In this market, more dealerships are beginning to realize the value of building a customer base. When the economy went south, dealers started looking harder at expenses and realized the real cost benefits and additional profits from working within their existing customer and prospect base instead of trying to 'buy' more people on the lot through expensive traditional advertising.
Oops, as usual, there's a problem: there are a couple of catches to retaining customers. A CRM tool and an effective follow-up process are a great start, but many other areas still affect retention. Follow-up, by itself, is insufficient to control growth.
So this month let's take a closer look at how your turnover in the sales department affects the total retention in your dealership.
One reason walk-in traffic is so much tougher to close is because those potential customers you got to your lot through your expensive traditional advertising don’t like you, don’t know you and don't trust you, at least not when they first walk on the lot. Knowing, liking and trusting you are feelings that have to be developed.
That's why the sales process is so critical. For example, Joe Verde's Training Network is designed so that salespeople can take each customer they meet through a step-by-step process of making a great first impression, building rapport, investigating to find that particular customer's buying wants and needs, and then through an effective presentation and closing process, turning 57 percent of them into a buyer 100+ minutes later.
Every time you lose a salesperson, though, two things happen:
You lose the follow-up and retention skills that person had.
You lose that like, trust and respect bond your customer had with that person.
The end result of both problems means you become trapped in the "high ad expense/low sales percent to traffic volume/minimal retention" cycle almost every dealership is in today.
Why do you lose sales with turnover?
Again, the answer is in the statistics: 71 percent buy because they like the person they deal with. And other studies have shown that people consistently buy from people they are most familiar with even whey they don’t really like them. Remember that old saying about "The devil you know…"
In fact, if you'll think back to when you were selling, you'll remember many customers who came on the lot asking for "Bob." You said, "Bob isn't with us any longer. How can I help you?" They said, "Oh, that's OK, we were just driving by – no big deal, we'll stop in some other time."
Why did they leave and buy down the street? Because even if you could easily outsell Bob, they were comfortable with him and not with you, so they made an excuse and left.
Turnover of salespeople happens for the following reasons:
Poor recruiting, interviewing and hiring processes lead to too many mis-hires and you end up with people on the line who shouldn't be in sales, or shouldn’t be working with your team and your philosophy.
Lack of effective initial training for new hires (experienced and inexperienced) on the three areas that totally control your sales and profits, which means they won’t sell enough to keep working for you. Those three critical areas:
1) Learning to develop business on their own to put more 'expense free' traffic on your lot.
2) Selling more of the people who are on your lot now to generate more sales with no new expense.
3) Retaining 75 percent of your customers forever to provide an endless supply of future traffic, sales and profits.
Virtually no continuing education on a daily or any other regular basis to even maintain, much less continue to improve, their skills.
No daily tracking to monitor salespeople's activities, which means you can't manage their activities to increase their production.
No daily coaching by management to maintain or improve their skills.
No accountability to do their jobs.
How do these problems create turnover?
Turnover means you fire them or they quit, and turnover is almost always tied directly to production; they don't earn enough personally, so they quit – or they don't sell enough and you fire them. Look back through the list above and circle every area that will affect the salesperson's production and you'll spot why they don't sell more and why you have turnover.
Every problem on the list is actually a management problem, not a salesperson problem. Managers never received their initial training, continuing education or coaching by the dealer or upper management – so even if you and your managers recognize a problem above, they can't fix it because they don't know how. When you look to the core of virtually all of your problems, it's always management and never the market, the weather or your salespeople.
Managers have to get proper education on their core skills, too. To be productive, every manager on your team has to learn how to
Establish the processes and procedures that will help you reach your goals today and to ensure continuous growth. This isn't rocket science; it is just establishing common sense best practices on how salespeople should do their job. Right now, with no processes and no requirements, almost every salesperson is just doing their thing until you fire them or they quit. Again, this is about their overall lack of production.
Recruit, interview and hire qualified people who can be taught and managed each day to follow those best practices. Managers hire the wrong people because they don’t know how to find, interview and hire the candidates most likely to succeed.
Train every new hire initially before they start selling, whether they’re new or have 20 year experience. They have to teach everyone how to sell based on the "best practices" you adopt for your dealership.
Become effective coaches, not bosses. Bosses don't develop their people and drive continuous improvement – only coaches can pull that off. Bosses swear they’re working with a bunch of idiots – coaches know what to do so they can turn them into professionals.
Track and monitor every activity salespeople are supposed to accomplish each day. If salespeople don’t follow up with working prospects, it's because they don't know how, nobody’s looking and/or there's no accountability.
Set clear, realistic and achievable goals for the dealership and then train and manage the salespeople on the specific skills and activities they'll have to accomplish to reach those goals.
Motivate, rather than de-motivate, salespeople. During training sessions, I ask dealers and managers to consider whether they motivate or de-motivate their salespeople and it comes out to about five to one; that kills your chances of greater success.
What’s the immediate solution?
Teamwork and leadership are the two critical traits you need to start growing and improving. The common problem is that because things have been "how they are now" (status quo) in your dealership for so long, 99 percent of you can’t and won’t develop the teamwork and leadership you need without a third-party influence. You need somebody else to remind your management team of why it’s critical and how to pull it off in spite of the internal perceptions your management team works with now.
All of our most successful dealerships start with management training. You can easily improve your sales and profits as long as you're willing to personally grow and improve. A good start is to get copies of my free book for every manager on your team.
