year bought the vehicle that they came in on. That means we’re not flipping them as much as we used to because they already know what they want and if we do try to flip them, they’re going to go somewhere else. See, paying on a percent of gross sounds right, but flipping is more difficult today than it ever has been, and it usually blows out an up. Your pay plans should be structured to just have them sell the car and move on because people have already done their needs analysis. We’re going to talk about this when we talk about process. They’ve done their product selections, their needs analysis, their feature presentation. They really just need someone to sell them a car.
All right, here’s another question. Should you pay a heavy volume bonus or a heavy per car? Should your percentage be on the per car or should your weight be on the volume bonus? Really you need to ask yourself what’s realistic in our dealership. Here’s what I want you to look at. Look at the difference between your top and bottom sellers. Let’s say that you’ve got a 30 car a month person on top, you’ve got an eight car a month person on the bottom. Does the eight car a month seller deserve roughly the same dollars per car as the 30 car seller? My answer is no, they don’t, and so if it were my dealership, I would work a way to structure my pay plans so that I would have a heavy volume bonus and I was paying less per car.