It used to be the case in the late 1990's up to the mid-2000's that sales consultants actually worked to make a commission from the gross proceeds of their sales. As a result of that mindset, it required that sales professionals follow proven steps in a process to not only optimize their earnings, but to also give their client the best experience possible. It was always my opinion that a great sales consultant optimized every sale and worked smarter rather than working harder. Then came the "volume" dealer...
For those of you who are unaware, there are many dealers out there whose existence depends almost solely on volume sales rather than optimizing gross profit. And, while there are many factors that are determinant of gross profit such as: cost, carrying charges, reconditioning, dealer pack, etc., let's keep it simple. In other words, for many of today's dealers, rather than spend adequate time training their staff to "sell", they are more inclined to employ "clerks" to corral customers, check out their website, and choose your model like choosing cereal at your grocery store. For professionals like myself, this methodology is sinful.
Why?
Many of today's dealers would rather have a "greeter" at the door, turn the customer to a "clerk", pick out your car, have the manager give it all away for the "best deal" on the first and only pencil, and have the "clerk" handle the 20 minutes of paperwork. The reason is simple: typically, the ones making the money are the managers and dealer - not you. As long as the manager sells "a unit", the F&I Manager gets an at-bat, service gets an email from a new customer for the next coupon blitz, and you get your "mini deal", the dealer is happy as can be.
Honestly, YOU shouldn't really get "paid" per se as you aren't selling; you are clerking. Selling requires rapport, listening, timing, knowledge, ability to convey value, negotiation, and closing. Are you capable? Apparently, most dealers do not believe so. In their mind, they are trying to bypass proper recruiting, effective training, skill development, turnover reduction, and accepting the fact that staff members may have their own personality and style. Good managers are capable to developing and fostering those individual personalities and strengths and harnessing their profitability. But, that requires good managers and investing in future successful employees. We know that isn't the case given the excessive turnover in the auto industry.
Dealer Principals and their anointed GM's have decided that short-cutting the process of employee development and associate individuality and putting the majority of responsibility in the hands of their managers streamlines the sales process while giving up on value-building and negotiation in lieu of extracting minimal profit margins, but moving more units. Oh, this process can definitely work, yes, and in the eyes of many dealers, the more car that cross the curb, the more profitable service business that they can capture and the more "advertising" the dealer achieves. In theory, this mindset can be true, but can come at great unseen costs, too. Furthermore, if tasked with running this type of operation, I can readily set up all of the systems and processes, hire the staff, delegate the functions, and drill down into all the mathematical benchmarks to maximize the "volume" principal. And, in all likelihood, I would do it very well. But, I have a conscience with respect to maximizing associate earnings and investing in my employees that others clearly do not.
You see, the bottom line is that volume dealers are set up to work for a minimum-challenge gross margin comprised of dealer holdback, advertising money, lower floorplan expenses, dealer volume sales bonuses, increased back-end profit attempts, and future service revenue. Again, if the advertising and inventory are there, this system can be quite profitable. The dealer hires some tart to do the ubiquitous annoying "we are the #1 volume dealer" television ads and you sit at your desk sending emails trying to figure out why the "you can make $100,000 per year" employment ad you answered seems to be a total fallacy. Moreover, you see the same two guys at the top of the sales board every month and wonder why you always see one of them headed into an empty conference room with the senior sales manager.
Compensation plans have also changed as a result of this and other newer operational philosophies. Many companies are now offering a nominal salary of say $30,000 per year plus spiffs for this, bonuses for that, and a tongue-in-cheek statement that "if you put the time in" you should make $60,000+. Those of us who have been in the industry for a number of years have seen this happen, but chances are far better than not that you will ride that $35,000 line and either burn out from the hours and lack of real prospects that aren't friends and family members or the dealership will attrition you out for new blood. This is typically a dealership management failure, but most dealers just don't care.
The automobile business can be a career-changer for many people - especially those who don't have a degree or are in an area where the job market is tight. Yes, it can be a high-paying gig, but too many associates pick up bad habits or integrity problems that make their tenure short as they bounce from dealership to dealership. Dealers are constantly changing, and most are not changing for the better.
There is no doubt that I can sit here and give you a page full of reasons why being the volume dealer can be and is profitable, but realize that business conditions such as macro economic changes or a bad story or two in the newspaper can change everything in the blink-of-an-eye for these dealers. And, unless they have a staff that it actually prepared to earn every sale through rapport building, proper needs assessments, effective product demonstrations, and closing skills, the next thing you wont see is the goofy blonde tart with the annoying voice pitching the "#1 volume dealer" any longer because there is a new sign out front.
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Copyright 2017, Robert Liotti, The Car Business Insider. All Rights Reserved.
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